What China’s 700 million new middle class means for Ag

Growing Middle Class Changing Dynamics in China
By Marri Carrow
U.S Grains Council

China is a global leader in the production of a number of agricultural products – from rice to pork to milk – while also being the world’s second-largest producer of corn. Yet the country is also the world’s number one importer of soybeans. “While China produces a tremendous quantity of agricultural products to meet the demands of its 1.3 billion people, it also imports a growing number of products to fill production gaps,” said Rebecca Bratter, director of trade development for the U.S. Grains Council. “Of course we recall that China imported 1.4 million metric tons of corn (55.1 million bushels) and 2.4 million tons of distiller’s grains last year and many analysts within the country expect those figures to grow over the next five years.”

Bratter, who spoke at the U.S. Department of Agriculture’s Ag Outlook Forum today, said the growth in feed grains and related products by China can be traced to its economic growth and a growing middle class.

“China’s per capita GDP has averaged 9 to 10 percent growth the last three years and will be close to 10 percent this year,” she said. “Its urban middle class is expanding rapidly, and this increase in buying power is resulting in dietary changes.”

She said China’s per capita income of $5,000 today will soon grow to $10,000 – and continue growing after that.

“Imagine 700 million people in China’s middle class,” Bratter said. “That is what’s coming in the future.”

In just the last five years the country has seen a significant shift in agriculture production. Take the hog sector as an example. In the 2004-05 period, about 35 percent of the hogs in China were in commercial production facilities. By 2010, that figure jumped to 65 percent.

“The switch to a commercial setting greatly increases efficiencies, allowing China to feed more people,” Bratter said. “Yet it also increases the need for quality feed grains for those livestock.”

While the hog industry has seen a dramatic change, the dairy sector’s feed demand has grown 14 percent recently compared to just 2 percent for all other feed sectors.

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