China Banks on Potatoes for Food Security

China Banks on Potatoes for Food Security

China Banks on Potatoes for Food Security

Simone_BarokeAnalyst Insight by Simone Baroke – Contributing Analyst

The Chinese Government has decided that its people need to eat more potatoes in order ease pressure on the country’s scarce agricultural resources. It is true that fresh potatoes are performing quite well as the leading starchy root in China, but they face a tough battle ahead in their quest to rival the country’s most popular carbohydrate staples. The government may well succeed in turning the potato into the economical choice, but imbuing it with trendiness is another matter.

Potato production lags behind

In early January, China’s Central Government announced that it was to turn potatoes into the country’s fourth most important staple crop after rice, wheat and corn (maize). By 2020 the area allotted to potato cultivation would be doubled to 10 million hectares (100,000 km2). The government’s motivations for this move are safeguarding the country’s vast food security, relieving environmental pressure and helping to release more of its rural farming population from the clutches of poverty.

 

The announcement followed deliberations at the Central Rural Work Conference a month earlier – an annual event held for Chinese policymakers.  The conference’s salient concluding message was the urgent necessity to modernise agriculture in China in order to boost crop yields in a sustainable way.

Promoting potato cultivation is potentially conducive to this goal, although it spells the reversal of the current trend, which sees other carbohydrate crops taking a clear lead. Our countries and consumers database shows that China’s production of maize, at 229 million tonnes in 2014, exceeded that of potatoes by two-and-a-half times.

Rice output was also more than double that of potatoes, while wheat production was a quarter higher. Furthermore, the data also show that over the past decade (2004-2014), production of maize and wheat shot up by 76% and 34%, respectively, while that of potatoes increased by only 26%.

Running out of land and water

Food security is a longstanding issue in China, and the current situation is that a country with just under 10% of the world’s arable land is having to feed one-fifth of its population. To make matters worse Euromonitor’s countries and consumers data evidences a worrisome trend: China’s arable land area is shrinking. In 2004, the country’s arable land area amounted to 1,122,600km2, while by 2014 it was 1,060,200km2. This constitutes a 6% drop, which is by no means insignificant.

A growing population and on-going environmental problems, including soil erosion, pollution, farmland degradation as well as the increasing use of agricultural land for urban construction are threatening to exacerbate the problem for future generations. Water usage is another major problem – China suffers chronic water shortages, and agriculture is by far the largest consumer of water. According to our countries and consumers data, despite the decline of arable land the land area subjected to irrigation has actually increased over the past decade, from 618,900km2  in 2004 to 707,500km2 in 2014. Potatoes cannot only be cultivated in poorer quality soils and across a wider range of climatic conditions than rice, wheat and maize, but are also much less demanding in terms of water requirements.

Potatoes the most popular starchy root

China is already the world’s biggest market for fresh potatoes. Our latest fresh food data reveals that Chinese 2014 volume sales of 39 million tonnes accounted for 23% of total global consumption.

The data also show that on the whole fresh potatoes are not doing too badly in China. In 2014 they achieved volume gains of almost 6%, double the rate registered by overall starchy roots in the country. Sweet potatoes, the next most “dynamic” type of starchy root, mustered a sluggish 1%. Potatoes’ fairly strident performance in 2014 is representative of that of the entire 2009-2014 review period, during which they managed to outperform all other main starchy root vegetables every year.

Despite the fact that China does not have what can be considered a high per capita consumption level of fresh potatoes – 28.7kg in 2014 compared with a 23.3kg global average – it is already among one of the highest in the Asia Pacific region. For context, India comes fairly close to Chinese consumption levels with its 25.1kg in 2014, but Japan, Malaysia and Indonesia managed just 5.7kg, 4.8kg and 4.0kg, respectively. South Korea and Taiwan stood at 10.1kg and 11.9kg per capita.

Cheap and trendy – is it achievable?

In sync with its announcement to foster potato consumption, the Chinese Government has been expending some efforts into making the brown tuber more enticing for consumers. These include the posting of messages pertaining to the high nutritional value of potatoes on Weibo, the Chinese equivalent of Twitter, the dissemination of recipes, and invitations on social media for consumers to discuss the merits of potatoes as an ingredient in various dishes. The government also envisages that potato flour will be integrated into noodles, steamed breads and dumplings in home-made as well as packaged foods.

If the government really wants Chinese consumers to embrace potatoes, it may have to do slightly more than promulgate recipes. Money talks, so growers will need to be given tangible incentives, e.g. in the form of cheap seed potatoes, while market sellers would probably find some kind of tax relief highly appealing. If measures such as these trickled all the way down to the consumer, making potatoes significantly cheaper the “rival” carbohydrate foods that are currently still favoured, it could quite feasibly motivate families lower down on the socioeconomic ladder to integrate more potatoes into their weekly menu. Economy-priced packaged products, such as the aforementioned breads, noodles and dumplings, may also have a role to play here.

It is questionable, however, whether potatoes will ever come to rival – or even surpass – the reign of rice and wheat, both of which constitute an integral part of the majority of Chinese dishes. For better-off urban consumers not constrained by a tight food budget, making potatoes and potato products trendy rather than cheap is likely to be a more fruitful strategy. This, however, is notoriously difficult to achieve through government-sponsored promotions, no matter how well intentioned.

Potato trendiness is, at least in part, being driven by their on-going proliferation in the foodservice arena. Western fast food is widely regarded as somewhat of a status meal option in China, and our consumer foodservice data show that burger fast food value sales in China doubled over 2008-2013. Having said that, the ever more enthusiastic consumption of fatty fries by an increasingly sedentary, obesity-prone urban population may not quite be what the Chinese Government had in mind when it decided on its potato-pushing policy.

 

This article has previously been published in Euromonitor website

 

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