China is Running Out of Farmland

China is running out of arable farmland and water resources necessary to feed its massive population. The nation has one of the lowest ratios of arable land relative to population, and the situation has been exacerbated as industries consume scarce water resources necessary for farming.

This problem has been out in the market for awhile, but government officials are warning that that situation is getting worse, not better.

China Daily:

Acute shortages of reserve farmland and water resources are now the main restraints for the country to ensure its food security, Zhang Ping, minister of the National Development and Reform Commission, said on Thursday while making a report to the top legislature.

Government efforts to fix the problem haven’t exactly been going as planned:

Facing a rising population, the central government plans to boost China’s annual grain output to more than 550 million tons by 2020, an increase of 50 million tons over 2007.

By contrast, the cultivable land in the country sharply decreased from 130.04 million hectares in 1996 to 121.72 million hectares in 2008 due to rapid urbanization and natural disasters, figures from the National Bureau of Statistics show.

Also, the current per capita cultivated farmland is about 0.092 hectares, which is only about 40 percent of the global average. Less than 4.7 million hectares in the country can be considered reserve farmland, Zhang told the legislature.

Officials have said that China might not be able to meet government agricultural output targets for the next decade.

While this is bad news in terms of China’s food security, it’s a massive opportunity for agriculture-related companies around the world. Whether it be Potash Corp (POT), BHP’s latest high-profile fertilizer M&A target, or merely America’s vast agricultural industry, a shortage of food in China could easily result in a boom for business over the next ten years and beyond.

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