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Losing Domestice Agriculture

After China entered the WTO, its agriculture industry has seen two important phenomenon that haven't attracted enough outside attention; one is the purchasing of soybean processing by foreign firms; the other is the batch of Korean, Japanese, and Taiwanese firms that are setting up new facilities here. Both will directly influence future agricultural liberalization policy, agricultural development, and may spur other transformations as well. 

China's soybean processing industry is gradually being taken over by foreign investors, which is well illustrated by the fact that here is only one large-scale pressing firm here that hasn't been acquired by a foreign investor. It is said that after 2007, the extraction industries will never again have purely Chinese-invested players. 

In recent years, China's average soybean output has been approximately 16 million tons. China's National Grain and Oil News Center predicts that for the 2005-06 harvest year, soybean consumption will reach 42.32 million tons. Among that, 32.5 million tons was extracted. 

Helongjiang province's peasant's make little profit from soybean planting, while the costs are increasing; approximately 1.22 yuan per half kg, a .08 yuan increase over 2005. According to recent soybean market price calculations, soybean planters will experience losses. According to Heilongjiang's most recent survey, 2007 will see a decrease in ten percent of soybean growing area. 

One-third of people in Heilongjiang rely on soybean-derived income for survival. With this deficit, an imported 20 million tons is necessary. But when more than 20 million tons is needed, with every extra 1 million ton imported, there will be 1.3 million citizens forced out of the soybean planting industry and possibly off of their land. Because each 1 million tons requires 1.4 million acres of plowable land, and per-capita land possession among Heilongjiang's agricultural population is 1.1 plowable acres, any fluctuationin soybean imports will affect millions of peasants. 

Then why not try growing something else? In western Heilongjiang, it is difficult to grow anything but soybean. The increase in soybean imports have already forced many domestic planters to reduce output, making their way of life difficult. 

Besides low soybean-oil extraction rates and high production costs, the subsidies of other governments are also important. In 2001 alone, US soybean subsidies totaled $19 billion, or 30 percent of export prices. 

There is domestic worry about the trend of 'complete westernization' of the soybean processing industry and the hardship this causes for those whose lives depend on it. But the Agricultural Research Center considers this attitude unacceptable, arguing that 'if industry as a whole can withstand foreign investment and products, why can't the processing industry?' and 'if the automobile industry has so many joint-ventures, will it experience the same trend?' 

I'm worried that in a short period of time, dairy products, wheat, corn, or rice will also receive foreign investment. 

Labor-intensive agricultural products have been the mainland's traditional specialty, selling at 3.7 percent the cost of their Japanese counterparts, 4 percent of Korea's, and 5 percent of Taiwan's. After entering the WTO, the mainland's labor-intensive agricultural product exports increased rapidly, with around 12 percent growth year-on-year. Asia is our biggest market.  

Since entering the WTO, each year thousands of Japanese, Korean, Taiwanese agricultural businesses have come to the mainland to set up operations. They use our cheap land and labor to produce labor-intensive agricultural products and take foreign market share away from China. It can be forecasted that Japanese, Korean, and Taiwanese firms will eventually become the driving force behind the mainland's agricultural industry. 

While inspecting Taiwan's south this journalist was told that when the US started to seize Taiwan's rice market share, the Taiwanese government began giving rice producers a yearly 30,000 yuan per-acre subsidy. They then went to mainland China where land costs 600-1,800 yuan per acre a year and built state-of-the-art agricultural parks, the labor-intensive products of which will be sold off in Japan, Korea, Hong Kong, and European markets. 

Within the WTO framework, the idea of 'free and fair' trade in agricultural products is sheer nonsense. Whether it's conscious or not, we are basically allowing highly subsidized foreign agricultural firms to 'freely' seize markets that have traditionally been accessed by our farmers. 

In December of 2005, on the eve of the Hong Kong Ministerial's 'NGO Roundtable', WTO Secretary General Pascal Lamy and the Philippine delegation had this conversation: 

Lamy: Foreign investment in the Philippines has modernized your agricultural industry, turning peasants into farmers, increasing their income.. is this bad? 

Philippine Representative: Mr. Lamy, after our peasants were forced into bankruptcy, only a few became farmers. The majority gushed into the cities. But there is no work in the cities-- even Hong Kong has 700,000 highly educated Philippine women working as housekeepers. 

Lamy: This isn't good?  

Hong Kong Philippine Housekeeper Representative: We want to go home! This is not a life we need! 


Do we plan to rely on public funds to help the hundreds of millions of displaced rural laborers? Do we really want to become a second Philippines? 


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