China hunger may outstrip food supply

March 10, 2011

The Governor of the Australian Reserve, Glenn Stevens has raised the prospect of a global food shortage, saying just as China is driving demand for steel, it will soon be driving demand for livestock and grain.
Speaking to the Australian Business in Europe forum in London, he said there was already a trend towards higher protein consumption in China that would have big implications for global demand and prices.
''These price rises will be unwelcome for very poor countries whose populations spend much of their meagre incomes on food,'' he said.
''For practical purposes they amount to a supply shock for the advanced countries - someone else's demand has pushed up the price at which markets are prepared to supply commodities.
''New capacity is being planned in many resource commodities. In Australia, where iron ore shipments are running a little over 1 million tonnes a day, projected capacity expansion will likely take that to about 2 million tonnes within four or five years.
''In the case of foodstuffs, much of the growth in supply will need to come from productivity gains or greater farming intensity. The experts seem to think that such productivity gains are possible but not given. In fact, the rates of productivity growth will need to be higher than those actually observed in recent years.''
Reserve Bank assistant governor Philip Lowe yesterday told the Australian Industry Group in Sydney that some manufacturers might be left behind as Australia increasingly moves towards producing services.
Although made worse by the high dollar, manufacturing had been declining in importance since the 1970s.
''It used to be 20 per cent of employment, it's now down to around 9 per cent. There's a long-term trend,'' he said. ''For the economy as a whole, though, income growth is strong, employment is strong and the structure of the economy is evolving.
''This is likely to be with us for quite some time. It presents tremendous opportunities. If we seize them we will do very well, even though at the individual level some firms will not do that well.
''But for the country as a whole, for the average living standard of 21 million of us, we will do very well.''

China unveils its 12th Five Year plan in Beijing

BEIJING- China opened its annual parliamentary session on Saturday, unveiling a five-year development blueprint and striving to handle pressing economic issues including inflation.
Nearly 3,000 National People's Congress (NPC) deputies from across the country, and more than 2,000 members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), the top political advisory body, are present in the Great Hall of the People at the opening meeting of the Fourth Session of the 11th NPCThe world is watching how China copes with the current complex situation and seizes the strategic opportunity for its development in 2011, the start of its 12th Five-Year Plan and the 90th anniversary of the founding of the Communist Party of China (CPC).
At the meeting, Premier Wen Jiabao delivers a report of government work. Top CPC and state leaders Hu Jintao, Wu Bangguo, Jia Qinglin, Li Changchun, Xi Jinping, Li Keqiang, He Guoqiang and Zhou Yongkang are present at the meeting.
In his work report, Wen said China "still faces an extremely complex situation for development this year."
"The world economy will continue to recover slowly, but the foundation for recovery is not solid," he said.
He noted some long-term and short-term problems in China's economic activities were intertwined, and institutional incongruities and structural problems were stacked up together, making the country's macro-control more difficult.
China will increase its gross domestic product (GDP) by around 8 percent this year, further optimize the economic structure, keep the consumer price index (CPI) increase around 4 percent, create more than nine million jobs in urban area and keep the registered urban unemployment rate at 4.6 percent or lower, according to the report.
China sets a target of 7 percent of annual economic growth over the next five years with significant improvement in the quality and performance of economic development, according to Wen.
Wen said China needs to maintain continuity and stability in its macroeconomic policies and make them more targeted, flexible and effective.
"We need to correctly strike a balance between maintaining steady yet rapid economic development, restructuring the economy and managing inflation expectations, pay more attention to maintaining overall price stability, and prevent large economic fluctuations," he said.
To check price hikes, China will make stabilizing price levels a "top priority" in its macroeconomic control this year, according to Wen.
To control the rise of prices, China will manage market liquidity, ensure the production and supply of major farm products and daily necessities, strengthen the oversight and supervision of prices, maintain market order and improve the system of subsidies, according to the report.
Sheng Yafei, an NPC deputy and Communist Party chief of the Songjiang district of Shanghai, said he had confidence in the central government in controlling commodity prices this year despite all the difficulties.
"There are favorable conditions for the country to control commodity prices: we have had gains in grain output for seven consecutive years, abundant supply of industrial products, and huge foreign exchange reserve,"  he said.

Bright Food trys again to secure a strategic stake in an attempt to build a global food company

BEIJING - Bright Food Group, China's leading food group, is optimistic about its bid to purchase a stake in France's Yoplait, an executive told China Daily on Thursday.
Although the competition is "quite fierce" among the bidders, the company is quite "serious" about the deal, the executive added.
Bright Food will accelerate steps to turn itself into a global food group through mergers and acquisitions in the coming five years, Ge Junjie, deputy general manager of Bright Food Group and also a national committee member of Chinese People's Political Consultative Conference (CPPCC), said in an exclusive interview with China Daily on the sidelines of the CPPCC.
China Business News said Bright Food has entered the final round of bids for a 50 percent stake in the global yogurt maker. General Mills Inc and Nestle SA are among the other leading bidders for the Yoplait stake.
Bright Food's offer is said to be the highest at about 1.7 billion euros ($2.36 billion), according to a Bloomberg report quoting sources close to the matter.
"Capital for bidding is not a problem for us, but we believe the deal is very important for the company," he said.
Analysts said a successful bid for the stake could help the company to control premium dairy farms and assist Bright Food's expansion into the high-end market.
"By acquiring 50 percent share in Yoplait, Bright Food will have some control over the company, including its dairy farms. It is an effective way for Bright Food to secure the quality of its products and to strengthen its position in the yogurt market," said Zhou Jiaxing, an analyst from Guoyuan Securities.
The Shanghai-based Bright Food is a food industrial giant in China, and its business covers dairy, sugar, spirits and snacks.
In 2010, the company's sales were between 85 billion Rmb and 90 billion Rmb, and "are expected to exceed 100 billion Rmb ($15 billion) this year if overseas deals are made," said Ge.
"The next five to 10 years will be the golden period for the internationalization of Bright Food. We aim to build it into a globally reputed food company by then," said Ge. "Nothing is impossible, but we are still at the starting point."
Bright Food will be expanding three major businesses - dairy, wines and sugar - overseas, and its target destinations include Australia, New Zealand, North and South America and Europe.
The company came into the limelight in the global market last year when it expressed an interest in buying assets of global giants such as Australia's CSR and the US nutritional product retailer, GNC.
But it didn't succeed in its overseas ambitions as it lost out to Singapore's Wilmar International last July for the sugar and biofuels unit of CSR and abruptly ended discussions with GNC and the UK-based United Biscuits.
After having gained knowledge and experience during the past year, the executive believes the company will succeed in overseas acquisitions this year.