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INSTITUTE FOR AGRICULTURE AND TRADE POLICY
Feeding
China’s Pigs
Implications for the Environment, China’s
Smallholder Farmers and Food Security
By Mindi Schneider
Institute for Agriculture and Trade Policy
May 2011
Feeding China’s Pigs: Implications for the Environment, China’s Smallholder Farmers and Food Security
By Mindi Schneider
Institute for Agriculture and Trade Policy
All photographs taken by Mindi Schneider in China from 2009–2010.
Mindi Schneider is a Ph.D. Candidate in Development Sociology at Cornell University. She currently lives in Beijing, where she is
writing her dissertation on contemporary agrarian change in China with a focus on the pig industry.
Note on sources: Some of the information included in this report comes from interviews and investigations Ms. Schneider
conducted during her field research, and reports and documents given to her in confidence. In order to maintain confidentiality,
informants are not identified by name or work unit.
The author wishes to acknowledge two external reviewers, Mia MacDonald and Dr. Daryll Ray. Jim Harkness provided editorial
input for this report.
Ms. Schneider’s field research was supported by a Fulbright-Hays Doctoral Dissertation Research Abroad Fellowship and a
Jeffrey Sean Lehman Grant for Scholarly Exchange with China though Cornell University.
Published May 2011
© 2011 IATP and Mindi Schneider. All rights reserved.
The Institute for Agriculture and Trade Policy works locally and globally
at the intersection of policy and practice to ensure fair and sustainable food, farm and trade systems.
More at iatp.org
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 3
Executive Summary
Starting in 1979, pork became the most produced and consumed meat in the world. The reason for its ascent to the top of the global
meat heap is simple: China. In 2010 alone, farmers and companies in China produced more than 50 million metric tons of pork, virtu-
ally all of which was sold and consumed domestically. This Chinese pork boom, which today accounts for half of all the pork in the
world, is the result of a set of policies and trade agreements t hat liberalized and industrialized Chinese agriculture and enabled enor-
mous production increases.
In the quest to feed 21 percent of the world’s population on nine percent of its arable land, Chinese central authorities priori-
tize ensuring a steady supply of low-priced pork as an important component of food security (China maintains a strategic pork
reserve, the only one of its kind in the world). In the more than 30 years since Deng Xiaoping introduced the first major set of
reforms to liberalize China’s economy in 1978, policies and investments have worked together to shape and implement a model
of agricultural development that privileges industrial agriculture and increased meat production and consumption. While some
of these measures have played a role in decreasing the number of hungry in the country, the crises of industrial agriculture are
emerging, with serious implications for the environment, public health, smallholder farmers, and questions of food securit y. This
paper focuses on t he pork sec tor in particu lar—includi ng t he feeding of swine—as it relates to these pressing issues and chal lenges.
Long before “Reform and Opening,” pork was critically important in Chinese agriculture and diets. Pigs were domesticated in
China some 10,000 years ago, and for millennia, virtually every rural household in China raised at least one or two pigs each year.
Smallholders defined the structure of pig raising in China all the way up until the early 1980s, when industrial forms began to
emerge. Today, smallholder farmers struggle to survive in the new market agro-economy, while specialized household producers
and large-scale commercial operations are actively supported by policy and investment. A small number of vertically integrated,
and predominantly domestic, agribusiness firms are claiming an ever-increasing share of pork production, processing and
marketing. Changes in swine feeding and China’s feedstuffs imports are at the heart of this shift. The industrialization of pig
farming in China has taken place in concert with the development of a multi-billion dollar (USD) feed industry.
Soybean imports are keeping the swine industry in China afloat. In order to overcome the limitations of domestic production
for feeding millions of pigs, authorities enacted a series of measures to liberalize China’s soy trade, including those required by
World Trade Organization (WTO) accession protocols, starting in the early 1990s. Imports quickly overtook both soy exports
and domestic production, and today, China is the world’s leading soybean importer. In 2010, more than 50 million metric tons
of soybeans came into China, mostly from the United States and Brazil. These imported beans accounted for 73 percent of soy
consumption in China, and were used exclusively in the product ion of soybean meal for livestock feed and soy oil for cooking (meal
and oil are coproducts in the soy crushing process). In stark contrast to the pork industry, which a handful of domestic companies
dominate, transnational agribusiness firms including Archer Daniels Midland, Bunge, Cargill, Louis Dreyfus (together, ABCD)
and Wilmar own about 70 percent of the soybean crushing industry in China. In recent years, China has enacted measures to cool
the domina nce of foreign fi rms in support of domestic operations. Whether or not these moves will be effective remains to be seen.
Soy is particularly important in commercial pig feed mixes, but for smallholder and specialized household farmers, corn is the
most used feedstuff. Corn is protected as a “strategic crop for food sec urity,” primari ly because of its role as a staple food for human
consumption. Recently, however, corn is also being used in the manufacture of industrial products, and increasingly in commer-
cial livestock feed. In 2010, China was a net corn importer for the first time since 1995. The buyers, a state-owned conglomerate
and a private agribusiness firm, used the corn to produce feed. Authorities claim that 2010 was an anomaly, but 2011 looks to be
another record corn import year for the Middle Kingdom.
The consequences of these changes in pig production and pig feeding have wide-ranging impacts. In terms of environmental degra-
dation, agriculture in general—and livestock farming in particular—are the most important sources of pollution in China. Livestock
farms produce more than 4 billion tons of manure annually, much of which contributes to nutrient overload in waterways and subse-
quent eutrophicat ion and dead zones. Globally, as more and more land is converted to i nte nsive monoc rop production of soybeans and
corn (and others in a nar row range of industria l feed crops), pes ticide and ferti lizers pollute wat erways, biodiversit y declines, natura l
carbon sinks are destroyed, and greenhouse gases are emitted in all stages of intensive feed production and transport.
Industrial pig feeding also carries a range public health concerns. China is becoming increasingly infamous as a site of food safety
scandals, most of which stem from feed additives such as hormones and growth regulators ending up in meat and livestock prod-
ucts. On top of this, the prophylactic administration of antibiotics in confined animal feeding operations (CAFOs) has resulted
4 INSTITUTE FOR AGRICULTURE AND TRADE P OLICY
in antibiotic-resistant and disease-causing organisms emerging in China, just as in the United States and Europe. Other threats to
public health include the emergence of so-called diet-related diseases of affluence, including Type 2 diabetes, coronary heart disease,
obesity and a range of cancers. At the same time, the current model of agricultural development has failed to close the gap in dietary
and income inequalities that continue to plague China, especially in t he form of differences between rural and urban populations.
Beyond environmental and health impacts, increased liberalization of agriculture is taking a toll on China’s rural population.
Smallholder farmers struggle to access markets, meet new market standards, cover costs of production and maintain an adequate
farm labor force. In the context of mass urban migration, many young, and especially male, rural residents are flooding China’s
cities as migrant workers, leaving the elderly, women and children to tend their households and farms alone.
For its people, environment and penchant for self-sufficiency, a reassessment of the actual impacts of industrial pork production
and pig feeding on China’s population and environment is needed. Redirecting research and subsidies from industrial systems to
locally embedded syste ms, while maintai ning food reserves, are steps in t he right direction toward ser ving national food security,
development and environmental needs.
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 5
I. Introduction
In 1978, Deng Xiaoping introduced a program of economic
reforms in China that began to move the country in the direc-
tion of becoming a market economy. The following year, pork
started on the path to global domination as the world’s most
produced and consumed meat. These two trajectories are
intimately lin ked. While pork had been a key source of protein
in China for thousands of years, it was only in the context of
de-collectivizating the countryside, liberalizing agricultural
markets, and adopting industrial production technologies
and ideologies that China’s pork sector began to shift global
statistics. Today, 30 years after Deng’s market reforms began,
pigs—and what pigs are eating—in China have become big
news and big business. The world, it seems, is watching.
The numbers that accompany the assent of China’s pork
industry are impressive. In 2010, farmers and companies in
China produced 50 m illion metric tons of pork from a domest ic
swineherd of 660 million head. This is twice the amount of
pork produced in all 27 EU countries combined, five times
the amount in the United States and almost half of the global
total of 101.5 million metric tons. On the chopstick side of this
food system sector, domestic consumption matches domestic
production: In 2010, people in China ate 50 million metric
tons of pork at an average rate of 37.1 kg per person1. Presently,
pork imports and exports are negligible, and consist largely
of trade in select body parts and products. Chinese importers,
for instance, buy offal (organ meat) from foreign companies,
and Chinese exporters sell cooked pork products to foreign
traders.
China’s high level of pork self-sufficiency is a point of national
pride and politica l significance. When Le ster Brown published
the book Who Will Feed China? in 1995, for example, he was
met with a resounding response from China’s research and
political institutions that, “We will feed ourselves!” Since
at least the 1980s, food security through self-sufficiency
had been a key concern of the central government, with the
legacies of famine and isolation from the not-so-distant past
serving as powerful motivations. Through a combination of
food reserves, price guarantees, rural credit, input subsidies,
support for agricultural research and extension, and political
incentives, China has been successful in large measure in
achieving food self-sufficiency, improving agricultural
production, and raising living standards. But when live-
stock are involved, particularly livestock raised in confined/
concentrated animal feeding operations (CAFOs), sources of
feed must be included in the calculus of self-sufficiency. In
China, the stories of the pig industry and the feed industry
are interdependent, and include farmers in North and South
America, farmers throughout China, agricultural imports,
foreign investment, and both domestic and transnational
agribusiness firms.
This report considers some of the implications of the indus-
trialization and liberalization of pig and feed production in
China. It ex pands the questions of “ Who will feed Chi na?” and
“Who will feed China’s pigs?”3 to questions of how will China
feed its pigs, who will decide, and what will these choices
mean for the environment, Chinese diets and food security,
and domestic small-scale farmers? Answering these ques-
tions involves first understanding the structure and politics
of pig and feed production in China today, and how these two
industries are emerging together and contributing to similar
challenges and crises in the food system.
II. From farm to factory:
The structure of pig farming in China
Pork is a central component of Chinese agricultural systems,
food security policy and diets. One reason for
this is the long history of raising swine in the
country. Pigs were domesticated from wild
boars in southern China as early as 10,000
years ago, and more extensively throughout
other parts of the country 6–7,000 years ago.
Millennia of animal husbandry produced a
genetically diverse range of locally adapted
indigenous pig breeds with characteristics
such as high prolificacy (large litters) and
juicy, flavorful pork.4 When the Chinese
Academy of Agricultural Sciences undertook
the first national survey of indigenous live-
stock in 1960, researchers found more than
100 indigenous pig breeds, which ranged
from the extreme northeast of modern
day Heilongjiang Province, to the Tibetan
Plateau, and all the places in between.5
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
Sheep and Goat Meat Poultry MeatPig MeatCattle Meat
Figure 1. World Meat Production by Sector: 1961–2009 (tonnes)
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
1962
1961
Source: FAOSTAT
6 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
This means that for virtually all of China’s agricultural
history, local people raised local pigs and ate them in local
(geographic, cultural, social, dietary) contexts. Dispersed
swine husbandry and consumption was dominant in China
all the way up until the end of the 20th century, when poli-
cies and markets began to change dramatically, and three
distinct scales and forms of pig production emerged.
A. Backyard farms
For thousands of years, small-scale farmers raised all of the
pork in China. As recently as 1985, these so-called backyard
farmers (后院式饲养场) who raise fewer than five pigs per
year, in addition to crops and other livestock on about a half
acre of land, produced at least 95 percent of the country’s pork.
They did so using indigenous pig breeds, locally occurring or
produced feedstuffs, and centuries of accumulated agricultural
knowledge and practice.6 Pigs in these smallholder systems
played key agroecological roles, particularly in the conversion
of weeds, crop residues and kitchen scraps into nutrient-rich
manure t hat would fertili ze crop fields. Mao Zedong wrote t hat,
“The pig is a fertilizer factory on four legs,”7 and a low-input,
low-pollution, low-carbon factory at that. Pigs also provided a
vital source of protein for rural people who raised them largely
for self-consumption.8 Before the 1980s when the government
liberalized agricultural markets, farmers generally produced
two pigs each year: one to slaughter and eat starting at Spring
Festival (Chinese New Year), and one to sell to government
purchasing stations in local areas at prices set by the state.9
Today, smallholder farmers, mostly women and elderly
villagers who remain in the countryside while men migrate
to China’s cities in search of employment, produce pigs for
self-consumption and for markets.10 They raise pigs on a wide
array of self-produced feedstuffs, and sometimes purchase
commercial feed and feed supplements to use at key moments
in the production cycle. They produce both meat pigs and
breeding stoc k, and sell them to loca l butchers or local dealers.
Meat is sold at wet markets—also called “traditional” or “open”
markets where fresh meat and/or animals are sold—either
in villages or in nearby cities. In China, wet markets can be
roadside butcher stands, village markets where animals are
butchered and sold, or fresh meat markets in cities.
Backyard farmers account for about 27
percent of national p ork produc tion (Figure 2),
though the smallholder share is much higher
in some regions of the country. In Sichuan,
the historic heart and current national
leader in pork production, backyard farmers
raise 70 percent of the pigs in the province,
while specialized households account for 25
percent, and large-scale commercial farms
have only 5 percent.11 This in contrast to the
roughly 20 percent share held by backyard
farmers in Guangdong Province, the national
feed industry leader and overall largest livestock (pigs and
chickens) producing province.
B. Large-scale commercial farms
Large-scale commercial farms (大型商业养 殖场) are
increasing in both number and in pork market share in China.
In the wake of Deng Xiaoping’s economic reforms in 1978,
methods of sel ling, eating a nd producing pork began to c hange.
These reforms broke up Mao-era collectives, permitted entre-
preneurs to launch private businesses and allowed foreign
investment to flow into China. Industrial modes of produc-
tion came on the scene, kicking off the trend toward large-
scale commercial pig raising that continues today. Before
1979, “factory farms” that raise thousands of hogs together
in enclosed structures using CAFO technologies were nonex-
istent in China.12 In 1985, these farms accounted for just 2.5
percent of the country’s total pork production, but by 2007,
China and World 2010 Pork Statistics at a G lance2
China 2010 World 2010 China as % of World Total
Pork Production
(1,000 metric tons) 50,000 101,507 49%
Pork Consumption
(1,000 metric tons) 50,050 101,126 49%
Pork Imports
(1,000 metric tons) 350 5,645 6%
Pork Exports
(1,000 metric tons) 250 6,052 4%
Swine Production
(1,000 head) 660,000 1,202,550 55%
Harvest time in a Sichuan Village. These smallholder farmers are
cleaning corn, paddy rice and millet. They will use most of the corn as
feed for their pigs.
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 7
their share had grown to 22 percent.13 By way of comparison,
large-scale farms (500–50,000 pigs per year) accounted for 97
percent of all the hogs produced in the United States in 2010.14
Most large-scale commercial pig farms in China today are
domestic enterprises. They may be state-owned, privately
owned through sole proprietorship or partnership, joint
ventures between Chinese and foreign firms, or between
private and state-owned firms.15 They are supported by central
and provincial government subsidies, in addition to state
and private investment. Commercial farms breed, feed, rear,
slaughter, process, and market pigs and pork. They do so in a
variety of ways, from being specialized in one particular phase
of production, to being vertically integrated in some or all
phases, to managing contracts with other farms and compa-
nies to produce and sell an end product. Commercial farms
often own their own retail brands, and “indust rial pork” is sold
almost exclusively in urban supermarkets. The scale of produc-
tion on these farms ranges from 500 to 50,000 pigs per year,
but is rapidly increasing. It is not uncommon for a single firm
to produce 100,000 hogs in one year, either through contracts
with ot her farms, or in a single production facility.
One of the most salient features of the commercial pig
industry in China is the trend toward vertical integration.
Most of the major players are domestic firms with opera-
tions in more than one stage of production, including meat
processing. The largest pork packers currently operate with
a large degree of unfulfilled slaughter capacity. In an effort to
fill t his gap, many packers are bu ilding their own pig breeding
and feeding facilities, and are poised to become the country’s
largest pig producers. Some of the leading commercial pork
companies are briefly outlined below.
AGFEED INDUSTRIES is one of the largest independent
commercial hog producers in China. Founded in 1995 by five
animal nutritionists from Jiangxi Province, it is now a U.S.
public company (NASDAQ: FEED) with operations in the U.S.
and China. AgFeed is in the process of becoming a “fully inte-
grated hog production system,” with operations in animal
nutrition (feed), hog production and harvesting (slaughter,
processing and marketing). The company operates five feed
mills in Southern China that produce premixes, feed concen-
trates and complete feeds, predominantly for hogs. They
own 31 hog farms with a total annual production capacity
of 550,000 head. With two new breeding and feeding farms
projects underway in Jiangxi and Guangxi Provinces, annual
production capacity will increase to 850,000 head by 2012.
The company intends to produce 2 million hogs per year by
2015. AgFeed acquired M2P2, a U.S.-based hog production and
industry management company in 2010.16 It also entered into
a joint venture with Hypor the same year in order to expand
hog breeding operations in China. Hypor is a subsidiary of
Hendrix Genetics, which is the second largest pig breeding
company in the world.17
COFCO (China National Cereals, Oils and Foodstuffs Corpora-
tion) (中国粮油食品集团有限公司) is the largest edible oil and
food producer in China, and the largest agricultural import/
export firm. It is a state-owned enterprise that is publically
traded. Specific information and statistics about COFCO’s
operations are difficult to find, though two large hog produc-
tion development projects have been in the press in recent
years. In 2007, COFCO launched a pig-breeding program in
Wuhan, the provincial capital of Hubei Province. By 2012, the
A small village in Sichuan Province. In addition to rapeseed for oil
production and sale, farmers are growing a wide variety of herbaceous
plants for use as pig feed. The crop in the foreground is Niupicai, which
is grown exclusively for pig feed.
An urban wet market in Chengdu, Sichuan Province.
8 INSTIT UTE FOR AGRICULTURE AND TRADE POLICY
project wi ll be a base for 500,000 breeding sow s and 10 million
meat pigs per year, one million of which can be slaughtered
on-site.18 In 2009, COFCO invested $588 million USD in a pig
production and processing complex in Tianjin to serve the
Tianjin and Beijing markets. It will produce 2 million live
hogs and 150,000 tons of pork per year after its completion
in 2014.19 COFCO bought a five-percent share in Smithfield
Foods in 2008, and purchased Maverick Food, a joint venture
between Smithfield and Belgian Artal Group in 2009.20
THE XINCHENG JINLUO GROUP (新程金锣肉制品集团有限公司),
the commercial brand of People’s Food Holdings Limited,21 is
the largest pork slaughter and processing company in China,
and a leading meat product producer. The private company
was founded in Shandong Province in 1994, and now has
operations in Shandong, Heilongjiang, Jilin, Inner Mongolia,
Hunan, Henan, and Sichuan Provinces, and export branches
in Hong Kong, Singapore and Japan. Jinluo has more than
17,000 specialty shops and over 9,000 franchise retail outlets.
The group produces two million tons of meat products every
year, and has an annual slaughter capacity of 22 million hogs.
The company is currently investing in breeding and feeding
operations, in addition to feed production facilities, in order
to fill t heir slaughter capacity.22
NEW HOPE GROUP23 (新希望集团有限公司) is the largest
wholly-owned private agricultural firm in China. The
group has holdings in agribusiness and food, chemicals and
resources, real estate and infrastructure, and finance and
investment. New Hope is the largest livestock feed producer
in China, and is quickly consolidating the meat, poultry
and dairy sectors as well. In 2009, New Hope slaughtered
1.7 million pigs, and sold 162,400 tons of chilled pork.24 Hog
slaughter and processing capacity is 10 million head, and
the company is developing breeding and feeding production
bases in cooperation with Hendrix Genetics to help fill their
slaughter production-capacity gap.25 New Hope has close
to 400 subsidiaries and 60,000 employees. They have joint
ventures with Chinese state-owned enterprises, and also
have private holdings in China and overseas. The company
is actively pursuing the central government’s “Going Global
Strateg y,” which encourages Chinese firms to invest abroad.26
THE SHINEWAY GROUP (双汇集团) is another of the largest
pork processors in China, with annual slaughter capacity of
more than 30 million pigs. This state-owned company was
established in 1994 in Henan Province, and sales of fresh and
frozen meat and live stock products e xceeded 50 billion RM B ($
7.6 billion USD) in 2010.27 Goldman Sachs bought a 10-percent
share in Shineway in 2006, but sold half of those shares to
CHINA’S STRATEGIC PORK RESERVE
What do pigs have to do with social and political stability in China?
Plenty. In a country where most of the population spends a large
share of their household income on food, and where pork is the
staple protein source, when the price of pork rises, discontent is
often not far behind. In an attempt to quell potential protest that
could threaten state power, central authorities created a strategic
pork reserve to control pork prices and to signal the need for shifts
in policy. This is the only reserve of its kind in the world today.
The strategic pork reserve consists of two dierent parts. The
Ministry of Commerce initiated a live hog reser ve that started
operating in earnest in 2007 when the inflation rate in China
hit 6.5 percent, and the price of meat and poultry surged 49
percent from the previous year.35 The live hog reserve had been
in existence before this price crisis, but was quite small and
rather ineective at regulating price. Today, it consists of a stock
of a few million pigs that are rotated every four months on 200
to 300 commercial farms.36
The 2007 food price hikes also spurred central authorities to
initiate a frozen pork reserve that year. Pork stocks in China were
suering from the PRRS (Porcine blue-ear disease) outbreak in
2006 that killed millions of pigs, as well as a production downturn
from high feed prices. COFCO, China’s state-owned and publi-
cally traded agribusiness conglomerate, signed a deal with U.S.-
based Smithfield Foods, the world’s largest pork producer, for
the purchase of 60 million pounds of pork in 2007 for the frozen
reserve. To fulfill the contract, Smithfield scaled up production
and added 250 workers at their Sioux City, Iowa plant, expecting
that this deal signaled the opening of a promising market for
pork exports.37 When the Ministry of Commerce released frozen
pork from the reserve in 2008 to calm high market prices, it was
Smithfield pork that found its way into Chinese kitchens. In 2009,
however, authorities decided that only domestically produced
pork would be used for the reserve in the future. Today, the frozen
pork reserve is administered through domestic packing plants,
most of which also have pig production facilities.38
The specifics of how the strategic pork reserve operates are
tightly held state secrets. According to a pork industry expert
in China, COFCO has a monopoly on both the live hog reserve
and frozen pork reser ve.39 COFCO also has a minority share in
Smithfield Foods,40 and in 2009, bought Smithfield out of its joint
venture in Maverick Food.41
This worker is processing sausage at a vertically integrated company
that owns hog production, slaughter and processing facilities, in
addition to owning its own retail market outlets.
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 9
CDH Investments, a Chinese private equity fund, in 2009.28
Shineway is currently investing in its own hog production
facilities, and hopes to produce 4 million hogs by 2015.29
THE TANGRENSHEN GROUP 30 (唐人神集团) is a shareholding
enterprise founded in 1995. The China Agricultural University,
the China Meat Products Research Center and Hong Kong Tai
Sang Feeds Company are the three joint investors. The group
has 45 subsidiaries with business in pig breeding, feed produc-
tion and meat processing, and also sel ls animal healt h products
and owns chain store and retailing operations. Tangrenshen
slaughters 2.6 million pigs a year, produces 40,000 metric tons
of meat products and 3.2 million tons of livestock feed. The
group plans to invest $342 million USD to expand pork produc-
tion to 10 million pigs per year in partnership with Whiteshire
Hamroc, a U.S.-based pig breeding company.31
THE WEN’S FOODSTUFFS GROUP32 (温氏食品集团) is a
leading private agricultural company in China that operates
through a family of 15 member companies and more than 80
subsidiaries. Wen’s is the largest broiler producer in China,
and also has operations in feed production, livestock equip-
ment, hog production, poultry and hog breeding, cattle and
dairy production, vegetable production, pharmaceuticals and
processed meat products. In 2009, Wen’s produced 3.5 million
pigs, both in company-owned and run production facilities,
and th rough contracts wit h speciali zed household pig farmers.
THE YURUN GROUP33 (雨润集团 ) is a private food company
that was founded in Nanjing in 2001, and listed on the Hong
Kong Stock Exchange in 2005. Operating through four retail
brands, the company processes and retails chilled and frozen
pork, in addition to canned foods, vegetables, spices and
imported food items. They have a pig slaughter capacity of
28.55 mi llion head, but slaughtered only 7 mill ion head in 2010.
The group is investing in land in Nanjing to establish a base
for pig production.34
C. Specialized household farms
The number of commercial pig farms is certainly
increasing, but in China there is an important middle
scale of production that central and local govern-
ments have aggr essively supported th rough favorable
policies and subsidies. Specialized household farms (
专业化的家庭式养殖场) encompass operations with
annual pig production from 10 to 500 head, with the
range of 50–200 head as the most common.42 These
farms, which accounted for 51 percent of all the pigs
in China in 2009, may be run by individual families or
by several bac kyard farmers who have come together
to focus on pig raising more exclusively, sometimes
with the help of government subsidies for housing
(humans and hogs) and for animal stocking. In this
system, farming is a professional endeavor based on produc-
tion of pigs for sale instead of self-consumption, though the
“backyard”—an average land holding of half an acre per house-
hold—remains the primary site of operation.43
Pre-reform (before 1978)
Traditional Backyard
Production
Post-reform
Specialized and
Commercial Production
Farm ers
The majority of the
population works as farmers,
using unpaid household
labor to produce food.
Pig raising is a paid
occupation, including
business executives, scientists,
farmer s and workers.
Pork &
Human Diets
Meat eaten primarily in
the spring when pigs
were slaughtered for
Spring Festival, marginally
throughout the rest of the
year. Pork had a higher
fat-lean ratio. Meat was
peripheral in diets.
Meat consumption more
frequent in rural and
urban areas, but dietary
inequalities persist by class
and residence. Pork is
leaner. Meat more central
in diets.
Pork Uses &
Markets
Most production was for
household consumption, and
later for local wet market s
and state provisioning.
Pork is grown and
sold through contract
agreements or dealers; is
retailed at wet markets, or
increasingly at super- and
hyper-markets in cities.
Production Scale
Small-scale, dispersed
production was situated in
localities throughout China.
Mid- to large-scale, using
confinement technologies
and concentrating around
major metropolises.
Pig Productivity
Low productivity on a
per-animal basis, production
cycle of 10–12 months.
Highly productive with
time-to-market requirement
of only 5–6 months.
Pig Breeds More than 100 indigenous
breeds.
Three major exotic breeds:
Duroc, Landrace, Yorkshire.
Pig Feeding
Locally occurring or
produced weeds, table
scraps, crop residues,
vegetables, grains, tubers
and agricultural byproducts.
Globally sourced oilseeds
and grains manufactured
into complete feeds with
vitamins, minerals and other
feed additives. Antibiotics
and other growth promoters
commonly used.
Manure Essential source of nutrients
for crops (fertilizer).
Waste that must be
managed to prevent water
and soil pollution.
Figure 2. Share of Total China Pig Production by Farm Type: 1985–2007 (%)
0
20
40
60
80
100
Large-Scale Commercial Production
Specialized Household Production
Backyard Production
200720052000199519901985
Source: Informa Economics and National Grain and Oil Information Center, 2009
10 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
Changes in feed ing practices and materia ls have accompanied
the scaling-up and industrialization of pig production. Some
specialized household swine farmers produce under contract
with large commercial farms, while others sell piglets and
meat pigs to local dealers who then sell pigs to slaughter,
processing, and retail companies. The specifics of produc-
tion contracts vary considerably by place and arrangement,
but feeding is almost always a part of the agreement. Like
large-scale commercial farms, specialized household farms
use purchased feedstuffs for hog feeding.44 Some specialized
farmers rely on purchased feed exclusively, while others use
it as a supplement to self-grown feedstuffs. Taken together,
these two models of production, which today account for the
majority and growing share of pigs in China (73 percent in
2007) involve a profound shift in feeding practice from locally
occurring and produced feedstuffs, to the long-distance
transport of processed feed, made largely from globally
sourced oilseeds and grains.
The table on page 9 summarizes pig product ion practices before
and after the 1978 reforms. Modern day backyard farms look
similar to the “traditional” category, but with differences in
the pig breeds used and in terms of labor and livelihoods.
Smallholders struggle to compete with the shorter production
cycles, high levels of capitalization, easier adherence to meat
quality and safety standards, and market control enjoyed by
large-scale commercial farms. Specialized household farmers,
on the other hand, occupy an insecure middle ground, strad-
dling t he worlds of “t raditional” and “modern” farmi ng. Th rough
governme nt subsidies and production contrac ts with la rge farms
and firms, they are steadily being brought under the umbrella of
the highly integrated, capital- and input-intensive pig industry
that is booming in China today. This boom is linked to the large-
scale commercial feed indust ry that took off in China during the
same post-reform period.
III. The feed industry in China
Before 1975, a Chinese pig’s lips would never have touched
processed feed. Grains and oilseeds were cultivated for
human consumption, while livestock were raised on weeds,
grass, crop residues, kitchen scraps or any of a number of
other readily available feedstuffs. In an effort to speed up the
conversion of plant materials into meat, from 1976 to 1985
China’s leaders supported rapid development of a milling
industry that would provide compound livestock feeds, as
well as employment opportunities in rural areas. These
changes would in turn increase meat consumption in the
country, improving diets and food security, and moving the
population beyond t he famines and meat rat ion ing of the past.
Through a combination of market reforms and government
financial support, Ch ina’s feed industr y went from practically
nothing before 1975 to becoming the world’s second largest
feed producer by 1995. Pig feed was t he first boom in t he 1980s,
followed by chicken feed in the 1990s.45
Today, China has a multi-billion dollar (USD) livestock feed
industry. Its 2008 gross output value was 425.8 billion RMB
($62.3 billion USD), an 8.5 percent increase from 2007. Of that
total, 381.29 billion RMB was from formula feed, 28.66 billion
RMB from feed additives, 6.96 billion RMB from animal-
derived feed, and 8.88 billion RMB from feed machines and
equipment.46 For the past 10 years, domestic feed demand has
been rising by about eight percent each year, making China
home to one of the largest feed industries in the world, and
poised to pass the U.S. as global leader in the coming decade.
Since its inception, the ownership and management struc-
ture of the feed industry has changed dramatically. During
the first two decades after reform, government agencies such
as the Ministry of Agriculture (MOA) and the Ministry of
Finance and Commerce (MOFCOM) managed most feed mills.
Farmers cooperatively owned some mills through arrange-
ments called township and village enterprises (TVEs),
generally under MOA supervision. At the same time, private
ownership increased, and central authorities also started to
encourage foreign fi rms to invest in joi nt venture mill s. Before
the turn of the century, private and public/private operations
accounted for 30 percent of all mills, and foreign investment
in 66 joint ventures totaled over $200 million USD.47
Currently, private enterprise, both of the domestic and trans-
national agribusiness variety, defines much of the sector. This
is part icularly true in soybean crushing. One analyst estimates
that 69 percent of the active soybean crushers in China are
privately ow ned.48 Of the 31 percent state-owned s hare, several
operations also have foreign and domest ic private investors.
A. Soybeans
Soybean, a plant that was domesticated in China 5,000 years
ago, is the current feed industry star. Similar to pigs, the
millennial-scale cultivation of soy has produced around 6,000
domestic varieties and a rich associated knowledge about soy
production, processi ng, and uses. But whereas China continues
to be largely self-sufficient in pork as an end-product food
category, centuries of soy self-sufficiency came to an end in t he
mid-1990s, with soy import dependency following in subse-
quent years. After being a leading soy-exporting country for
decades, China bec ame a net importer in 1996, and by 20 03, had
taken over as the world’s largest importer of soybeans. In 2009
and again i n 2010, Ch ina’s import s accounted for more than half
of the total global soy market.49
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 11
Given that soybeans are touted as the ultimate source of
protein in modern feed mixes for shorter-cycle, leaner pork
production, these developments might seem natural or
expected. Surely, most all of the rapid growth in soy imports
is in response to increased domestic demand to feed the ever-
growing national swineherd, but the shift to imported soy and
the associated changes in Chi na’s feed industr y are not because
of the so-called invisible hand of the market. Rather, they are
the direct result of a set of policies, agreements and conflicts—
some quite visible, and others less obvious—involving a
diverse set of Chinese and international actors. For its part,
the Chinese central government has enacted measures aimed
at ensuring China’s food security on a limited amount of land,
supporting increased consumption of cheap pork, liberalizing
the soy sector, and anticipating and abiding by WTO regula-
tions. From the perspective of soybean-exporting countries
and transnational agribusiness firms (and the institutions that
regulate international trade), China was, and remains, a key
site for invest ment and profit and a central component of futur e
development plans. With soybeans, what is at stake is nothing
less than control of the flow of soybeans into the country and
throughout t he food system.
1. Liberalizing and industrializing soy
To increase meat consumption for 1.3 billion people on only
120 million hectares of arable land, something’s got to give.
For China’s central authorities, a key “something” has been
soybeans. Recognizing that domestic soy output would not
be able to keep up with the massive growth planned for the
livestock industry, the government moved to liberalize the
soy sector starting in the 1990s, allowing imports to over-
take both exports and domestic production. Officials used a
number of methods to open this market.
Central authorities implemented the Value Added Tax (VAT)
system in 1993 to encourage production and export of certain
products,50 and as a key source of state revenue. For food and
agricult ural goods, t he VAT rate is gener ally 13 percent.51 In 1995,
to spur the livestock industry and to get around limitations in
domestic soybean crushing, the government lifted the VAT on
soybean meal. As a result, meal imports surged to 3.6 million
tons in 1996–1997, making China the world’s largest soybean
meal importer that year, and then to 4.2 million tons in 1997-
1998. This increase in supply depressed domestic soy prices,
reduced domestic cr ushing margi ns and discouraged producer s
from planting soybeans during those years. As domestic crush
fell, so too did soy oil product ion, since soy bean meal and soy oil
are co-products in t he crushing process. Several sources report
edible oil smuggling in the country as a result of the shortfall.
In an attempt to correct t hese imbalances, the central govern-
ment reimposed the 13-percent VAT on all imported soybean
meal in 1999, a move that favored the import of unprocessed
soybeans instead. Consequently, soybean meal imports
dropped from 4.2 million tons in 1997–1998 to 0.1 million
tons in 2000–2001, while soybean imports soared from 3.8
million tons in 1998–1999 to 10.1 million tons in 1999–2000.52
Domestic soybean meal prices rose, crushing margins
improved, employment increased and edible oil smuggling
stopped. To this day, China’s soy import strategy is foc used on
whole, unprocessed soybeans, not soybean meal.
WTO and bilateral trade agreements were also important
drivers of soy sector liberalization. In 1996, the government
reduced the import tariff on soybeans from 40 percent to 3
percent in anticipation of accession to the WTO in 2001. The
tariff rate on soybean meal was set at 5 percent, while soy
oil was 9 percent.53 In 1999, China and the U.S. became closer
trade partners when the two countries signed a bilateral
trade agreement that contained a tariff-rate quota for soy oil
(that would later turn into a bound 9-percent tariff rate), but
excluded soybeans and soybean meal.54 In 2003, Brazil came
on the scene when China accepted the country’s soy export
application.55 These agreements defined the terms of trade
and China’s major trading partners for the next several years.
Changes in how soybeans and soybean meal are defined and
regulated were also key policy maneuvers with important
consequences for trade and domestic production. In 2002, in
order to raise domestic soybean meal prices after supplies
exceeded demand, central authorities defined soybean meal
as an industrial, rather than agricultural, product. This
language changed the tax structure of soybean meal, giving
it a 13 percent export tariff refund to encourage exports and
to relieve excess supply on the domestic market.56 Redefining
soy in this way was related to the government’s more general
reclassification of it as a “non-strategic” crop for food security.
Upon accession to the WTO in 2001, China’s overall strategy
was to focus food security policy on maintaining strategic
reserves of rice, corn and wheat—crops considered impor-
tant for direct human consumption—while liberalizing the
markets for other non-staple crops in order to honor accession
protocols and commitments. At that time, authorities liberal-
ized soybea ns from strict s tate control, and removed so-called
trade-distorting mechanisms.57 According to experts within
China, t he main reason that soy was “cut loose” was to ensure
adequate supplies of feed for industrial pork production.
As a result of this sectoral restructuring, soybean imports
have been soaring since the late 1990s at an average annual
growth rate of about 26 percent. From 2009–2010, China
imported just over 50 million tons of soybeans, representing
58 percent of all soybean imports worldwide.58 Imported soy
is crushed domestically to produce livestock feed (soybean
meal) and soy oil. Between 2000 and 2007, soy crushing in
China increased 72 percent, from 19.77 million tons to 34
12 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
million tons, at an 8.1 percent average annual increase.59 In
2009–2010, China produced more than 38 million tons of
soybean meal, and in 2010–2011, is expected to produce 42
million tons. As for soy oil, production in 2009–2010 was
more than 8 million tons, and more than 10 million tons are
expected in 2010–2011.60
These figures make China the world leader in both soybean
meal and oil production, but it is important to remember that
this output comes overwhelmingly from imported beans. In
2009, 73 percent of the soybeans consumed in China were
imported.61 The United States and South America (Brazil and
Argentina62) are seasonal complimentary soybean suppliers
for China. Because of the “opposite” growing seasons in
these two global locations, South America soy imports domi-
nate from June to October and United States imports from
November to May.63 This system means that U.S. beans are in
direct competition wit h Chinese domestic bea ns because they
share the same growing season.
2. Soybean wars and foreign crusher dominance
The dominance of foreign firms in the Chinese soybean
industry is one the most contentious issues in China soy
policy and production circles. The situation is reported in the
Chinese media as “Soybean Wars,” “Battle of the Beans,” and
“Foreign Companies Eat Up Our Country’s Soybean Industry,”
suggesting the conflict between transnational agribusiness
firms and domestic crushers and producers. While foreign
enterprises started to enter the Chinese feed industry in the
1980s through joint ventures with domestic mills, it was only
after the soy crusher defaults in 2004 that these companies
were able to take contr ol of 80 p ercent of Chinese soy cr ushing,
ushering in a new era of foreign domination.
Aft er the 13 percent VAT on soybea n meal was rei mposed in 1999,
there was an unprecedented crushing boom in China to accom-
pany the surge of whole soybean imports. Investment in the
sector soared and crush capacity expanded beyond production.
At the same time, toward the end of 2003, China and the U.S.
were on the brink of a trade war because of the U.S.’s growing
trade deficit. Chinese Prime Minister, Wen Jiabao, made a trip
to the U.S. and promised to send delegates the next year to
purchase agricultural products, primarily “non-strategic” soy
and cotton. The monthly average soybean future price on the
Chicago Board of Trade (CBOT) at the time of Prime Minister
Wen’s visit was $7.70 USD per bushel. In March and April of
2004, when Chinese buyers arrived in the U.S. to make the
bulk of soy purchases as per the previous agreement, the price
of soybeans had sk yrocketed to $ 9.82 and $9.89 USD per bushel
respectively. Average April prices in 2003 and 2005 were $6.04
and $6.23 USD per bushel respectively, so the almost $10 USD
per bushel price was an anomaly.65
When deliveries and payments came due from the Chinese
buyers in June, July and August of 2004, the price of soybeans
had tanked to $5.93 USD per bushel. Rather than incur losses
from the radically different per-bushel price at the time of
purchase and the time of delivery, many Chinese importers
defaulted on their contracts. Angry traders took the case to
arbitration at GAFTA (Grain and Feed Trade Association) in
London. Because price fluctuations are perfectly legal under
the international pricing system based on CBOT futures,
but defaulting on trade contracts is not, the final ruling was
against the Chinese crushers. They were required to fulfill
their contracts and pay for soy shipments at the abnormally
high March and April prices. A Chinese Academy of Science
study estimated that Chinese crushers overpaid for this soy
by a margin of at least $1.5 billion USD.66
The immediate result was that many Chinese crushers were
forced into bank ruptcy and had no choice but to sell to foreign
firms. Predictably, the firms that made the most market
headway after the crusher defaults were already leaders
in the global soy trade.67 ADM, Bunge, Cargill and Louis
Dreyfus (together, ABCD) bought over 70 percent of the
shut-down Chinese crushers, and Singapore-based Wilmar
also increased its market share at that time.68 It is important
to note, however, that New Hope Group, a private domestic
firm with annual feed production capacity of over 20 million
metric tons,69 is the largest feed producer in the country.
Official statistics on the number and type of feed enterprises
in China also illustrate the continuing and growing promi-
nence and concentration of foreign fi rm ownership. Accordi ng
to Ministry of Agriculture figures, there were 13,612 feed
enterprises in 2008. This was 11.5 percent lower (1,764 fewer
operations) than in 2007, and recorded the third consecutive
year of diminishing numbers. The only enterprise catego-
ries that saw an increase in the number of operations were
foreign-funded and joint-stock enterprises. All other catego-
ries declined.70
China: Soy Figures 2009–201064
Soybean imports 50.34 million tons
Soybean production 14.7 million tons
Soybean meal production 39 million tons
Soybean oil production 8.7 million tons
Soy impor ts as % of total soy consumption 73%
GM soy imports as % of total impor ts 90%
Soybean import tari rate 3%
Value of imported soybeans as a percentage of the value
of all imported agricultural products 35.8%
Imported volume of soybeans compared to imported
volume of all grains/other oilseeds combined 13.5 times
Value of imported soybeans compared to the total value
of all imported grains/oilseeds 20.8 times
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 13
Livestock feed is the main driver in the soybean crushing
industry but soy oil is also becoming increasingly important.
Before industrialization of pig and feed production, small-
scale farmers cooked their meals with fat from the pigs they
slaughtered in t he spring, or pressed a smal l amount of cooking
oil from crops produced locally. Today, edible oils have also
been largely commercialized, and soy oil is now the leading
cooking oil in China, accounting for 40 percent of national
use.71 While there is regional variation in household edible oil
consumption, with rapeseed, palm and pea nut oil domi nating
in some parts of the country, soy oil is gaining more and more
of the market. According to a scholar at a leading Chinese
agricultural university, virtually all restaurants in China
today—from street vendors to upscale eateries—use soy oil for
cooking.72 It has completely taken over the restaurant sector.
Foreign firms have an important presence in soy oil produc-
tion, with several operating under their own brands within
China. Jinlongyu (金龙鱼) has 30–40 percent of the total
market for all edible oils in China, and is an important soy oil
brand. Its parent company, Arwana, is owned by Kerry Oils
and Grains, which was just purchased by Singapore-based
Wilma r. Bunge st arted the Douweijia (豆维家) brand of soy oi l
in Nanjing in 2007. ADM and Wilmar have a joint venture in
the Jinhai brand (金海) of products, including the Sania (莎妮
雅) soy oil brand. Through a joint venture wit h China National
Cereals, Oils and Foodstuffs Corporation (COFCO), ADM and
Wilmar also own five companies of crushers and refiners.
On its website, ADM notes that, “A key part of ADM’s Asia
strategy today is our strategic ownership interest in Wilmar
International Limited.”73 Cargill and Dreyfuss don not pres-
ently have their own retail soy brands, but instead sell unre-
fined oil to local refiners or to ADM enterprises.
As a result of the crusher defaults in 2004, on top of crusher
buyouts, half of all domestic soy oil refineries were forced to
close. Transnational agribusiness corporations now control
80 percent of soybean crushing, and control 60 percent of
China’s soy oil refining.74 This means that the same firms that
control soybean exports to China from production centers in
the U.S. and South America are also the major importers that
control the flow of soy through the Chinese food system.
3. Protecting domestic soy
Changes in the feed industry, including ever-increasing
soybean imports and the dominance of foreign firms, have
had definitive impacts not only on domestic soy crushing
and oil refining, but also on domestic soy production and
farmers. In 2009, Chinese farmers produced 16 million tons of
soybeans on 9 million hectares, or 7.5 percent of the country’s
total arable land.75 Liberalization of the sector has meant that
surging soy imports have dramatically outpaced domestic
production, and more and more farmers are opting out of
planting soy (Figure 3).
Soy experts in China estimate that there are 25 million
smallholder soy farmers in the country today.76 So while
large-scale soy production is increasing—with groups like
Beidahuang,77 a state-owned conglomerate working to scale-
up and mechanize production to increase per-acre produc-
tivity—smallholders play a vital role in the soy sector, acting
Figure 3. China Soybean Production, Imports, and Exports: 1978-2009 (tonnes)
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
Export Quantity
Import Quantity
Production Quantity
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
Source: FAOSTAT
14 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
both individually and through cooperatives. The real story
behind domestic soy production, therefore, is the story of the
struggles of smallholders whose livelihoods are endangered
by changes in the soy industry and in soy pricing.
There are seve ral reasons why farmers move out of soy produc-
tion in China. One important factor is that the market price
of imported soybeans is cheaper than that of domestic soy. A
complex mix of commodity programs, agricultural policies,
and pricing schemes in the United States and South America
keeps the market price of soybeans (and other agricultural
commodities) below the cost of production. This is a well-
documented phenomenon that has led to unfair competition
and dumping on world markets for decades.78 When domestic
farmers are undercut by cheap imports, one immediate result
is that those farmers can no longer make a living from their
crops, and are of ten forced out. On top of th is, the foreign fir ms
that control 80 percent of crushing and 60 percent of refining
in China have the ability to import soybeans from their own
production centers around the world at a price much cheaper
than what domestic soybeans can sell for. In 2010, imported
soybeans in China were 300 to 600 RMB cheaper per ton
than domestic beans.79 This situation means that not only are
domestic soy prices depressed, but that both foreign-owned
and domestic crushers are buying more imported beans in
order to increase profits, or in some cases, to stay in business.
Tian Renli, the president of Heilongjiang Jiusan Oil and Fats
Company said, “It’s not that the processors don’t want to use
domestic soybeans, but we can’t at current prices.”80 Domestic
crushers can buy soy from local farmer co-ops, but increas-
ingly they are getting soy supplies from the same foreign
firms that control the vast majority of t he processing sector.
The GM issue, which is highly controversial in China, further
complicates soybean pricing. Currently, the central govern-
ment prohibits commercial planting of GM food crops, but
unlike most other countries with similar bans, allows
imports.81 In 2009, 90 percent of soy imports were GM.82
Given that 73 percent of the soy consumed in China in 2009
was imported, and that 90 percent of imports were GM, that
means that 81 percent of all soy was GM. Clearly, this is a chal-
lenging market situation for domestic producers who grow
non-GM soy that should fetch a premium price, but instead
creates a barrier for them when they are faced with buyers
who want (or need) the cheapest beans possible. There is little
incentive for crushers to buy domestic non-GM soy because,
on the other side of processing, the price of GM and non-GM
soybean meal and soy oil is largely the same.
Farmers are h aving a hard ti me breaking even from plant ing soy,
and for smallholders in part icular, who have an average annual
income of about $690 USD (4,616 RMB), the implications are
especially serious. E xperts est imate that 30 percent of soybean
farmers have already left their homes and families to become
migrant workers in China’s coastal cities. Liberalization of the
soy sector, including the mass influx of cheap soy imports and
domination by foreign processors, is linked to urban migration
in complex ways (Read more in the final section).
The mix of low soy prices for domestic farmers, cheap GM
soy imports, foreign domination of soy crushing and oil
processing, and the exodus of soy farmers to labor in the
cities has led to a domestic sector in trouble. In response,
central authorities have taken measures to protect the soy
industry, and experts have advised on alternative markets
and strategies. 2008 was a particularly active year for soy
regulation. On August 22, China’s National Development and
Reform Commission (NDRC) issued a directive on the future
direction of the domestic soy sector. Some of the key provi-
sions included policies to further concentrate soy production
and processing in the Northeast and in Inner Mongolia, to
scale-up and further industrialize the sector, to develop and
improve the domestic soybean futures market, to establish
a soybean reserve system for commercial circulation, and to
develop soy industry standards. The aim of these measures
was to support domestic production and maintain a consis-
tent supply of soy.
Also in 2008, the central government imposed new restric-
tions on foreign investment in soy processing to limit the
expansion of foreign control, and to try to level the playing
field for domestic firms. By these provisions, foreign firms
are not allowed to expand existing operations, invest in new
operations, or have a controlling share (more than 50 percent)
in new joint ventures.
To help alleviate downward price pressure on farmers in 2008,
the central government started buying domestic soy at a
minimum purchase price. At that time, international futures
markets fell because of the financial c risis, initiat ing a flood of
even cheaper soy into China.83 The state minimum purchase
and storage price for 2008–2009 was 3.7 RMB per kg, and 3.74
RMB per kg for 2009–2010.84 Between October 2008 and June
2009, the China Grain Reserve Corporation (CGRC) bought
7.25 million tons of soybeans in Northeast China at 3.7 RMB
per kilogram.85
Over the past two years, protective purchasing has helped
to swell the state reserves in Heilongjiang Province and
domestic crushers are now negotiating on the purchase of
soy from these stockpiles. The degree to which the minimum
pricing scheme has helped smallholders and domestic proces-
sors, however, is unclear. Many farmers couldn’t afford to
transport their beans to state warehouses to collect the
higher payments. Additionally, the state reserve only bought
the highest quality soybeans, and even at that, couldn’t buy
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 15
the total domestic harvest. Price alone, therefore, wasn’t
enough to save all of China’s soy farmers. Some domestic
processors didn’t fare much better. The increased domestic
soy price meant that processors’ profit margins shrunk.86
Even after the government provided rebates to processors for
buying domestic beans, they were still losing money. Further,
protective purchasing in 2008 has been linked to another
wave of processing plant closures in Heilongjiang that year,
further challenging the ability of domestic producers, espe-
cially smallholders, to sell their soy.
The Chinese Soybean Industry Association (CSIA) has
proposed alternatives for the soy sector. Along with other
experts, the CSIA urges that China should develop new
markets for domestic soy so that it doesn’t compete directly
with cheap GM imports. There are two main proposals on the
table. One is to use domestic soy exclusively in the manufac-
ture of foodstuffs such as tofu, soymilk and vegetarian prod-
ucts to be marketed within China. This proposal could also
include marketing sustainable soy products to link producers
to the growing domestic market for sustainable food prod-
ucts. Presently, there are a handful of Chinese firms using
this model. The other proposal is to (re-) develop the export
market for non-GM soy to Japan, South Korea and European
countries. This would involve improving soy varieties and
quality to internationally accepted standards, and imple-
menting local monitoring and certification schemes. Both of
these proposals aim at separating the markets for domestic
and imported soybeans to benefit Chinese producers and
processors. There are similar proposals for labeling and
promoting non-GM soy oil.
B. Corn
Soy has a competitor in China’s feed industry, and its name
is corn. While soy is a native crop, corn was introduced from
the Americas only during the Ming Dynasty, sometime in
the early to mid 16th century.87 Corn and soybeans today are
prime competitors for land and trade, and increasingly, as
components in livestock feed. Considering productive area,
both crops are grown primarily in the Northeast—the soy
base is Heilongjiang Province, while Jilin Province is the main
corn region. If farmers opt out of soy production, they often
plant corn instead (and vice versa in some cases). Throughout
the 20th century, corn has been more widely planted than
soy (Figure 4), but in some places in the Northeast, officials
encourage farmers to rotate the two crops. This is the domi-
nant practice in the USA, but is not widely used in China.
In the early 2000s, corn and soy roughly offset each other
in terms of value, largely because of massive soy imports
coupled with the need for heavy subsidies for corn produc-
tion and export. The central government, in other words, has
devoted huge amounts of money to these two crops.
1. Regulating and industrializing corn
Unlike soy, corn is considered a st rategic crop for food secur it y,
and so is more tightly regulated by the central government.
China is a world leader in corn production, and is historically
a regular net expor ter with negligible imports. In the past t en
years, however, the situation in the corn sector has started to
change dramatically.
The structure of state support for corn production changed in
2001 when China joined the WTO. In order to fulfill commit-
ments, China was required to eliminate export subsidies on
Figure 4. China Harvested Area of Maize and Soybeans: 1978-2009 (hectares)
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
40000000
Soybeans
Maize
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
Source: FAOSTAT
16 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
corn and open a 5.85 million ton quota for corn imports at a
one-percent tariff rate.88 These measures were expected
to significantly decrease China’s corn exports and increase
imports, but much to the surprise of analysts and traders,
China’s corn exports in 2002—the year after WTO accession
—were the highest in the country’s history. Corn imports in
2002 were also insignificant, meaning that in its first year
as a WTO member, China remained, and even increased, its
global position as a net corn exporter. In 2003, corn exports
were even higher, supported not by the WTO-forbidden
direct export subsidies, but by a package of measures aimed
at boosting corn sales to promote the livestock industry and
domestic meat consumption. These measures included subsi-
dies for corn sales from state grain reserves, railroad tax and
grain shipment waivers, subsidies for port fees, and a VAT
rebate for exported corn.
The above policies we re so successful in promoti ng produc tion
that throughout the early 2000s, corn supply in China persis-
tently e xceeded demand, exports boomed and corn prices rose
steadily throughout the first years of the new millennium.
In 2007, central authorities began to encourage and support
industrial corn processing as a way to deal with excess supply.
In the 2007-08 market year, about one fourth of the country’s
total corn u se was in industr ial products such as corn s tarches,
sweeteners, alcohols, amino acids and citric acid. China also
began exporting these products, changing its corn export
profile from trading mostly in unprocessed corn, to exporting
mainly industrial products. Industrial corn exports are now
three times as high as unprocessed corn exports.89
2. From leading corn exporter to net corn importer
Perhaps the most profound change in the corn sector over the
last decade is the 1.3 million tons of corn that China imported
from the United States in 2010. While this amount is small
relative to China’s total corn production (158 million tons in
2009–2010, and expected 168 million tons in 2010–2011), it
accounted for 1.4 percent of the total global corn trade.90 This
was the first time since 1994–1995 that China was a net corn
importer. At that time, central authorities cut off exports of
corn and other grains because of widespread concerns about
grain shortages and inflation.91
The reasons for 2010’s amped up imports are related to high
domestic corn prices, though among analysts and officials
there is disagreement about what drove prices up in the first
place. Government officials at the National Grain and Oils
Information Center urge that rising corn prices were not the
result of fal ling domestic supplies or reser ves, but that market
speculation was to blame.92 Central authorities seem to be
arguing that once they crack down on illegal activities that
force prices up (i.e., hoarding), China wi ll return to bei ng a net
exporter, and corn self-sufficiency will be preserved.93 They
insist that the country will not continue to import significant
amounts of corn in the future, despite the USDA’s prediction
that 2011 imports will top 1 million tons.
Analy sts at the United States Gra ins Council (USGC) agree t hat
market speculation played a role in increasing corn prices, but
argue that drought in 2009 coupled with cool and wet condi-
tions at spring planting in 2010 also contribute significantly to
the high price situation, as did increased processing demand
for the livestock industry.94 These analysts, along with global
grain traders, predict that China will continue to import corn,
mostly for feed, and will remain a net importer into the fore-
seeable future.95 Hanver Li, the Chairman of Shanghai JC Intel-
ligence Co, a Sino-U.S. joint venture agro-commodities invest-
ment advisor, went so far as to say that, “A new era of China
importing corn is here,” calling the present moment a “turning
point” at which China will become a regular corn buyer. Li and
other experts predict that China’s annual corn purchases will
reach 15 million tons by 2015.96 Traders are also anxious for
China to continue purchasing corn to help recover low inter-
national prices, and trade groups like the USGC are excited
by the market opportunities. Thomas Dorr, USGC president,
said, “There is evidence that [China’s] demand for high-quality
proteins is going to require added energy for livestock rations
and we believe it’s an excellent opportunity for the U.S. to
provide those corn supplies as needed.”97
As for the mechanics of the 2010 corn imports, COFCO
was the top buyer, and the New Hope Group was number
two. COFCO didn’t release plans for how it would use the
imported corn, but the New Hope Group stated publically
that it would use purchased corn in the manufacture of pig
feed.98 Some imports will likely go to restore state stockpiles
that were drained through auction to cool local prices earlier
in 2010. From April 13 to May 25, the state sold 4.67 million
tons of reserve corn, mostly to traders in the Northeast who
quickly shipped it to Guangdong Province for livestock feed
processing.99 After six rounds of sales, corn futures on the
Dalian Commodity Exchange rose to 1,984 RMB ($302 USD)
per ton on May 24, a two-year high. By opening the door to
corn imports, the central government used the international
market to stabilize the domestic market.
Aside from worries in Beijing that China will no longer be
self-sufficient in grain, there are several other concerns asso-
ciated with the possibility that China’s corn imports might
continue into the long run. First, in terms of global food
supplies, if China becomes a major importer, there are fears
that price fluctuations in global markets will become increas-
ingly dramatic, as the world relies on an even narrower set of
countries to s upply corn. Jay O’Nei l, an ag ricultural economis t
at Kansas State University in the United States, said, “This
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 17
means there are fewer countries supplying the needs of a
growing world and the potential for crop production short-
falls is a greater risk to everyone.”100
There are a lso important c limate and envi ronmental concerns,
particularly in terms of the deepening relations between
pig production in China and soybean and grain produc-
tion in South America. Tom Philpott argues that increased
corn demand from China can only result in more land being
cleared in S out h America for large corn plantat ions.101 Al r ea dy,
deforestation has claimed 528,000 square kilometers of the
Brazilian Amazon as cattle grazing and large-scale soybean
fields have taken over. Soy production in Brazil quadrupled
between 1995 and 2009, and almost half of all exports went
to China for the feed indust ry.102 At t he same time, almost half
(1 million square kilometers) of Brazil’s Cerrado, the most
biologically diverse savannah in the world, has been burned
for use as cattle pasture, sugarcane fields for ethanol produc-
tion, and large-scale soybean and corn cultivation, primarily
for export and the manufacture of livestock feed.103
This conversion of mass tracts of land to intensive monocrop
agriculture has threatened the livelihoods of many small-
holder Brazilian farmers who are forced to move. At the same
time, both the processes and long-term impacts of removing
forest and burning grasslands contribute to climate change,
as CO2 stores are released and sinks are lost. On top of that,
transporting massive amounts of feed around the globe, from
Brazil to China for instance, further strains fuel demand and
contributes even more GHG emissions. If South American
countries pursue monocrop corn plantations that mirror the
way soy has been developed there, these impacts will be even
more serious.
Inside China, there are concerns around the GM issue, given
that 60 percent of the corn imported in 2010 was genetically
modified.104 That said, in 2009 China’s central government
approved the first strain of homegrown GM corn to be grown
for research purposes only.105 It also approved 11 varieties of
GM corn for import. While the official stance on GM crops
may be changing and perhaps moving toward acceptance,
even if the general public continues to have reservations.
Finally, if corn goes the way of soy in China, and imports
become a regular occurrence, what are the costs to China’s
small-scale producers? How will their livelihoods be
affected? What will they grow if they can’t compete with low
market prices for either corn or soybeans? Similarly, how do
these changes in t he structure of the corn industry a ffect food
security, given that 64 percent of corn is being used as live-
stock feed, 25 percent for industrial uses and only 11 percent
as edible grain?106 Because corn is now primarily used for live-
stock feed, the central government is considering a revision
to current trade policy, such that corn would no longer be
regulated in the same way as grains intended exclusively for
human consumption.107
The focus on developing a domestic corn processing industry,
allowing GM imports, and the possibility that the central
government will reclassify corn as a “non-strategic” crop,
makes this sector sound quite similar to the soy sector. A feed
mill executive in Guangdong Province said, “We think corn
will follow soy, and imports will become a normal practice
whenever there is need.”108 COFCO officials maintain that corn
imports will always be a supplement to domestic production,
and that the central government is committed to regulating
this sector. Corn planting is expec ted to increase in 2011 to help
decrease imports, but international industry and trade groups
are focused on creating more regular corn trade with China in
the future. The battle, so to speak, seems poised to rage on.
Feeding China’s pigs:
Challenges and issues
The feed industry in China can be classified as operating
through a combination of local and transnational agribusi-
ness firms that use mostly domestically produced grains and
mainly imported oilseeds (soybeans), together with addi-
tives manufactured in China and abroad, to produce feed for
the rapidly industrializing livestock sector. There are other
commercial feed crops and ingredients, but today soybeans
and corn account for the lion’s share. The vast majority of pigs
raised each year in China are eating commercial feed at some
point in the production cycle, and as the scale of pig produc-
tion continues to increase, so too will the scale and extent of
the feed industry. Trends in industrial pig feeding seem to
inevitably point to additional soybean and corn imports in
the future, further narrowing the range of feedstuffs used to
produce pork.
Central policies and subsidies, and so-called market signals
for increased (lean) meat demand, have been used to define
the slower growth cycle and fattier pork output from small-
holders as “backwards.” It is highly unlikely, therefore, that
“traditional” feeding, which happens to be a highly environ-
mentally sustainable and near carbon-neutral activity, will
be promoted or supported as part of China’s agricultural
development model. Instead, industrial feeding will continue
to be relentlessly promoted as the most modern, efficient,
and safe method for further increasing pork production and
consumption in China. This will have serious implications
for the environment, for Chinese diets and public health, for
smallholders and for food security.
18 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
A. Environmental challenges and issues
The Food and Agriculture Organization (FAO) stated in 2006
that, “The livestock sector emerges as one of the two or three
most significant contributors to the most serious environ-
mental problems, at every scale from local to global.”109 To
put this statement more bluntly, it is the livestock industry,
including intensive animal feeding and feedstuff production,
that is the overwhelming cause of these problems. Issues
such as water pollution, greenhouse gas emissions, reduced
genetic and species diversit y, and the emergence of antibiot ic-
resistant disease-causing organisms are increasing both in
scale and global r elevance. In China, t he r ush to increase meat
consumption is implicated in these and a number of other
environmental problems. The effects have both domestic and
global reach.
1. Water and soil pollution
In February of 2010, the Chinese government released results
of the first national pollution census110 (全国污染源普查). The
most startling finding of this nearly three-year, 737 million
RMB ($110 million USD) investigation was that agriculture
today is a bigger source of water pollution in China than
industry. Researchers found that farming was responsible
for 44 percent of chemical oxygen demand (COD—the main
measure of organic compounds in water), 67 percent of phos-
phorus discharges, and 57 percent of nit rogen discharges into
bodies of water. The Ministry of Agriculture immediately
recognized that these findings were the direct result of the
shift to intensive farming methods over the past 30 years.
The Ministry’s Wang Yangliang said:
Fertilizers and pesticides have played an important role
in enhancing productivity but in certain areas improper
use has had a grave impact on the environment. The
fast development of livestock breeding and aquaculture
has produced a lot of food but they are also major
sources of pollution in our lives.111
Fertilizer- and pesticide-containing runoff from crop fields
(vegetables, grains, oilseeds, cotton, etc.) is an important
source of this water pollution. Greenpeace estimates that
China uses 35 percent of the world’s fertilizer, and pesticide
use is increasing every year. In 2006, Chinese farmers used 1.2
million tons of pesticide on approximately 300 million hect-
ares of farmland and forest. In 2009, China was the world’s
largest pesticide producer. Output volume was 2.23 million
tons, export volume was 0.51 million tons and leftover pesti-
cide demand was 400,000 tons.112 As a result of increased fertil-
izer and pesticide application, at least seven percent of arable
land is polluted from improper use, in addition to significantly
increased water pollution levels throughout the country.113
Manure is an even more important source of pollution. Experts
warn that the massive increase of animal waste from the live-
stock industry is the main source of water pollution in China
today. According to Ministry of Agriculture statistics, in 2000,
China’s livestock produced 3.8 billion tons of manure, and by
2008, the figure was 4.8 billion tons.114 The sheer volume of
manure shifts it from being a valuable resource, to a waste-
management problem with severe ecological consequences.
Such massive amounts of manure contribute to nutrient over-
load on land and in waterways. This is particularly evident in
the rapidly increasing incidence of blue-green algae outbreaks
in China’s lakes and streams. Eutrophication results when
intensive l ivestock farms, wh ich generally lack effect ive water
treatment methods to deal with the rivers of manure coming
out of them, deposit excessive amounts of phosphorus and
nitrogen in nearby bodies of water.115 The problem is exacer-
bated when inland water flows to coastal areas. As a direct
result of runoff containing excess nutrients from fertilizers
and manure carried by the Changjiang (Yangtze) and Huanghe
(Yellow) Rivers, a dead zone has developed in the East China
Sea.116 Thi s has serious consequences for ecosys tem functioni ng.
Because the government has failed to institute regulations to
strictly manage manure runoff from industrial operations, pig
farms are not being forced to internalize the environmental
costs of manure treatment.
2. Greenhouse gas emissions
Globally, the livestock industry contributes 18 percent of
anthropogenic greenhouse gas (GHG) emissions.117 There
are three main GHGs that come from the livestock industry
in significant amounts: carbon dioxide (CO2), methane and
nitrous oxide. Carbon dioxide is emitted at virtually every
stage in the production and transportation of livestock prod-
ucts and feed, accounting for nine percent of all human-made
CO2 emissions globally. Methane, a gas that is 23 times more
potent in the atmosphere than CO2, is emitted from enteric
fermentation (flatulence i n ruminant s) and from manur e. The
livestock industry is responsible for 37 percent of all human-
made methane emissions globally. Manure also accounts for
65 percent of all global human-made emissions of nitrous
oxide, which is 296 times more potent than CO2.118
At the same time that China’s livestock industry is growing,
so too are the country’s GHG emissions. China passed the
U.S. in 2008 as the world’s largest emitter, with current
emissions that account for 17.3 percent of the global total.1 19
This is a dramatic shift from the carbon-absorbing economy
that defined China for thousands of years, before it began to
indust rialize its ag ricultural (and othe r) sect ors.120 The fur ther
increase in industrial livestock feeding will exacerbate the
above GHG emissions figures and the problems associated
with them, both inside China and internationally.121 Al ready,
erratic weather (linked to climate change) is wreaking havoc
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 19
on agricultural production and communities in China, as
evidenced by severe drought in 2009 and 2010, followed by
rampant flooding in 2010. Experts predict these patterns will
continue, and intensify in the coming years.122
3. Genetic and species diversity
The focus on a narrow range of crops and livestock to meet
dietary needs has led to a global reduction in genetic and
species dive rsity. The case s of soybeans and pigs in Chi na illus-
trate this trend. The more than 6,000 varieties of soybeans
that Chinese farmers have developed over thousands of years
account for 90 percent of all the soybea n varieties in t he world.
Today, only a few varieties make up the core of the soybean
industry; experts fear that if GM soy production is allowed
in China, most wild types will be wiped out.123 The conver-
sion of mass tracts of land to monoculture crop production in
the country’s Northeast and elsewhere will further reduce
overall agroecosystem species diversity.
Swine breeds have already been significantly reduced. The
“modern industrial hog,” prized for quickly converting feed
into lean pork, has taken over. Presently, just three exotic
breeds, namely Duroc, Landrace and Yorkshire (DLY) have
replaced the more than 100 indigenous pig breeds in China.
Farmers at all scales of swine production, from the back-
yard to the CAFO, raise these breeds either in pure or hybrid
form. Indigenous breeds are now maintained on conserva-
tion farms and in the national gene bank, but very few (less
than 5 pe rcent of China’s total swi ne produc tion) are raised by
farm ers for pork.124 Conseque nces of re lying on a narrow range
of intensively bred livestock breeds include the loss of genetic
traits such as prolificacy or fertility, increased vulnerability
to disease and extinction of local breeds. At the same time,
reliance on industrial swine breeds, especially to the degree
currently seen in China, is coupled with horizontal and
vertical integration of ownership by a handful of agribusi-
nesses.125 PIC (the Pig Improvement Company) and Hendrix
Genetics are already major players in providing breeding
stock in China, as they are globally.
4. Antibiotic resistance
Industrial livestock feedi ng generally includes administering
constant “subtherapeutic” doses of antibiotics throughout
the production cycle. This is done to prophylactically prevent
disease and to promote growth by making the conversion of
feed to weight gain more efficient. As a result of such over-
use, antibiotic-resistant strains of disease-causing organ-
isms (mostly bacteria) have rapidly emerged, compromising
the ability of medicines to treat disease in both humans
and other animals.126 This phenomenon is expected, and has
serious public health implications:
Through evolutionary adaptation, disease-causing
organisms (e.g., E. coli) almost always develop
resistance to substances that humans exploit to kill
them. In other words, they acquire the ability to thwart
the toxicity of medicines designed to control them.
The widespread and routine use of antibiotic drugs
accelerates this evolutionary process, to the point
where the declining eectiveness of antibiotics is now
considered a serious public health crisis, expressed in
the rising incidence of drug-resistant infections.1 27
There are three primary ways that antibiotic-resistance is
conferred in the livestock industry. Drugs fed to animals
are excreted in manure, and are then carried into the envi-
ronment via runoff from feeding operations. The antibiotics
kill susceptible microorganisms in soil and water, leaving
bacteria with rare resistance to the drugs to flourish. This
same selection process can also take place in animals’ diges-
tive tracts, and when manure is applied to soil as fertilizer,
resistant bacteria in the manure can transfer resistance to
bacteria in the soil. Disease-causing organisms can also
share genes that encode resistance to antibiotics. Similarly,
gene sharing can occur across different species, for instance
through fecal bacteria found in meat products.128
In the U.S. and Europe, antibiotic-resistant disease-causing
organisms are found in meat and poultry products, including
multidrug resistant E. coli and organisms resistant to broad-
spectrum antibiotics such as penicillin, tetracycline and
erythromycin.129 These organisms were recently discovered
in China as well. According to Zhu Yongguan at the Chinese
Academy of Sciences, “In Ch ina and elsewhere, larg e amounts
of antibiotics are used in the animal industry to promote
growth.”130 Professor Zhu and his colleagues released a study
in 2010 that showed soils contaminated with manure from
livestock farms “are major reservoirs of antibiotic-resistance
Blue-green algae bloom in a waterway outside of a large-scale
commercial pig farm in Sichuan Province.
20 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
genes in the environment.”131 Researchers identified bacteria
with tetracycline resistance in soil samples taken from feed-
lots near Beijing, Tianjin and Jia xing. These findings wi ll have
implications for both animal and human health.
B. Health and dietary challenges and issues
The co-development of China’s livestock and feed industries
over the past 30 years has raised the level of meat output
and consumption to record and world-leading levels. Meat
consumption has quadrupled in China since 1980 to its
current level of 54 kg (119 pounds) per person per year. Pork
consumption alone has doubled in the past two decades, such
that the average Chinese person now eats 39.6 kg of pork in
a year, compared to 20 kg in 1990.13 2 These profound produc-
tion gains have meant that hundreds of millions of people are
eating more protein today than perhaps at any other time in
their lives, helping to reduce the prevalence of undernour-
ishment in the Chinese population to 10 percent, or 130.4
million.133 While these changes are certainly impressive, they
have come with a host of new food system issues related to
diets and public health. These problems warrant concerted
policy attention.
1. Food safety
There are a number of food safety issues associated with
industrial livestock feeding, and China has been in the spot-
light over the past few years for several particularly severe
offenses. While the highly publicized melamine scandals and
animal feed recalls are most well known, there are a host of
other food safety issues that haven’t reached scandal propor-
tions, but t hat are potential public healt h crises in the ma king.
All are related to the endless pursuit of producing more meat
in shorter periods of time—the “efficiency” upon which indus-
trial agriculture is based.
Livestock feeders in China (and elsewhere) use growth
hormones, antibiotics and growth promoters, such as copper
sulfate and arsenicals, to speed up the conversion of feed to
meat.13 4 As a result, these substances end up in the environ-
ment via manure runoff and in the meat and animal products
made from livestoc k. In 2010, reports linked growt h hormone
residues from livestock feeding found in milk formula, to
babies in centra l China under 15 months old grow ing breasts.135
Hormones are not yet regulated in the livestock industry in
China. Heavy metal residues are frequently found in meat,
coming from contaminated feed and water sources, and from
metals used as growth promoters.136 Add to these problems
the pesticide and myotoxin residues from feed that end up in
food products, and it becomes clear that food safety issues are
endemic to today’s livestock industry.
2. Dietary inequality and meat dreams
The processes of meat sector development and accompanying
changes in diet have been uneven. T he fig ure below shows per
capita meat and animal products consumption in rural and
urban China, comparing 1991 and 2008 levels. Despite across-
the-board increases and some progress toward narrowing
the gap, urban residents still eat almost twice as much meat
and animal products as rural residents.
Dietary inqualities mirror other rural-urban disparities.
In 2008, the average per capita urban income was 11,299
RMB ($1,688 USD), while the rural level was 4,761 RMB
Figure 5. Per Capita Meat, Poulty, Aquatic, and Animal Products Consumption, Rural and Urban China: 1991 and 2008 (kg/person/year)
0 20 40 60 80 100
Urban China
Rural China
2008
1991
Source: 2009 China Agricultural Development Report, Ministry of Agriculture, PRC
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 21
($712 USD).137 The urban-rural income ratio in 2010 is 3.33 to
1, growing from 2.56 to 1 in 1997.138 Urban annual 2008 food
expenditures (4,260 RMB, or $636 USD) were almost three
times as high as in rural areas (1,599 RMB, or $239 USD),
though rural residents spent a larger share of their income
on food (43.7 percent of rural income, versus 37.9 percent of
urban income).13 9 There is also, of course, inequality within
rural and urban areas. These data indicate that in terms of
diet and income, inequalities are persistant and systemic.
Another form of dietary inequality is the recent emergence
of so-called diseases of affluence in China. In the 1930s, 97
percent of calories in the average Chinese person’s diet came
from grains and vegetables, compared to 63 percent in 2002.1 40
Today, a process that Tony Weis calls the “meatification” of
diets is proceeding at a rapid pace.141 Meat is moving from the
periphery to the center of Chinese diets, with differences in
degree across the population. At the same time, the fast food
industry is booming, with global chains like KFC and McDon-
alds operating on what seems like every street corner in
China’s cities. Taken together, Chinese people are becoming
increasingly vulnerable to a range of diet-related diseases,
including Type 2 diabetes, coronary heart disease, obestity,
and a range of cancer s. A study in 2008 found t hat one in eve ry
four adults and nearly 20 percent of children under the age
of seven in China were overweight. In 2005, China’s central
government reported that 70-90 million Chi nese people were
clin ically obese, accounting for one-third of the global total.142
T. Colin Campbell and Thomas M. Campbell outlined the
relationship between these chronic illnesses and diets high
in animal products in their 2005 book, The China Study, which
focused on the health benefits of traditional, plant-based
diets in China.
A Chinese man in Beijing who grew up during the times of
meat rationing in the 1970s said “when I was as a young boy,
my dream was to eat meat.”143 Clearly, many in China have
realized this dream and moved well beyond the famines and
rationing of the past to eat meat everyday, and sometimes
at every meal. Others, especially in rural areas, still live
in a world where meat is a luxury. Using the $1.25 USD per
day poverty guideline, there were 150 million poor in China
at the end of 2009.144 According to Li Xiaoyun, Dean of the
Center for Integrated Agricultural Development at the China
Agricultural University, an additional 20 to 30 percent of the
rural population (140 to 230 million people) are precariously
close to slipping back below the poverty line because of sick-
ness, natural disaster or economic recession.145 This vulner-
able population is predominantly smallholder farmers, miles
away from affluence and its diet-related diseases, and who
may still dream of having more meat to eat.
C. Smallholder challenges and issues
Smallholder farmers living in China’s vast rural regions are
most vulnerable as a group to livelihood and lifestyle trans-
formation as a resu lt of feed and livestock se ctor restr ucturing.
In addition to challenges in market access and competition,
they face other intense pressures related to broader-scale
social change. The rural population is somewhere between
700 and 900 million, depending on how migrant workers
are counted. The experiences of more than half of China’s
population, therefore, need to be carefully considered in
constructing policies for agricultural development.
1. Market access and competition
Backyard pig farmers146 and small-scale soybean farmers
consistently struggle in the new market agro-economy. Pig
farmers who want to sell their animals are at a severe disad-
vantage in terms of evolving meat quality standards that favor
leaner pork, safety requirements based on international stan-
dards and the structure of state subsidy programs. First, the
longer production cycle on backyard farms produces pork with
a higher fat-to-lean ratio. While many Chinese people prefer
the flavor of this meat, market standards within China are
increasingly for leaner pork, making it difficult for small-scale
farmers to enter into certain markets. Additionally, because
they usually cannot pay for the test ing or certification sc hemes
that are currently used to verify hygiene standards (increas-
ingly using the International Organization for Standardiza-
tion (ISO) system), smallholders are excluded in terms of food
safety. At the same time, backyard farmers are largely outside
of the subsidy arena, as livestock subsidy programs are by and
large aimed at industrializing the sector. [For a more complete
look at smallholder disadvantages see, Li Jian, The Decline of
Household Pig Farming in Rural Southwest China: Socioeco-
nomic Obstacles and Policy Implications,” Culture & Agricul-
ture, Vol. 32, Issue 2, pp. 61-77e (2010).]
Small-scale soybean fa rmers have been losing money in recent
years because they can’t sell their beans at a break-even price.
Cheap GM imports, a struggling domestic crushing industry
and infrastructural challenges of getting their harvest to
potential markets, combine to create an incredibly difficult
situation. As futures markets and hedging become more
prevalent in China, smallholders are further challenged by
gaps in information delivery. There are currently four futures
exchanges in China, with the Dalian Commodity Exchange
managing trade in soybean, soybean meal, soybean oil, corn,
palm oil and petrochemical futures contracts. Efforts at
improving rural price information are underway to help fill
these gaps, but there is currently no centralized system in
place to communicate price issues to small farmers.
22 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
2. Social issues: Migrant labor, livelihoods and lifestyles
Smallholder issues can’t be separated from the urbanization
trend that is swelling the populations of China’s cities. There
are currently 240 million workers in China who constitute a
“floating pop ulation”147 t hat moves from the countr yside to cities
where they work as migrant laborers. Virtually all are classi-
fied as rural residents because they hold rural hukou in China’s
household registration system.148 Even those who have been
away working in a city for a decade or more are still considered
rural residents, and so receive social benefits only in thei r rural
homes. This means that they cannot take part in healthcare,
education and social insurance benefits that urban residents
enjoy in many cities. So while migrant worker wages flow back
to rural families, other privileges do not.
This migration, the largest in human history, has created
challenging social conditions in the countryside. Half of
migrant workers were born in the 1980s, and most are male,
though female migrants are also quite common. The result
is that in rural areas, “Just like in wartime, women, children,
and the elderly make up most of the population.”149 Those
who stay behind and continue farming are referred to as the
“773861 army,” named for elderly residents (i.e., 77 years old),
female (mostly married) residents (“38” is March 8, Interna-
tional Women’s Day), and children (“61” is June 1 for Interna-
tional Children’s Day). This army works the fields, raises the
livestock and maintains smallholder farming systems while
young family members labor sometimes thousands of miles
away from home. Families in this way are split, and the work
of agricultural production falls to those with t he least amount
of education, and perhaps those least adequately equipped to
innovate in farming practice and marketing.150 As agriculture
becomes increasingly marketized, this is yet another hurdle
for smallholders.
The processes of industrialization of agriculture on the one
hand, and the migration of labor from rural to urban areas
on the other, are both key components of the central govern-
ment’s current model of development. Experts predict that
by 2030, central policies will effectively move hundreds
of millions more people to China’s cities, leaving only 400
million in rural areas. The 1.4 billion urban residents will
need massive amounts of food, which large-scale, vertically
integrated farms and companies will largely supply. This
model is rigged against smallholders, for whom it becomes
more and more difficult to maintain their livelihoods and life-
styles. The annual cost for a soybean farmer, for example, to
keep one child in school is one-fifth of their annual income.151
Migrant labor becomes a necessity for survival, urging more
and more people toward t he cities where t hey can earn wages
that will support rural households.
Despite the drivers and incentives that are urging rural
people to urban areas, not everyone wants to migrate. The
Chongqing municipal government recently enacted a policy
that al lows farmers and ot her rural residents t o become urban
citizens by changing to an urban hukou. The program hasn’t
been as popular as officials expected, as many rural people
are opting to remain in the countryside. The primary reason
for this seems to be related to rural livelihoods and lifestyle.
A rural resident outside of Chongqing told the Global Times,
“I am familiar with the rural way of life and I could raise my
family by working on my farm. If I become an urban resident,
I would be stripped of the right to use my farmland within
three years.”152 Rural subsidies, elimination of agricultural
taxes, land policies, rising costs of living in urban areas, labor
market restructuring, and preference for rural livelihoods
and lifestyles are important reasons for people to stay in the
countryside. Even in the context of mass urbanization and
industrial agriculture, small-scale farming, it seems, will
remain a v ital part of China’s food system well into t he future.
V. Discussion: Food security and
models of agricultural development
Food security is of the utmost importance to Chinese authori-
ties. In making agricultural development policy, they must
consider not only how to feed the country’s 1.3 billion people
on a limited landbase, but also how to reign in income and
dietary inequalities and keep food prices low enough to avoid
widespread discontent. In the post-reform period, authori-
ties have been actively promoting large-scale industrial
agriculture as the supply source for addressing food security.
This model, however, falls short for addressing both land-
efficiency needs and food and income inequalities.
China must feed 21 percent of the world’s population using
only nine percent of the world’s arable land. Given these
constraints, the argument goes that further industrializing
agricult ure is the only w ay to address food needs for a huge and
growing population without bringing more land into produc-
tion. Intensive feed and livestock production are part and
parcel of this approach. Raising hundreds of thousands of pigs
on imported soy in CAFOs appears on the surface to use much
less land than so-called traditional forms of swine husbandry,
which involve small farms spread out across the countryside.
But industrial pig production is a land-intensive system in at
least two ways. First, on the input side, producing one kilo-
gram of industrial pork requires about 13 kilograms of feed.153
To meet this need, China purchases tens of millions of tons of
soybeans and corn from South A merica and the United States
every year. CAFO production, therefore, can appear land-
efficient only because livestock have been separated—some-
times by thousands of miles—from sources of feed. Second,
on the output side, industrial pork production requires huge
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 23
tracts of land to act as a sink for manure. Confining animals
at the industrial scale results in more manure than local land,
watersheds and air can absorb. As a result, CAFOs pollute,
poison, and otherwise degrade land, water and air on a scale
that extends well beyond the sites of production.
Industrial agriculture is also proposed as a way to ensure
“cheap pork for all,” a key to the Chinese conception of food
security. Government policies and subsidies support the
scaling up of pork production, particularly through highly
integrated domestic agribusiness firms. These companies, in
turn, sell pork either directly or indirectly to retail markets.
Because the middle and upper classes in China live exclusively
in cities, large-scale pig farm s are situated near urban centers,
and most commerci al pork is sold there as wel l. Industria l pork
rarely reaches poor and rural areas, and changing markets
and market standards erode rural livelihoods. This model of
food security turns out to be a model of plenty for those who
can afford it, and deficiences for those who cannot.
As a way to get around the problem of limited land, and to
increase pork availability, a new method has emerged in
recent years. The Ch inese governme nt and industr y have been
“going out” to invest in la nd i n Africa, Latin A mer ica and other
parts of Asia15 4 for feed and food crop cultivation. This move
takes development policy beyond just a focus on importing
grains and oilseeds for the domestic feed industry, toward
state and private ownership and control of resources in other
countries. Authorities are pursuing this path in the name of
increasing food security, which today means increasing meat
consumption, particularly for the upper and middles classes
in China’s cities who can afford to live the meat dream.
Given the limitations of industrial agriculture as a model of
equitable, land- and resource-efficient food security, Chinese
policymakers would be well-advised to look for alterna-
tive approaches to ensure long-term sustainability. There
are such viable alternatives based on small-scale, dispersed,
locally-situated agriculture. The World Bank and United
Nations–commissioned International Assessment of Agri-
cultu ral Knowledge, Science and Technology for Development
(IAASTD) report advocates a multifunctional role for agri-
culture in reducing poverty and social/gender inequalities,
stabalizing rural cultures, reversing environmental degrada-
tion and mitigating climate change. Stating that “business
as usual is not an option,” given the combination of climate,
energy, water and food crises, the IAASTD questions indus-
trial agriculture (and GM food) as the solution to the social
and ecological crises associated with global agribusiness, on
the grounds that markets fail to adequately value environ-
mental and social harm.155 Policies for models that do a better
job of valuing these kinds of harms, as well as multifunction-
ality, offer more sustainable and equitable ways forward.
IV. Ways forward
Given the still-growing demand for pork in China and the
various economic and policy dynamics described above,
continuing the current path of industrialization may seem
inevitable. But as this report has shown, there are consider-
able negative social and environmental impacts associated
with that path, including pollution, climate and biodiversity-
related issues, dietary and public health issues, and rural
economy and livelihood issues. This section suggests steps
that policymakers in China could take to address the prob-
lems associated with the current model of agricultural devel-
opment, and pursue a more equitable and sustainable path.
1. ASSESS THE FULL SOCIAL , ENVIRONMENTAL AND PUBLIC
HEALTH COSTS OF INDUSTRIAL P ORK AND FEED PRODUCTION .
In the absence of such an assessment, industrial livestock
feeding appears to produce relatively cheap and abundant
meat in the face of growing consumer demand, and alterna-
tives seem to carry greater costs. Some of the externalized
costs of the industrial system that need to be calculated are:
costs of cleaning up environmental pollution (water,
soil, air), including manure and agrochemical runoff
and contamination, and livelihood losses that result;
medical and insurance costs from increased morbidity
and mortality associated with pollution, overconsump-
tion of livestock products and diseases of affluence;
medical and research costs from the emergence and
spread of zoonotic diseases associated with intensive
livestock feeding;
medical and research costs associated with the emer-
gence and spread of antibiotic resistant pathogens as a
result of non-therapeutic use of antibiotics in pig feed;
costs associated with greenhouse gas emissions from
all stages of industrial livestock production;
loss of manure as a source of nutrients and organic
matter on croplands, and increased costs of manufac-
turing and using commercial fertilizers;
economic and food security costs to smallholders and
rural communities where household pig raising is
undermined by subsidized, industrial operations; and
costs associated with the loss of domesticated plant and
animal diversity.
24 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
There is also a whole set of social and environmental costs
associated with China’s policy of supplying its soy needs
through imports. In addition to the implications for domestic
small-scale soy farmers, many of these costs are felt outside
of the country. The loss of biodiversity and local livelihoods
from the conversation of forest or grassland to large-scale soy
and corn plantations in Brazil is one important example.
Once all of t hese currently h idden cos ts are taken i nto account,
China’s industrial pork will not look like such a bargain. Poli-
cymakers should adjust incentives and regulations so the
market price of industrial pork more accurately reflects its
full costs, thereby reducing its competitiveness in relation to
pork from more sustainable production systems. They should
actively pursue a production system that better balances
price, nutrition, rural livelihoods and other environmental
and social values.
2. REDIRECT RESEARCH AND EXTENSION FUNDS FROM
INDUSTRIAL PRODUCTION TO SUSTAINABLE ANIMAL
HUSBANDRY AND CROP PRODUCTION. China is home to
more than 6,000 varieties of soybeans and more than 100
indigenous pig breeds that are important sources of genetic
diversity. Recent policies and funding structures, however,
are systematically replacing these locally adapted varieties
with a narrow range of exotic, industrial ones. Research and
extension efforts should be focused conserving and utilizing
these va rieties and breeds, and innovating on sus tainable, not
industrial, methods of crop and livestock production.
3. REDIRECT SUBSIDIES FROM INDUSTRIAL LIVESTOCK
PRODUCTION TO LOCAL FOOD SYSTEMS AND FARMER
ASSOCIATIONS. Smallholder agroecosystems and the collective
systems of knowledge associated with them are steadily being
dismantled in the rush to industrialize and urbanize. Subsidies
should be combined with research and extension to support
small holders, local food syst ems and strong farmer associations.
4. PROMOTE HEALTHY DIETS FOR ALL. In the course of devel-
opment, many industrialized countries “overshot” the levels of
animal protein consumption now recognized as most healthy,
and are paying the price in the form of epidemic levels of diet-
related disease and mortality. China’s policymakers seems bent
on blindly imitating the mistakes of the West, despite having a
traditional diet identical to that recommended by contemporary
nutritioni sts. Rather t han promoting a meat-centric d iet, Chinese
authorities should promote healthy diets for all, and discourage
over-consumption of meat and animal products.
5. MAINTAIN FOOD RESERVES TO ENSURE ADEQUATE
SUPPLIES. China should continue to manage domestic food
(grain and pork) reserves to avoid shortages and to protect
the most vulnerable populations against price volatility.
These reserves should be managed in equitable ways.
6. CONTINUE TO PROMOTE HOUSEHOLD METHANE
DIGESTERS FOR BIOGAS PRODUCTION, AND REQUIRE
LARGESCALE COMMERCIAL FARMS TO BUILD BIOGAS
PLANTS. Chinese central authorities have been actively
promoting household biogas production by providing subsi-
dies to smal l farmers for methane dige sters. Of the 1 40 million
rural households in the country, the Ministry of Agriculture
estimates that 35 million currently use digesters to produce
cooking gas and fertilizer. On the other hand, less than one
percent of the 4.2 million large-scale livestock farms in
China employ t his method to deal wit h manure.156 Authorities
should require commercial farms to install large-scale biogas
plants in conjunction with their production facilities.
7. ADDRESS THE ROLES OF TRADE POLICIES AND INDUS
TRIAL CONCENTRATION IN LIVELIHOOD LOSS FOR SMALL
SCALE FARMERS. The influ x of cheap imports and t he growing
concentration of ownership by a narrow range of vertically
integrated agribusiness firms creates an uneven playing field
for domestic producers and local products. The government
should actively intervene to restrict market concentration
and create a fair market environment for small producers.
Programs should help smallholders meet changing market
and safety standards, compete with cheap imports and indus-
trially produced agricultural products, and cooperate.
8. SUPPORT DIVERSE SCALES AND FORMS OF AGRICUL
TURAL AND LIVELIHOOD PRODUCTION. Rather than
promoting a “one size fits all” model of development with
industrial agriculture as the centerpiece, recognize the key
role that smallholder farmers play in the country’s food and
agricultural system, and support these systems as vital parts
of future plans for development and sustainability.
Of course, pursuing an alternative path also has its costs.
But if fundamental government priorities of supplying ever-
increasing amounts of meat while keeping retail prices low
don’t change, alternative approaches may never receive
serious consideration. After all, many of the externalities
of the current system are either suffered by economically
and politically weak groups such as smallholder farmers, or
will be felt most acutely in the future. The pragmatic solu-
tion for current leaders may still be to stay the (industrial)
course. Meanwhile, the limitations and crises associated
with this model—water and soil pollution, increased green-
house gas emissions, antibiotic resistance, decreased species
and genetic diversity, food safety issues, dietary inequalities,
FEEDING CHINA’S PIGS: IMPLICATIONS FOR THE ENVIRONMENT, CHINA’S SMALLHOLDER FARMERS AND FOOD SECURIT Y 25
chronic disease, the squelching of smallholder livelihoods,
and the ever-widening gap between rich and poor—are
already being felt.
VI. Conclusion
Feeding China’s nearly 700 million pigs is a massive under-
taking. By pursuing an industrial model of agricultural devel-
opment, based in large part on producing millions of tons of
pork from imported feedstuffs, Chinese authorities and poli-
cymakers are promoting a paradigm that they believe will
ensure t he country’s food security. They are doing so with the
help of trade liberalization, state and private investment, and
foreign and domestic agribusiness firms.
Judged against the narrow goal of increasing the country’s
pork production, they have thus far been successful. But
the industrialization of China’s pork and pig feed also has
mounting social and environmental costs. And while these
costs may be ha rder to quantif y than rising produc tion figures,
decision-makers would be wise to take them into account and
consider whether, in the long term, another path may better
serve the nation’s food security, environment and develop-
ment needs.
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26 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
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43. Informa Economics and NGOIC , 2009.
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102. Kevin Gallagher, “The Fragile Bit of Bric: Despite Brazil’s Powerhouse Reputa-
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108. Ibid.
109. Food and Agriculture O rganization of the United Nations, Livestock’s Long
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115. Ibid.
116. Robert J. Diaz and Rutger Rosenberg. 2008. Spreading Dead Zones and
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119. Mia MacDonald and Sangamithra Iyer, Skillful means: The challenges of China’s
encounter with factor y farming, (New York: Brighter Green, 2011).
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Factori es, Says O cial Sur vey.”
121. The central government is currently promoting biogas technology as a way
to deal with excess manure from livestock production. To date, however, only one
percent of large-scale livestock and poultr y operations are using biogas digesters.
For more information see Mindi Schneider, “China’s Pollution Census, Manure
and Biogas,” Institute for Agriculture and Trade Policy Think Forward, July 19, 2010,
http://iatp.typepad.com/thinkforward/2010/07/chinas-pollution-census-manure-
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122. Bill McKibben, Eaarth: Making a Life on a Tough New Planet (New York: Times
Books, 2010), 79.
123. Ma and An, Concept Note: Sustainable S oybean Initiative in China.
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125. Sus anne Gura, “Livestock Breeding in th e Hands of Corporations,” GRAIN
Seedling, January 2008.
126. Putting Meat on the American Table: Industrial Farm Animal Production in
America. A Repor t of the Pew Commission on Industrial Farm Animal Production,
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127. Leo Horrigan, Jay Graham, and Shawn McKenzie, “Antiobiotic Drug Abuse:
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128. Horrigan, Graham, and McKenzie, “Antiobiotic Drug Abuse: CAFOs are
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129. Horrigan, Graham, and McKenzie, “Antiobiotic Drug Abuse: CAFOs are
Squandering Vital Human Medicines,” 256.
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131. Ibid.
132. Xinhua, “Per capita pork consumption doubles in 16 years,” China Daily,
September 17, 2007, http://ww w.chinadaily.com.cn/bizchina/2007-09/17/
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28 INSTITUTE FOR AGRICULTURE AND TRADE POLICY
133. FAO, “Food Securit y Statistics,” http://ww w.fao.org/economic/ess/food-
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in China,” Frontiers of Agriculture in China 3, no. 4 (2009): 471-477.
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140. Mia MacDonald, “Chinese Farms a Growing Challenge.”
141. Tony Weis, The global food economy: T he battle for the future of farming
(New York: Zed Books, 2007)
142. Paul French and Matthew Crabbe, Fat China: How Expanding Waistlines are
Changing a Nation (New York: Anthem Press, 2010), 5.
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system in China that dates back to ancient times. Hukou ocially identifies a person
as a resident of a particular area, and includes identifying information such as name,
date of birth, place of birth, and family relations. Changes in hukou are generally not
permitted.
149. Xinhua, “China’s rural population to halve in 3o years: economist,”
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150. Yan Hairong, New Masters, New Servants: Migration, Development, and
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153. Doug Gurian-sherman, CAFOs Uncovered: The Untold Costs of Confined
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2008), 18.
154. While there is very little in the way of public information (numbers) about
China’s investment in land and resources in Africa, Latin America, and other Asian
countries, anecdotal information is available from GRAIN at http://farmlandgrab.org/.
155. International Assessment of Agricultural Knowledge, Science and Technology
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