Empowering the globe: The global influence of China’s agricultural industry chain

In today’s world, agriculture is much more than just the basic means for human survival, it is a vital driver of global economic stability and progress. The global agricultural industry chain, from seed research and development, cultivation, harvesting, processing, distribution to final consumption, is an intricate network. This network is not only crucial for the food security of billions of people, it is also an integral part of international trade. With a growing global population and economy, there is rising demand for food and agricultural products, highlighting the urgency to refine and advance the agricultural industry chain.

The backdrop of the agricultural industry chain is multifaceted, encompassing the sustainable utilization of natural resources, the influence of advances in biotechnology, the obstacles created by climate change, and the effects of international trade regulations. Considering this context, the significance of the agricultural industry chain is clear. It has implications for not only food security, but also environmental sustainability and global economic balance. Modernization and digitalization technologies, such as precision farming, smart irrigation systems, and biotechnology breeding, are revolutionizing the landscape of agriculture by facilitating a transformation in traditional agricultural production practices through improving efficiency, reducing waste and protecting the ecological environment.

China plays a pivotal role on the global agricultural stage. With a rich agricultural history and an abundance of resources, the country’s advancements in agricultural technology, efforts to boost production efficiency, and commitment to sustainability have far-reaching effects on the international agricultural industry.

China’s role in the global agricultural industry chain

China plays a multifaceted role in ensuring global food security, contributing to ensuring domestic food security, taking part in international food trade, driving innovation in agricultural technology and fostering international cooperation.

China has steadily enhanced its food production capacity by continuously improving agricultural technology and modern agricultural practices. The government’s focus on food security is reflected by various policy measures, including the preservation of farmland, promotion of high-yield crop varieties, and advancements in agricultural mechanization. These initiatives have ensured the stability of grain production. From 2008 to 2021, China’s total grain output surged from 534 million tons to 683 million tons with an average annual growth rate of 1.90%, surpassing the international average and creating a solid supply foundation for the global grain market.

China’s agricultural products demonstrate significant price competitiveness in the global market due to relatively lower labor costs, allowing them to enter the market at lower prices, influencing global agricultural product price levels. For example, Chinese apples and citrus fruits, owing to their price advantage, have gained international popularity, therefore, improving consumer choices but exerting price pressures on similar products from other countries.

Furthermore, China’s diverse agricultural exports have enriched global consumer choices. Unique agricultural products from China, such as tea, traditional Chinese medicinal herbs and specialty fruits, introduce new flavors and healthy options to the international market. These products cater to specific market needs and have increased global agricultural diversity.

China’s imports of agricultural products also play a crucial role in the global market. The rapid development of the Chinese economy and improvement to people’s living standards have led to rising demand for high-quality agricultural products, which not only drive China’s import of agricultural products but also stimulates global agricultural production and trade. For example, China’s grain imports have seen a rapid increase over the past decade, growing from 41.31 million tons in 2008 to 164.54 million tons in 2021, marking an annual growth rate of 11.22%. This significant increase not only highlights China’s dependence on the global grain market, but it also generates substantial demand, fostering prosperity in international grain trade.

In recent years, the Chinese government has implemented numerous policies aimed at improving agricultural efficiency, safeguarding food security and promoting agricultural sustainability. These measures include providing subsidies, refining agricultural tax strategies and improving rural financial services. The government aims to stimulate agricultural production and boost agricultural output through these initiatives. These policies not only stabilize the domestic grain market, but they also have a positive impact on worldwide grain supplies. For instance, China has implemented a minimum purchase price policy for major grain crops, such as rice and wheat. This policy aims to secure farmers’ income and encourage grain production, helping to stabilize international grain prices, and to some extent, mitigate severe price fluctuations.

In terms of international cooperation, China actively participates in global food security governance through mechanisms such as South-South cooperation. By sharing its agricultural development experience, China helps other developing countries enhance their agricultural production capacity. These efforts not only boost global food security but also showcase the fact that China is a responsible major power.

China vs. other countries in agricultural industry chain

China

In the upstream of the agricultural industry where seeds, fertilizers and pesticides play a crucial role, China has made outstanding progress, especially in seed research and development. The country’s breakthrough work on hybrid rice and genetically modified crops has positioned it as a global leader in these areas. This achievement is attributed to China’s robust capacity for independent innovation, which drives its domestic agricultural production efficiency.

China’s fertilizer industry is well established and more than capable of catering to immense local agricultural demand. Additionally, it exports to the global market, ensuring a consistent supply of fertilizers. Despite these developments in the seed and fertilizer sectors, China still relies on imported high-end seed technologies. Moreover, the issue of overcapacity and environmental pollution within the fertilizer industry requires attention.

In terms of the production of pesticides, China has considerable capacity. However, there is room for improvement in environmental and safety standards when compared to globally advanced levels.

To resolve these challenges, China has implemented a range of measures. In the area of agricultural production, China is realizing large-scale and intensive agriculture through large-scale land circulation and agricultural mechanization. The deployment of cutting-edge technologies, such as precision farming and smart irrigation systems, has substantially boosted agricultural production efficiency.

In terms of agricultural processing and market distribution, China boasts a well-established agricultural processing system, leading to higher value-added products. With a sophisticated agricultural logistics system, China’s agricultural products can swiftly reach various regions around the nation and even international markets, not only improving the competitiveness of agricultural products, but also fostering the healthy development of the agricultural industry chain.

Overall, while China has achieved significant accomplishments in key areas in the upstream of the agricultural industry chain, it still faces hurdles such as dependency on imported high-end seed technologies, overcapacity in fertilizer production, escalating environmental pollution, and the need for improved pesticide safety standards. To achieve agricultural sustainability, China is implementing a range of measures, including promoting agricultural modernization, improving mechanization levels, strengthening the enforcement of environmental regulations, and implementing subsidy policies, to transform agricultural production methods for greater efficiency and sustainability.

India

For India, progress in seed research and development is evident but falls short of international standards, especially in terms of the creation of high-yield, disease-resistant and drought-resistant varieties.

Despite starting late, India’s journey in agricultural chemical usage has witnessed rapid progress. Indian companies are making strides in the production of agrochemicals, most notably in the research and development of bio-pesticides and bio-fertilizers. Although they have a certain production capacity, there is still a wide gap compared to advanced international levels in terms of developing eco-friendly pesticides and bio-pesticides. The Indian government has introduced various incentives, such as tax benefits and research and development subsidies, to encourage companies to innovate and invest further in the agricultural industry.

India’s agricultural landscape is primarily dominated by small-scale farmers with relatively low levels of mechanization, resulting in lower agricultural production efficiency. The government's push for modernized agriculture is hindered by capital and technological constraints. Additionally, the country’s agricultural processing capacity is limited, restricting value addition to products, and its underdeveloped logistics system further complicates the circulation and sale of agricultural products.

Taking the cotton industry as an example, China is one of the world’s largest cotton producers, and its cotton industry benefits from advanced seed technology and the rational use of fertilizers and pesticides, ensuring both yield and quality. Although India is also a major cotton producer, there is a certain gap compared to China in terms of seed improvement and the use of fertilizers and pesticides, which directly affects the yield and quality of Indian cotton.

There is still a considerable gap between India and China in the chemical field of the agricultural industry chain. To enhance the overall level of the agricultural industry chain, India must further invest in seed research and development, fertilizer and pesticide production, agricultural product processing, and logistics systems. With the Indian government focusing on agricultural modernization and increased international cooperation, India is expected to narrow the gap with the rest of the world and achieve sustainable development in its agricultural industry chain in the future.

Vietnam

Vietnam’s journey in seed research and development began later than other countries, resulting in a strong dependence on imported seeds. Furthermore, the country’s fertilizer industry lags with a limited domestic production capacity and heavily relies on fertilizer imports. While Vietnam has some capacity to produce pesticides, there is a notable disparity in range of products and their quality compared with international standards. The country’s ability to process agricultural products is somewhat lacking, limiting the value that can be added to these products. The logistics system in Vietnam is still evolving, which creates certain challenges for the distribution and sale of agricultural products.

Taking rice as an example, China has enhanced its domestic food self-sufficiency and contributed to global food security by developing hybrid rice technology and exporting hybrid rice seeds. Although Vietnam is also a major rice producer, there is a significant gap in terms of seed technology and agricultural production efficiency when compared to China.

For instance, Chinese agricultural processing giants, such as COFCO and New Hope Group, have established comprehensive industry chains spanning from cultivation, processing to sales. Conversely, agricultural processing enterprises in Vietnam are typically smaller with less comprehensive industry chains.

In summary, Vietnam faces disparities across all aspects of its agricultural industry chain, especially in seed research and development, agricultural production technology, agricultural product processing and logistics systems. The Vietnamese government is actively working to bridge these gaps by encouraging foreign investment and promoting agricultural modernization. Through increased economic openness and bilateral cooperation, Vietnam is looking forward to learning from China's experience and facilitating the development of its agricultural industry chain.

The US

The US is a global leader in seed research, especially in the field of genetically-modified seed technology. Companies, such as Monsanto (now Bayer) and Corteva, boast robust research and development capacities along with significant market shares. The American fertilizer industry is also mature, capable of catering to both domestic demand and exporting in significant quantities.

In terms of agricultural production, the US primarily focuses on large-scale farms, achieving high levels of mechanization and automation. The country demonstrates high agricultural production efficiency with substantial yields per unit area. The use of precision farming technologies, such as GPS navigation, drone surveillance and smart irrigation systems, greatly enhance the efficiency and sustainability of agricultural production. The country also possesses a mature agricultural processing system and a globally leading logistics network. American agricultural processing companies can transform primary agricultural products into high value-added foods and industrial raw materials, such as corn to ethanol fuel and soybeans to edible oil and feed.

For example, the US is a major global producer and exporter of soybeans, resulting from its efficient production methods and strong processing capabilities. Although China also produces soybeans, its high domestic demand necessitates a continuous rise in soybean imports, especially in recent years, primarily from countries like the US.

In the US, the pork industry maintains high product quality and a competitive edge in the market, through large-scale farming and stringent disease control measures. On the other hand, China’s pork industry is struggling to rebuild and modernize in the aftermath of the African swine fever outbreak.

Overall, the US exhibits a high level of development in the upstream and downstream sectors of its agricultural industry chain. However, it also faces challenges such as the effects of climate change on agricultural production, a shortage of agricultural labor, and fluctuations in agricultural product markets. While China has made significant advances in developing its agricultural industry chain, it still lags the US in certain areas, such as seed technology, agricultural production efficiency, agricultural product processing and logistics systems. As China continues to modernize its agriculture, the rivalry and collaboration between these two nations in the agricultural industry chain are expected to intensify in the future.

The EU

The European Union (EU) plays a leading role in seed research, specifically in the areas of organic and non-genetically modified seeds. With the most advanced technologies and stringent regulations, the EU has adopted a conservative stance on genetically-modified crops, prioritizing biodiversity and ecological balance.

In terms of agricultural production, the EU is mainly made up of family-run farms and focuses on sustainability and ecological balance. With policies promoting organic and precision farming, the EU offers subsidies and technological aid to assist farmers in improving their production efficiency in an environmentally-friendly manner. The EU also boasts a refined agricultural processing system and enforces strict food safety standards, resulting in EU agricultural products being internationally acclaimed for their superior quality and safety, which are mainly due to stringent quality control and traceability systems.

For instance, EU dairy products are globally recognized for their high production standards and excellent quality. Under the Common Agricultural Policy (CAP), EU dairy farmers receive subsidies that allow them to maintain production while adhering to strict animal welfare and environmental standards. While China’s dairy industry has seen improvements in quality control and brand development, it still falls short when compared to the EU.

The EU’s organic agriculture sector has undergone rapid advancement, with organic products fetching higher prices and gaining consumer trust in the local market. China is also advancing its organic agriculture, but there is a notable discrepancy in certification systems, market supervision and consumer awareness compared to the EU.

Overall, the EU has achieved sustainability and social responsibility in upstream seed research, fertilizer and pesticide use, midstream agricultural production technologies, and downstream agricultural product processing and marketing of the agricultural industry chain. Although China has made significant strides in agricultural modernization and industrialization, it still lags the EU in areas such as environmental preservation, food safety and sustainable development. With continuous adjustments to China’s agricultural policies and deepening international cooperation, it is poised to make further progress in advancing its agricultural industry chain.

Environmental and resource challenges affecting China’s agricultural industry chain

The principal challenge affecting China’s agricultural industry is its limited resources. With a growing population and fast-paced urbanization, the availability of land for agriculture and water shortages have become significant issues. Statistics indicate that China’s per capita water resources only amount to a quarter of the global average, with severe imbalances in distribution. For example, an acute water shortage in northern China led to a steady decline in groundwater levels, indirectly affecting the stability of agricultural production.

Global climate change also presents substantial hurdles to China’s agricultural production. The increasing frequency of extreme weather conditions, such as droughts, floods and heat waves, not only affect the growth cycles of crops but could also result in considerable yield fluctuations. In 2019, severe flooding in several southern regions of China led to widespread crop damage, causing major losses for farmers.

The excessive use of fertilizers and pesticides in agricultural production leads to soil and water pollution, posing threats to food safety and damaging the environment. For example, the significant non-point source pollution from agriculture in the Yangtze River Basin has disrupted its ecological balance and affects the safety of drinking water for riverside residents.

With consumers becoming increasingly concerned about food safety, there is a pressing need to improve regulations and quality control in agricultural production. The African swine fever outbreak in 2018 drastically affected the pork market, exposing vulnerabilities in the country’s agricultural production and regulatory systems.

Moreover, China’s agricultural products face competition from both developed and developing countries in the international market. Trade barriers and protectionist policies further impede the exportation of Chinese agricultural products.

The development potential of China’s agricultural industry chain

China’s agricultural industry has considerable growth potential, supported by its vast domestic consumer base. As incomes rise and spending patterns evolve, the demand for top-quality agricultural goods is on the upswing, providing expansive market space for the agricultural industry chain. For instance, the rise in health awareness has accelerated the demand for organic and environmentally-friendly food, which in turn drives the development of related sectors. Furthermore, the accelerated urbanization process and the implementation of new urbanization and rural revitalization strategies will further promote the expansion of the agricultural industry chain. The shift towards diversity, branding and sustainability in agricultural products creates new opportunities for the industry’s growth.

China’s agricultural industry is transitioning from traditional farming to more modern methods. Key to this transformation is technological innovation, which improves industry standards. For example, the advent of smart farming technologies, such as the Internet of Things, big data and artificial intelligence, brings precision and automation in agricultural production, therefore, improving efficiency and product quality. In addition, the extensive processing of agricultural products and the rise of agritourism, which are value-adding components of the industry, create new paths for industry advancement. A case in point is Jiangsu province, where agricultural specialty product processing not only increases the value of local products but also boosts employment and raises farmers’ incomes.

The Chinese government focuses on the sustainable development of agriculture, as proven by the adoption of various policies to support the development of green and ecological agriculture. These measures not only safeguard agricultural resources and the environment, but they also enhance the marketability of agricultural goods. Through promoting organic and circular agriculture, among other methods, China’s agricultural industry is predicted to experience eco-friendly growth. For example, the development of ecological tea gardens in Yunnan Province not only protects the local ecosystem, but it also increases the quality and value of tea.

China’s agricultural industry chain can improve its technological level and production efficiency by cooperating with leading agricultural countries, to introduce advanced agricultural technology and management experience. At the same time, China can also export its agricultural technological achievements to other countries, facilitating a two-way technology flow.  An example of this is China’s collaboration with Israel on water conservation irrigation technology, which has not only improved China’s water resource utilization efficiency but also created new market avenues for Israeli companies.

China's agricultural industry chain can better utilize international market resources and achieve diversified exports of agricultural products. Collaborations with countries rich in resources could allow China to import high-quality seeds and agricultural products while exporting its own agricultural output, creating a mutually beneficial dynamic. The cooperation between China and Brazil in the soybean trade is a typical example, where Chinese demand for soybeans drives the trade between the two countries.

In international trade and investment, China's agricultural industry chain can work with other countries to promote policy coordination and seek more policy benefits. For example, by participating in international agricultural organizations and multi-lateral trade agreements, China can negotiate preferential trade conditions, creating a favorable external environment for the growth of its agricultural industry chain. After China joined the World Trade Organization (WTO), the liberalization and facilitation of its trade in agricultural products created new opportunities for the internationalization of the country’s agricultural industry chain.

With shared global challenges, such as climate change and food security, China’s agricultural industry chain can partner with the international community to research and devise sustainable solutions. For instance, China’s collaboration with African nations on agricultural technology transfer and training not only improves the agricultural productivity of African countries, but it also opens new markets for Chinese agricultural companies.

Conclusion and suggestions

In the global agricultural industry chain, the importance and development potential of China are becoming increasingly prominent. As one of the world’s largest agricultural producers, China plays a crucial role in ensuring domestic food security and has a significant position in international food trade. The modernization and intelligentization of China’s agriculture, such as the use of precision farming, smart irrigation systems and biotechnological breeding, are leading the transformation and advancement of the agricultural industry. These efforts not only help improve production efficiency and reduce resource waste, they also offer valuable insights for the sustainable development of global agriculture.

Facing challenges such as resource constraints, climate change, environmental pollution, food safety and international competition, China’s agricultural industry chain is exhibiting remarkable adaptability and innovation. Through precision farming technology, intelligent agricultural machinery, the application of biotechnology in seed research and development, and the promotion of circular economy models in agriculture, Chinese agriculture is advancing towards modernization, intelligentization and green development. The application of these technological innovations not only safeguard national food security, but it also utilizes Chinese wisdom and solutions for global agricultural development.

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