Who Will Protect China’s Small Farmers?

China’s hog production practices have shifted greatly over time as the country has transitioned into a market economy. “It was really easy to get a loan in the 1980s,” recalls Mr. Liu, owner of Fu Hang farm, a medium-sized pig farm located in the Northeast part of Zhejiang Province. “I signed a contract with food companies which not only promised to purchase my pigs but also subsidize their feed.”

In 1988, the Chinese government launched the Vegetable Basket Project in an effort to ensure the supply of non-staple foods such as vegetables, dairy, pork and poultry products. “At that time, there was a very small number of pig farmers,” explains Mr. Liu, adding “when government officials had a meeting with us in the 80s, they encouraged us to raise pigs and provide food for the huge population. But now,” he continues, “if we have a meeting, we’re told not to do this or that, to get our animals vaccinated or get fined! They don’t want us to raise pigs any more’it’s not worth it. It’s very land and water intensive and the government has to worry about the environment too. In Hong Kong, the government gives you money if you quit. If you add up all the costs, it’s a lot cheaper to import meat.”

True. China, traditionally self-sufficient in meat production, has become increasingly reliant on imports to meet domestic demand. According to statistics from China’s Ministry of Agriculture, the country imported 447,000 tons of meat products in 2007’a nearly 88 percent increase from the previous year’s levels. Meat imports have been rising steadily at an annual rate of just over 21 percent, and in 2007 and 2008, meat imports surpassed exports for the first time in China’s history. The country’s pork trade has been picking up since 2000, with pork imports, peaking in 2003, resuming growth in 2006 after two years of declined sales. It’s predicted that China will grow into a major pork importer in the near future as urban centers expand and domestic demand grows.

“There’s no safety net for us. The government simply does not care’I’m all on my own,” laments Mr. Liu, watching his pigs being trucked out of his farm. And yet, Mr. Liu is certainly not the most vulnerable. China is implementing drastic changes in its agricultural practices as it moves towards large-scale intensive operations. At present, small-scale household backyard production still dominates China’s hog production. The overwhelming majority of hog farms have fewer than 6 pigs, with such farms producing over half of the country’s pork. Despite this trend, specialized hog farms such as Mr. Liu’s, as well as large-scale hog production enterprises, are becoming increasingly common in the country, pushing small-scale farmers out of the market.

While farmers like Mr. Liu are left to battle the economy and government, corporations, both domestic and transnational, are reshaping China’s hog industry’mirroring the government’s evolution from extensive to intensive economic policies. China National Cereals, Oils and Foodstuffs Import and Export Corporation (COFCO), China’s largest food processor, manufacturer, and trader, has been drastically restructuring itself to secure its leadership in both the Chinese and global food market. It aims at building a vertically integrated food supply chain’and making it big.

In late 2009, COFCO acquired Maverick Co. Ltd., a joint venture between US-based Smithfield Foods and Belgium’s Artal Group, for 194 million yuan ($23.37 million). The ambitious acquisition showed COFCO’s determination to emulate western-style intensive production systems, valued for cutting back on production costs. In the meantime, COFCO devoted billions of RMB into building large-scale hog production demonstration sites all over China, with annual throughput of one to three million pigs.

COFCO’s ambition is met with competition from abroad. Since China’s entry into the World Trade Organization in 2001, the Chinese government has increasingly freed trade in agricultural products and lessened restrictions on foreign investment, which has infiltrated the entire pork supply chain from feed to slaughter, processing, distribution, and trade. Foreign investment is especially concentrated in the upstream of the supply chain’production and slaughter’where the livestock production system can be modified the most. It’s estimated that foreign investment accounts for over half the hog industry’s capital.

“We face the greatest risks and make the least (profit),” Mr. Liu says, as trucks carrying well over a hundred pigs leave his farm. As China embraces intensive agriculture, who will protect the country’s small farmers? And how will China’s government tackle the broad social, economic, cultural, and environmental consequences of prioritizing cheap production at the expense of all else?

Photo courtesy of Stella Zhou