CHINA'S INSATIABLE APPETITE FOR CHANGE - DuPont

20 Pages·2013·7.77 MB·English

IN PARTNERSHIP WITH:
CHINA’S
INSATIABLE
APPETITE FOR
CHANGE
AN OVERVIEW OF THE COUNTRY’S EVOLVING FOOD SECURITY STRATEGY
Table of Contents

Introduction PAGE 1
China’s 5 Challenges PAGE 4
China’s Guiding Principles PAGE 7
Collaborative Solutions PAGE 9
Conclusion: A Call to Action PAGE 16
End Notes PAGE 18
PROUD TO SPONSOR THE
This white paper was created by Fortune Industry
Perspectives and DuPont. It is the first of a series
showcasing sustainable development thought
leadership, which will help inform the discussions
at the 2013 Fortune Global Forum, June 6–8, 2013, in Chengdu, China.
For more information on sustainable development in China, please visit
www.cnnmoney.com/sponsoredinsights/dupont
Feeding its
burgeoning
population is one
of China’s top
priorities.
Introduction
IT WASN’T SO long ago that parents in encourage food production, and a willingness
Western nations reminded recalcitrant to embrace cutting-edge scientific advances.
children that “people were starving in Aware that its own know-how was limited,
China.” This admonition to reluctant China has welcomed science-driven compa-
eaters was based on harsh realities. For nies like DuPont for food security expertise
much of its history—and as recently as the that has helped transform it into a showcase
1970s—China was the setting for recur- of agricultural production and improved
rent famine and starvation. But in a little nutrition.
more than a generation, the country has “We believe that in a time of development,
transformed itself into a model for a world especially when China is now in a transitional
increasingly concerned about feeding an phase, R&D and innovation will lead China
exploding population. China’s journey from a from its current economic structure to where
state of persistent hunger to a net exporter its 12th Five-Year Plan wants it to be,” says
of food is a success story that offers impor- Tony Su, President of DuPont Greater China.
tant lessons for the rest of the world.
China’s transformation is the result of
long-term planning, consistent policies to 1
“And science and technological R&D for sus- Holding Company Limited in Shenzhen in
tainable solutions is the only way to go.” 1988, it has forged 50 wholly-owned subsid-
The Asian nation’s success has reper- iaries and joint ventures to serve the domes-
cussions far beyond its own borders. With tic marketplace in these same three areas,
nearly one in five of the world’s population, among many other business sectors. Among
China’s demand for food affects an intercon- its flagship operations is its R&D center in
nected global economy and a worldwide Shanghai that focuses on product develop-
supply chain. Its purchases of wheat and ment and materials testing. Its interactions
soybeans in the 1990s raised prices around with the Chinese government offer an ideal
the world, and gave a boost to economies as spotlight for the company to demonstrate its
far-flung as Australia and Brazil. Today, its commitment to science, collaboration across
moves toward self-sufficiency and its invest- borders, and the evolution of locally based
ments in farmland abroad are also having an solutions to problems that have international
impact around the globe. repercussions.
DuPont, a 210-year-old company with a This white paper offers a vision of advanc-
history of doing business with China, is a ing food security through scientific coopera-
global player in agriculture, food, and nutri- tion. Its purpose is to promote a discussion of
tion. Since establishing the Du Pont China the critical collaborative role that multination-
als, NGOs, governments, and other organiza-
tions can play in finding solutions in China and
in many other parts of the world where food
security remains a challenge. With productiv-
ity of the human society at unprecedented
levels, providing citizens with enough to eat is
A COVETED RESOURCE not a political option—it is a fundamental hu-
man right. China has demonstrated that this
China’s thirst for water is
is an achievable goal for itself, and for many
steadily on the rise.
other countries that face the same obstacles.
While China’s success so far has been
remarkable, it still has a long way to go to-
ward establishing a sustainable food system
for its people. Though it ranks first in world
WATER USE
agricultural output1, the world’s most popu-
100 MILLION CUBIC METERS lous nation faces a severe shortage of arable
6,000 land—a shortage exacerbated by the effects
TOTAL WATER USE
of climate change and industrialization, as
55,,000000 well as rapid urbanization. At the same time,
as China’s people grow richer and more
4,000 AGRICULTURAL USE urbanized, they are demanding better, safer,
and more nutritious diets.
3,000 The world has much to learn from China
as the country works to reengineer its food
2,000 supply chain—from more efficient farmland
use and better infrastructure to the deploy-
1,000 ment of new bioscience and farm machinery
technologies. China’s challenges are not
0 unique; rather, they are shared by developing
’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10
Source: China National Bureau of Statistics
2
POPULATION LAND USE
BILLIONS MILLIONS OF HECTARES
1.5 130
CULTIVATED AREA -4.6%
ARABLE LAND -7.5%
1.4 104
+4.3%
1.3 78
1.2 52
1.1 26
PERMANENT CROPS +25.2%
0 0
’02 ’07 ’09 ’02 ’07 ’09
Source: AQUASTAT database - Food and Agriculture Organization of the United Nations
(FAO) JULY, 2012.
WHILE CHINA’S economies around the world and, to some strides toward food sustainability over the past
extent, by developed economies as well. 30 years. Now the world’s largest agricultural
POPULATION
While China’s population of 1.3 billion producer, the country has increased produc-
will grow only modestly—to a projected tion of coarse grain by 114% since 1983, meat
OF 1.3 BILLION
1.5 billion by 2050—the global population is by 395%, and milk by more than 1,100%,
WILL GROW expected to swell by nearly 30%, to 9 billion2. according to the Organisation for Economic
China has 19% of the world’s population Co-operation and Development (OECD)5. And
ONLY MODESTLY,
but only 7% of its farmland—an average of China is the first developing country to achieve
THE GLOBAL just 0.23 acres of farmland per person, com- the UN Millennium Development Goal of
WpAaTreEdR w UithS Ethe U.S.’s three acres. A steady reducing by half the number of people living in
POPULATION IS loss of farmland from urbanization, deserti- extreme poverty and hunger.
100 MILLION CUBIC METERS
fication, and flooding may help explain why The government of China, well aware of
EXPECTED TO 6,000
China ThOaTsA Lb WeeAnTE bRu UySinEg up farmland in Africa, the country’s food challenges now and in the
SWELL BY NEARLY 55,,00A00u00stralia, and New Zealand3. Much of that future, is pushing ahead with programs to ad-
lost farmland has been in areas that were dress them, say experts at the International
30%, TO 9 BILLION.
once the country’s most fertile regions4. Food Policy Research Institute (IFPRI). That
4,000 AGRICULTURAL USE
The good news is that, despite its chal- is why current Chinese President Hu Jintao
lenges, China—and all those who play a noted that food security was of vital impor-
3,0ro0l0e in feeding its people—has reason to be tance to the national interest in his keynote
optimistic. The country has made remarkable speech at the Asia-Pacific Economic Coopera-
2,000 tion forum in September 2012. He pledged
support to strengthen the food security sec-
1,000 tor. China’s transition from a country of recur-
ring hunger to a showcase for food security is
a model for global change.
0
DEM’0O0G’R01AP’0H2 IC’0 3TR’0E4N’0D5S’06 ’07 ’08 ’09 ’10
A growSoiunrgce :p Cohpinual aNtaitoionn ails B supreuarur ionf gS tadteismticsand
for land to be used for agriculture.
POPULATION LAND USE
BILLIONS MILLIONS OF HECTARES
1.5 130
CULTIVATED AREA -4.6%
ARABLE LAND -7.5%
1.4 104
+4.3%
1.3 78
1.2 52
1.1 26
PERMANENT CROPS +25.2%
0 0
’02 ’07 ’09 ’02 ’07 ’09
Source: AQUASTAT database - Food and Agriculture Organization of the United Nations
3
(FAO) JULY, 2012.
China’s 5 Challenges
China has five overarching challenges in achieving its long-held goal
of 95% self-sufficiency in basic foodstuffs by 2020.6
1.
FOOD AVAILABILITY AND AFFORDABILITY. incentives for grain production, a practice
“Today, humanity produces enough the government is now moving away from.
food to feed everyone,” Raj Patel wrote in
2.
Foreign Policy in 2011, “but, because of the NUTRITION AND HEALTH. As its population
way we distribute it, there are still a billion grows, China’s goal is not only to boost
hungry.” Poor distribution and the sheer size food production but also to improve nutri-
of global food inventories aren’t the only tional content, increasing the micronutrients
issues, however. Affordability and availabil- and vitamins in staple food products. And as
ity are equally important. High food prices China’s people become more affluent, food
A farmer from cause insecurity on the part of consumers7. habits are changing. Like upwardly mobile
Heilongjang province,
As recently as 2007-08, a global spike in people everywhere, China’s people want
in northwest China,
shows the fruits of food prices fueled instability and unrest in more nutritious, agriculturally intensive foods
his labor. numerous poor countries throughout the like meat, fish, poultry, eggs, and dairy prod-
world, accompanied by hoarding and food ucts, as well as packaged and convenience
trade embargoes. At the same time, low foods compatible with their more urban and
prices can be just as damaging, causing industrial lifestyles. China’s consumption
insecurity for farmers and others involved in of retail food products (as opposed to food
food production and related sectors8. grown and consumed locally) is rising by a
Global food prices are nearly certain to remarkable 11% a year, according to Busi-
rise over the next 15 to 20 years, says the ness Monitor International. Maintaining a
Food and Agriculture Organization of the healthy, balanced diet to improve population
UN (FAO)’s Kostas Stamoulis, and they will wellness for the long term is important.
become more volatile. As a result, China and Nutritional food value is a complex issue.
other nations must prepare for inevitable Poor nutrition concerns rich and poor alike.
price gyrations9. “The classical Chinese diet—rich in vegeta-
One measure of real bles and carbohydrates with minimal animal-
prosperity is the percentage sourced food—no longer exists,” Barry
FEEDING THE MASSES
of household income spent Popkin wrote in Health Affairs in 200810. The
China has made great strides in
on food, and despite all the consumption of meat went from 6% to 27%
lowering the malnutrition rate
progress, China’s citizens of the Chinese diet between 1965 and 2005,
MILLIONS pay a high price for food. In according to the FAO.
250 2006, Chinese households Not surprisingly, obesity is now a growing
spent an average of 39.8% problem in China, with attendant problems
200 of their income on food, vs. like diabetes and heart disease. According to
13.7% in the U.S. The Global the same article in Health Affairs, one in five
150
Food Security Index, devel- Chinese adults is overweight. Diabetes Care re-
oped by the Economist Intel- cently estimated there were 92.4 million people
100
ligence Unit and sponsored in China with diabetes in 201011. In China
by DuPont, shows that China and other developing nations, the diseases of
50
experienced the least volatil- affluence are closely tied to urbanization and in-
0 ity of any country in agricul- creased demand for processed foods with high
PERCENT OF TOTAL POPULATION
tural production over the past fat and sugar and low nutritional content12.
21.4 14.4 13.1 11.6 11.5
20 years, in part because of
‘90-’92 ‘99-’01 ‘04-’06 ‘07-’09 ‘10-’12 its geographic size but also
Source: State of Food Insecurity 2012, FAO because of heavy government 4
3.
MORE THAN More than 94 million Chinese become ill each
94 FOOD SAFETY. Food safety is a domi- year from food-borne bacteria, according to
nant concern in China. Frequent episodes of a 2011 study in the Chinese Journal of Food
contamination have shaken public confi- Hygiene14. Pathogen detection is a press-
dence. A survey in late 2010 reported in The ing need. This has created opportunities for
Lancet found that China’s people consider foreign companies, says Hong Yang, senior
MILLION
food safety their second-greatest risk in researcher at Eawag, a research center near
CHINESE BECOME daily life, after earthquakes. Highly publi- Basel, Switzerland: “People don’t trust local
cized food scandals include melamine in products, especially when they relate to chil-
ILL EACH infant formula, steroid-contaminated meat, dren. Foreign companies and their products
rice containing cadmium, and cooking oil have higher reputations.”
YEAR FROM
recycled from the streets13. Liu Xiumei, a Food safety is in part an infrastructure
FOOD-BORNE researcher in China’s National Center for issue. China has more than 600 million farm-
Food Safety, says the initial safety focus by ers, with an average farm size of less than
BACTERIA.
government was on illegal additives because 0.65 hectares (1.6 acres)15. The diminutive
of the publicity those cases garnered. A size of most Chinese farms means that few
national reporting system set up in 2011 has could survive without government subsidies.
found more common causes of illness. Most are so marginal in economic terms
“From the initial research, we found that that their operators lack the knowledge and
food-borne diseases caused by microorgan- technology to prevent or deal with disease
isms make up about 60% of all reported outbreaks, writes Michael Boddington of
cases,” says Liu. “The problem is more Asian Agribusiness Consulting in Beijing16.
serious than chemical contamination or According to one small-hold farmer recently
contamination caused by animals or plants.” interviewed in China Today, a man named
CHINA: AGRICULTURAL REGIONS & ZONES
4
CORN-
KAOLIANG-
3 SOYBEANS
1
SPRING
WHEAT CORN-KAOLIANG-
WINTER WHEAT
PASTURE MILLET-CORN- 6 = hAeraevaisly m couslttivated
WINTER WHEAT
5
1. Gansu & Xinjiang
2. Qinghai-Tibet
2 SICHUAN 3. Inner Mongolia &
RICE
along the Great Wall
RICE-
TEA 4. Northeast
7 8 5. Loess Plateau
6. Yellow River, Huai River
SOUTH/ & Hai River
WESTERN
RICE DOUBLE-CROP RICE 7. Southwest
9 8. Middle & lower
reaches of
Yangtse River
Sources: Columbia University, Prof. Hu Zizhi & Dr Zhang Degang 9. South
5
is hybrid, the level of their
resistance to disease, pests,
and temperature swings var-
ies. The nation also needs to
improve quality standards in
crop harvesting and storage.
There is an especially critical
need for ingredients that
increase product shelf life by
protecting food against yeast
and mold for longer, as well
as better food packaging
that lowers the risk of food
decay, contamination, and
leakage during transit and
on the store shelf.
5.
A woman carries SUSTAINABLE AGRICUL-
vegetables from a
TURE. While expanding the
village market in
Yunnan province. food supply, China must re-
engineer farming, infrastruc-
ture, storage, and waste
while improving and preserv-
Liu Shili, small-scale farming operations ing farmland and water resources. As part
often contribute to the abuse of agricultural of its alarming loss of arable farmland and
chemicals17. Related challenges include water resources, northern China has been
counterfeiting, use of cut-rate pesticides, hit with historic dust storms and drought
and industrial pollution of land and water. in recent years, and parts of the coastal
Better crop protection and farmer educa- south have suffered unprecedented flooding.
tion will reduce the excessive use of chemi- Adding to China’s agricultural sustainability
cal products and the consequent harmful challenges is its shrinking rural workforce.
residues. DuPont has collaborated with the True, the country has some 600 million farm-
Institute for the Control of Agrochemicals ers18, but their average age is thought to be
(ICAMA) in the Chinese Ministry of Agri- between 50 and 60.
culture to develop crop safety guidelines. In large part that’s because farming in
DuPont has also introduced Coragen, a China remains largely a subsistence activity.
pesticide with far lower toxicity levels. The average farm size is less than two-thirds
of a hectare (1.6 acres), and these small
4.
farms typically consist of a half-dozen tiny,
FOOD WASTE. A recent FAO study scattered fields, with farmers commuting
estimates that food loss and food waste in two to three hours a day to reach them all,
China may amount to one-third of its total says Xiaobo Zhang, senior research fellow at
food production. “Such losses are star- IFPRI, who himself grew up on a collective
tling,” declares Zhang Tianzuo, director of farm. Little wonder, then, that China’s rural
farm produce processing at the Ministry young are turning their backs on farm life in
of Agriculture. China’s food loss is vast in favor of industrial and white-collar work.
part because the country must contend
with high temperatures and humidity,
which increase vulnerability to disease and
spoilage. Although 100% of seed in China 6
China’s Guiding
Principles
These four pillars represent the overarching imperatives necessary
to win China’s pursuit of a sustainable food system.
FOOD SECURITY REQUIRES an integrat- 2.COLLABORATION. Private-sector compa-
ed, holistic approach that includes nies and a broad range of globally and
infrastructure investment, agricul- locally focused NGOs are working in collabo-
tural and economic development, ration to help China achieve food security at
and a host of related factors like increased the national and local levels—NGOs like the
human understanding and interaction. None- International Fund for Agriculture Develop-
theless, science and technology are essential mentment (IFAD), the UN’s Food and Agricul-
parts of that equation. ture Organization (FAO), and the World Bank.
Recognizing the scope of needed change, Together these participants are looking for
China has adopted a principled approach answers that will increase production, reduce
to tackling its food security issue. The goal: waste, fight disease, and deliver nutrition to
to leverage breakthroughs in science and those most in need.
technology and create a sustainable food
3.
system for its growing population. The KNOWLEDGE TRANSFER. Agricultural and
private and public sectors are now work- efficient food production know-how
ing closely together on the Asian nation’s must be brought to people and places that
targeted objectives. Spinning out of laborato- need it. The improved yields that farmers
ries across the country are improvements in need come down to things like choice of
everything from seed strains to fertilizer and seed, fertilizers, and how land is managed.
nutritional food ingredients. But that alone In parts of China, as elsewhere in the world,
FOOD SECURITY
is not enough. The key to success is igniting small-hold farmers are working with the same
CHALLENGES the adoption of new best practices—modern planting methods that have been used for
farming techniques, food testing, and stor- thousands of years, and keep producing and
MAY BE GLOBAL,
age—at the grassroots level. eating food that lacks the micronutrients
From a broad perspective, there are needed for good health. Education, outreach,
BUT THE
four pillars that represent the overarching and knowledge transfer are vital to enhancing
SOLUTIONS HAVE imperatives in China’s pursuit of a sustain- their productivity and viability.
able food system that have been noted in the
TO BE LOCAL. 4.
government’s long-term strategic plan: SUSTAINABLE SOLUTIONS. In China and
elsewhere, solutions have to be sustain-
1.
INNOVATIVE LOCAL SOLUTIONS. Food able in the broadest sense of the word. This
security challenges may be global, but principle encompasses how food is produced,
the solutions have to be local. Food needs to how it gets to market, even how it’s served on
be grown and produced close to where it is people’s plates. The food supply must expand in
most needed. Science can provide universal accordance with social, economic, and ecologi-
answers, but wide variations in environment, cal factors such as infrastructure, storage and
soil and culture, food manufacturing practic- waste, and water quality preservation needs.
es and preferences, and transportation and
distribution call for local solutions. Govern-
ments need to develop policies to catalyze
the adoption of best practices developed by
scientific know-how. 7
The 21st-century food supply must continu- The secret of China’s success in address-
ally expand—in China and elsewhere—but ing its food needs reflects effective long-
the resources to grow and distribute food are term strategies. Investment in science and
finite. We must use them as efficiently as we technology has helped the country make huge
can and apply inclusive scientific innovation. leaps in agricultural production in the past
Sustainability encompasses social, econom- 25 years, and those investments are ongo-
ic, and ecological considerations, such as ing. China plans to spend more than 4 trillion
infrastructure, storage, waste reduction, and yuan ($636 billion) over the decade following
CHINA IS A improving and preserving water quality—all 2012 in seed breeding, livestock production,
of which are essential to achieving food se- and agricultural transportation and stor-
HOTBED OF curity. We face a dilemma of simultaneously age, according to domestic media20. And as
needing to grow food rapidly and to manage attention has shifted to green concerns, R&D
INNOVATION.
depleting resources, says the World Business spending has also focused on irrigation, water
Council for Sustainable Development in a conservation, soil erosion, and desertifica-
2008 report titled “Agricultural Ecosystems: tion, according to a study by Chen for the
Facts & Trends.” British Office of Science21.
In addition, the government fully recognizes
THE CASE FOR OPTIMISM
the importance of partnerships and collabora-
One reason to be optimistic about China’s tion with those who can bring cutting-edge
food security in coming years—and indeed, scientific expertise to bear on China’s food
the world’s—is the remarkable progress that security issues—leading companies, NGOs,
the country has made to date. Contemporary and academics the world over who are eager to
visitors can scarcely imagine the fragility of participate in helping China develop the right
China’s food supply as recently as the 1970s, solutions to challenges that will ultimately be
when food came from collective farms whose shared by other nations, if they are not already.
local officials controlled everything from DuPont China, established in Shenzhen in
crop mix and farming practices to selling 1988, exemplifies the kind of close part-
prices. Systemic inefficiencies left millions nership China has forged with many of the
of Chinese with diets far below the mini- world’s most innovative companies. DuPont
mum 2,100 calories needed by the average operates through some 50 subsidiaries and
adult19. Today it is estimated that just 10% joint ventures in China, focusing on solutions
of China’s population does not get enough in agriculture and nutrition, safety and pro-
to eat. “For a country of that size with the tection, performance materials, and electron-
recent memory of hunger, that is quite an ics and communication technologies. DuPont
achievement,” says Kevin Chen, China pro- works directly with China’s government, its
gram leader for the International Food Policy customers and consumers, including farmers,
Research Institute. and local and global NGOs, as well as other
A second cause for optimism is that companies, providing more than 300 product
China’s government fully recognizes the chal- families in China—from synthetic fibers to
lenges ahead and is pushing forward with agriculture, from food ingredients to electron-
efforts to cooperate on food security, sustain- ics. DuPont views China as a hotbed of in-
able development, agricultural trade, science, novation. Over the years, it has witnessed the
and development with multinationals, NGOs, nation’s determination to address its major
and agricultural experts. This open approach food problems—and to do so in partnership
has opened opportunities for multinationals with the widest possible range of private com-
including DuPont, Unilever, Sumitomo, and panies and others who possess the greatest
many others to establish relationships with expertise and scientific know-how.
Chinese companies and government agencies
to bring advanced technology to China and
adapt it to local conditions. 8