Study On Long-Term Trends In China's Grain Demand

Food, which is the foundation of social stability and economic development, is vital to national well-being and the people's livelihood. Food, energy, financial issues are the three major economic security problems nowadays. In recent years, the world food problem is not optimistic. After the global food crisis in 2008, world food security situation is still grim. China, the world's largest grain producer and consumer country has withstood the test of world food prices soaring, using about 9% of the world's arable land and about 6.5% of the world's freshwater resources in solving the problem of feeding 20% of the world's population, which has made tremendous contributions to global food security as well as world peace and development. However, large population and lack of agricultural resources in basic national conditions determine the long-term and strategic nature in Chinese food problem. According to the long-term development trend, as the population continues growing, urbanization and industrialization advancing, income increasing and lifestyle changing, China's grain consumption growth will show a rigid trend. However, factors of production such as land, labor, capital and technology will transfer from rural to urban. Thus China's grain and food security will face serious challenges. Now China has entered the second half of the mid-industrialization. Accompanied by the accelerated development of industrialization and urbanization, new trends and new factors influencing food demand continue emerging. It is significant to reappraise the long-term trend in China's grain demand under new circumstances, which will help us in time to develop reasonable policies to regulate supplies in grain breed structure, and allocate grain production resources to improve resource efficiency.In this study, we collate and analysis relevant literatures in detail about China's grain demand at home and abroad. Basing theoretical foundation on western economics, consumer behavior and mathematical economics theory, we make deep analysis on impact factors and trends in China's long-term grain demands. Methods such as theoretical analysis and empirical analysis, qualitative analysis and quantitative analysis are used. Through systematic analysis on China's grain consumption in history and current situation, as well as consumption structure and characteristics, we learn from experience of world food consumption, build the GM(1,1) metabolic model, and make simulation and judgments on long-term trends in China's grain demand. As to rice, corn, wheat and soybeans, the four major varieties of grain, we first analysis the consumption features and patterns of each breed, and then build structural models by gripping key factors that affect the consumption demand. Parameters of relevant variable are estimated according to macro and micro variable data of influencing factors in grain consumption over the years 1995 to 2009, and on the basis of the more detailed and reliable food consumption data in tables of grain supply and demand which is provided by food policy group in Development Research Center of State Council. Basing on low scheme, baseline scheme and high scheme, we simulate and analysis the long-term demand trend of four major grain varieties separately for the well-off level by 2020, industrialization and the population peak by 2030, economic and social development reaching moderately developed countries by 2050. We get the following conclusions:China's long-term total population will show an inverted "U"-type, and still be in the net growth in a relatively long period. The accelerated urbanization and industrialization, rising income among urban and rural residents, optimization and upgrading of food will require a higher level of demand.According to GM (1,1) metabolic model and simulation results, China's total demand of grain will be in rigid growth in the long term. Both the number and proportion of rice and wheat demand tend to decline, while that of corn and soybean will increase. Till the mid-21st century, the latter will exceed the former and become the two largest species. With the number and proportion reduction in rations, demand structure of grains will change from the domination of rations into balance among rations, feed demand and industrial use.Income elasticity shows to be different among varieties and vary from urban to rural areas. The elasticities of rice, wheat rations and rural corn rations are negative. In the contrary, those of soybean and urban corn rations are positive. The self-price elasticities of the four major breeds are all negative. Compared with urban situation, absolute values of rice and wheat self-price elasticities of rural residents are larger. Moreover, those of corn and soybean are smaller in both urban and rural areas. Cross elasticity between rice rations and wheat price is positive, thus there exists an alternative relationship between rice and wheat rations. Furthermore, consumer preference is also an important factor of rations. Price ratio of rice to corn is the main factor of rice feed consumption. Corn feed demand is mainly decided by per capita income, meat production and corn price, while the industrial demand is mainly impacted by price and economic development. Demand for seed is estimated through the time-series data.As for the demand structure, we find that both the number and proportion of rice and wheat rations tend to decrease, yet still occupies a predominant proportion. Thus consumption of feed, industrial use and seed maintain a smaller proportion. The proportion of rice feed demand will decline, while industrial use will rise. Contrary to seed consumption in rice and wheat, feed and industrial demands of wheat tend to increase. The number of corn rations will show absolute increase, but reduction in proportion. Feed and industrial demand for corn remained a proportion of over 90%. As the main factor of soybean consumption growth, oil demand will increase rapidly. with rations and seed increasing, soybean consumption structure will be basically stable.Finally, this paper offers some policy proposals from five aspects:strengthen the overall grain production capacity to ensure national rations security; optimize and adjust varieties structure, and guide people to a scientific and rational food consumption pattern; integrate the grain distribution of resources to increase efficiency; make efforts to improve both the international and domestic agricultural resources and markets; actively implement the strategy of using agricultural resources overseas.