Making food security a top priority

Updated: 2016-03-22 10:46

By Karl Wilson in Sydney(China Daily)

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"That policy has played a key role in increasing China's agricultural production for 11 successive years," he said in a recent commentary.

"But things have changed in the global agricultural market. As prices of agricultural products overseas have remained low for quite a long time, prices in the domestic market have been falling too.

"Even though the government still buys grains at protective prices, which are higher than market prices, enterprises that need farm products have been eyeing overseas markets to fulfill their requirements."

Wei said the government needs to adjust its policies to ensure food security. One way of doing this is for Chinese agricultural enterprises to go global.

"Some Chinese agricultural enterprises have the technology and funds to operate farms overseas, and the government should encourage them to do so, for the time has come for China to coordinate global resources to ensure its food security," he said.

One country which has figured high on China's priority list when it comes to agriculture is Australia, said KPMG's Ferguson.

Australian supply

In February, the Australian Treasurer Scott Morrison gave his approval for Chinese billionaire Lu Xianfeng's Moon Lake Investments to buy Van Diemen's Land Company (VDL) — Australia's largest dairy farm — for A$280 million ($210 million).

The company comprises more than 25 dairy farms and covers 17,800 hectares.

But some of the nation's top business and political leaders have warned the purchase could weaken the local market, with the farm's supply instead used to meet the huge demand for baby formula in China.

In recent months, Australian supermarket shelves have been stripped of baby formula, dubbed "white gold" in China, as millions of tins have been shipped there at a much higher price. Milk is an essential ingredient of formula.

Morrison has defended the sale, saying it met the "national interest" test.

"Moon Lake has advised that it intends to continue to supply the milk produced at VDL under the same contractual terms that are currently in place," he said in a statement.

"This provides assurance that there will not be an impact on the supply of milk and milk products in Australia."

Hans Hendrischke, professor of Chinese business and management at the University of Sydney Business School, echoed the view that food quality and safety have become major issues in China.

"China does have a problem with food processing and the government is addressing the issue," he said. "But the issue is complex and the food-processing industry is competitive and fragmented."

The sector has lost the public trust, he added.

"Chinese investors are looking for a supply chain people will be happy with. Australia is one such country.

"They are buying big farms, not small holdings. They are looking at food processing and extending supply chains."

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