The amazing underlying fact is how rapidly the number of Chinese farmers is decreasing. Rural population is a rough guide to farmer numbers and it is has dropped from about 800 million at the turn of the century to 240 million now. That’s about 3.5% per year, and it’s accelerating.
By comparison, during the ag mechanization of the U.S., our sharpest drop in farm numbers was about 2% per year. China has about 335 million acres of farmland of which about 240 million are in grain production. The math indicates the impact on farm machinery use.
With an average farm of a little over an acre, the obvious question is where would you park a combine? While there are millions of farms this small, they usually farm in groups big enough to use tractors and harvesting equipment. In fact, China exports more farm machinery (in dollars) than the U.S., mostly tractors and livestock equipment to places like Vietnam and South America. It imports some machinery, but not much.
The rapid reduction in farmer numbers is a result of government efforts to 1) raise money, since the government owns the land; 2) achieve modest economies of scale for added productivity; 3) add about 5% more tillable acres by removing farmhouses. This movement of people off farms to urban areas has also been driven by the need for labor during their rapid industrial growth.
Despite government efforts, China is currently losing about 2 million prime acres per year to development and erosion. It is hard to envision Chinese farmers competing in the market for U.S.-sized machinery, but they will likely be formidable competitors and buyers for smaller equipment in places like India and Africa.
Still the rapid movement of people off their farms and their plummeting birthrate suggests China may have larger farms and equipment within a decade or so.
EDITOR’S TAKE:
Some of you may recall that at one point in my career I traveled to China, especially the rural areas, on a number of occasions. It was during those trips that I quickly realized the Chinese government had, and still has, a large problem – they cannot produce enough food! The farms were highly inefficient and poorly equipped. Laborers were not enthused about producing food and turning it over to the government. Distribution and processing were woefully outdated and in poor condition typically. And, most of the households did not have refrigeration at that time. Sure, China’s population is declining due to their one-child policy. That may relieve some of the pressure down the road, but not anytime soon! It is still my contention that China needs us as much or more than we need them. Even if they don’t purchase agricultural commodities directly from the U.S., when they do buy, it creates a vacuum somewhere that our farmers/ranchers can fill. Either way, the situation in China is a huge opportunity for our farmers and ranchers for many years to come. The real unknown is whether the Chinese will expand their food operations into Africa or other continents since they can’t produce enough domestically. Only time will tell.
