Page 158 - 2019 White Paper on the Business Environment in China
P. 158
9 White Paper on the Business Environment in China
This fact decreases the enthusiasm of farmers of buying can be explained by the fact that the Chinese people
insurance. At the same time, the higher coverage requires primarily consume a vegetarian diet of 400 kg of food
higher premium, and respectfully more governmental consumed per capita. Based on the annual grain output
subsidy spending. Several other challenges are in China, food consumption per capita reached 350 kg in
considered to influence the agricultural insurance system 2004, 400 kg in 2010 and 450 kg in 2015. It may be hard to
in China. Agricultural insurance market premium growth believe, but China now has the highest number of obese
is strongly affected by the country’s gradual slowdown of people in the world (Cui and Shoemaker).
the overall economic growth, lack of transparency in the
information provided to the international reinsurance Seed Industry
companies, lack of data quality and sufficiency provided
at the farm level, and loss assessment and loss adjustment The Chinese State Council issued new guidelines on
methods lack transparency and require significant stabilizing grain production at 550 million tons by 2020,
improvements in the future. China is expected to pull while placing greater emphasis on non-grain food quality
more budgetary support to their vast rural economy, than quantity.
including further development of crop insurance
programs, as there has been a significant economic Although only in the early stages of implementation for
improvement in urban areas. The common challenges are China, genetically modified (GM) crops may provide one
a lack of systematic infrastructures, including processing potential solution to improve environmental resistance
systems, underwriting control and compliance rules. and enhance yields. China allows GM cotton and papaya
Compared with the US, the current coverage level is to be grown commercially in China, but other staple GM
primitive due to a lack of credible data at the farm level. foods are prohibited from being grown. The approval
As such, crop insurance programs in China are yet to process for cultivating GM crops in China involves at least
become an effective risk management tool for many three stages: First the ministry allows inedible industrial
individual farmers. (Zhang and Shi). crops like GM cotton. Next GM crops can be used to
feed crops for animals. The final stage will be to permit
Farming edible GM crops for feeding humans. GM crops must
be cultivated in line with China’s laws and regulations.
According to June 2018’s China Agricultural Industry Growing GM corn, rice or soybeans was banned by a 2016
Report by the Chinese Academy of Agricultural Sciences, provincial regulation in Northeast China’s Heilongjiang,
planting areas of crops like rice and wheat are declining China’s top grain producer. GM seeds are also forbidden,
due to policy adjustments in crop storage. It is estimated according to the regulation that took effect in May 2017.
that the output of rice and wheat by 2035 will be 203 China currently imports GM soybeans, rapeseed, cotton
million tons and 128 million tons respectively (Li, China to and corn.
Be). China’s agriculture policies will always depend on its
population growth and its concomitant food demands. By late June 2017, ChemChina finalized its US$44
China’s accelerated increases in urban population, relative billion purchase of the Swiss pesticides and seeds giant,
to that in the rural areas will also continue have an impact Syngenta. It was China’s biggest foreign takeover of all
on food consumption. China’s urbanization rate reached time. Two weeks later, Dow Chemical (DOW) announced
57 percent in 2016, and may increase to 65 percent by that an agriculture fund backed by the Chinese
2025 and 80 percent by 2050. With China’s population government would pay US$1.1 billion for its Brazilian
approaching its peak, grain consumption is expected corn seed and research business. Longping High-Tech
to decrease starting in 2018. According to consumption Agriculture Co, an agricultural firm controlled by China
patterns of grain in China, direct grain consumption conglomerate CITIC Group Corp, sees Brazil expanding
accounts for only 30 percent, the remainder of which corn output up to 5 percent per year in coming years
is found in processed grain products for food and feed. and is investing heavily to grab a third of the country’s
Thus, the general consumption of food products has corn seed market. The company said it will start building
been stable for the past three years. In contrast, the new seed plants in Brazil in 2019 to increase production
total production of meat, milk, and beer has gone down capacity beyond its current four installations. The plan
to 4, 6 and 7 percent, respectively from 2014 to 2016. is to boost its share in a market worth US$4.02 billion
This suggests that total food consumption in China has from 15 percent currently to 30 percent in five years.
reached or is approaching a maximum. These results The firm said a natural second step will be to enter the
158
This fact decreases the enthusiasm of farmers of buying can be explained by the fact that the Chinese people
insurance. At the same time, the higher coverage requires primarily consume a vegetarian diet of 400 kg of food
higher premium, and respectfully more governmental consumed per capita. Based on the annual grain output
subsidy spending. Several other challenges are in China, food consumption per capita reached 350 kg in
considered to influence the agricultural insurance system 2004, 400 kg in 2010 and 450 kg in 2015. It may be hard to
in China. Agricultural insurance market premium growth believe, but China now has the highest number of obese
is strongly affected by the country’s gradual slowdown of people in the world (Cui and Shoemaker).
the overall economic growth, lack of transparency in the
information provided to the international reinsurance Seed Industry
companies, lack of data quality and sufficiency provided
at the farm level, and loss assessment and loss adjustment The Chinese State Council issued new guidelines on
methods lack transparency and require significant stabilizing grain production at 550 million tons by 2020,
improvements in the future. China is expected to pull while placing greater emphasis on non-grain food quality
more budgetary support to their vast rural economy, than quantity.
including further development of crop insurance
programs, as there has been a significant economic Although only in the early stages of implementation for
improvement in urban areas. The common challenges are China, genetically modified (GM) crops may provide one
a lack of systematic infrastructures, including processing potential solution to improve environmental resistance
systems, underwriting control and compliance rules. and enhance yields. China allows GM cotton and papaya
Compared with the US, the current coverage level is to be grown commercially in China, but other staple GM
primitive due to a lack of credible data at the farm level. foods are prohibited from being grown. The approval
As such, crop insurance programs in China are yet to process for cultivating GM crops in China involves at least
become an effective risk management tool for many three stages: First the ministry allows inedible industrial
individual farmers. (Zhang and Shi). crops like GM cotton. Next GM crops can be used to
feed crops for animals. The final stage will be to permit
Farming edible GM crops for feeding humans. GM crops must
be cultivated in line with China’s laws and regulations.
According to June 2018’s China Agricultural Industry Growing GM corn, rice or soybeans was banned by a 2016
Report by the Chinese Academy of Agricultural Sciences, provincial regulation in Northeast China’s Heilongjiang,
planting areas of crops like rice and wheat are declining China’s top grain producer. GM seeds are also forbidden,
due to policy adjustments in crop storage. It is estimated according to the regulation that took effect in May 2017.
that the output of rice and wheat by 2035 will be 203 China currently imports GM soybeans, rapeseed, cotton
million tons and 128 million tons respectively (Li, China to and corn.
Be). China’s agriculture policies will always depend on its
population growth and its concomitant food demands. By late June 2017, ChemChina finalized its US$44
China’s accelerated increases in urban population, relative billion purchase of the Swiss pesticides and seeds giant,
to that in the rural areas will also continue have an impact Syngenta. It was China’s biggest foreign takeover of all
on food consumption. China’s urbanization rate reached time. Two weeks later, Dow Chemical (DOW) announced
57 percent in 2016, and may increase to 65 percent by that an agriculture fund backed by the Chinese
2025 and 80 percent by 2050. With China’s population government would pay US$1.1 billion for its Brazilian
approaching its peak, grain consumption is expected corn seed and research business. Longping High-Tech
to decrease starting in 2018. According to consumption Agriculture Co, an agricultural firm controlled by China
patterns of grain in China, direct grain consumption conglomerate CITIC Group Corp, sees Brazil expanding
accounts for only 30 percent, the remainder of which corn output up to 5 percent per year in coming years
is found in processed grain products for food and feed. and is investing heavily to grab a third of the country’s
Thus, the general consumption of food products has corn seed market. The company said it will start building
been stable for the past three years. In contrast, the new seed plants in Brazil in 2019 to increase production
total production of meat, milk, and beer has gone down capacity beyond its current four installations. The plan
to 4, 6 and 7 percent, respectively from 2014 to 2016. is to boost its share in a market worth US$4.02 billion
This suggests that total food consumption in China has from 15 percent currently to 30 percent in five years.
reached or is approaching a maximum. These results The firm said a natural second step will be to enter the
158
