Jason Young: Agribusiness key to help the country feed itself

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Opinion

History tells us that as most large economies develop, a key challenge is finding ways to make agriculture more efficient in order to feed a growing population of city dwellers. China is no exception to this development pattern and has already reached a stage where agricultural development is a prerequisite for sustainable growth.

China's urban centres are already home to well over half a billion people, many of whom are migrant labourers.

This population is set to grow to a billion in the coming decades, requiring a vibrant agricultural sector to meet urban demand for a high quality, safe and secure food supply and to alleviate rural-urban development tensions.

To meet this aim, China has introduced a series of new policies to promote the rapid development of a modern agricultural sector. Unlike the past, when tax cuts were the primary way of helping rural households and encouraging household productivity gains, policies introduced in late 2012 and early 2013 aim to fundamentally restructure the agricultural sector.

Chinese agriculture has traditionally been organised around the household farming model.

This mitigated many of the worst excesses of mass urbanisation, but it had real costs in terms of efficiency. The agricultural sector has not benefited as much as it could from industrialisation, capital formation and technological upgrading in urban areas. In developmental terms, rural China is being left behind.

The new agricultural policies aim to address some of the obstacles to rural development by improving security of land tenure, reforming residency mobility, increasing access to credit and by promoting the development of "large and powerful" commercial agribusinesses and "corporate champions" in rural areas.

In the coming years we can expect to see a powerful combination of preferential policies from the state, experimental development zones, foreign investment and technology transfer and bottom-up entrepreneurialism driving development in the Chinese agricultural sector. Chinese agriculture will become more competitive, but it will need help to get there.

This presents exciting opportunities for New Zealand. This country has a well-developed and highly competitive agricultural sector with leading models of agribusiness organisation, agriscience research and education, and well-developed vertically integrated production, processing and distribution chains. New Zealand companies are already involved in rural China, including Fonterra's dairy farms in Hebei Province and Global Horticulture New Zealand's kiwifruit production and processing operations in Shaanxi Province.

The New Zealand-China story to date has largely been about what we can sell to China. The next chapter will be more about what we can do to help China feed itself.

Investing in rural China: New Zealand agribusiness and the local global nexus

Jason Young is conducting a three-year research project on New Zealand agribusiness investment in rural China, supported by a $345,000 Fast Start Marsden grant from the Royal Society of New Zealand.

His project will explore the interaction of international agribusinesses in China with local development conditions. Though the agricultural sector is increasingly welcoming of foreign investment and joint ventures to promote agricultural best practices, to encourage technology and knowledge transfer and to modernise the agricultural sector, very little is known of how international agribusinesses operate in rural China.

This project will document those practices using New Zealand case studies in Hebei, Shaanxi and Guizhou, and explore the evolution of rural institutions to identify the role of investment in the development of rural China.

Jason Young is a research fellow at the New Zealand Contemporary China Research Centre and lecturer in Political Science and International Relations at Victoria University of Wellington.