‘Sharp swings’: why China is warning of food security risks despite bumper crops

The country has sufficient staple grain supplies, but Beijing said the nation’s food sector still faced structural challenges, including a weak processing industry and a lack of high-quality crop varieties in some areas.

These weaknesses could pose problems for China if global food markets were to experience a shock, although a policy document interpreting Beijing’s 15th five-year plan – its top socio-economic development blueprint – said there were currently no signs of widespread shortages.

“Risks of sharp swings in global food prices remain, driven by factors such as extreme weather, geopolitical conflicts and speculative capital,” said Liu Huanxin, a commissioner at the National Food and Strategic Reserves Administration, in the report released earlier this month by the National Development and Reform Commission (NDRC).

Price fluctuations could impact domestic market expectations, ripple through downstream industries and complicate Beijing’s efforts to stabilise costs and food supplies, officials cautioned in the document.

In its latest warning about rising inflation caused by conflict in the Middle East, the Food and Agriculture Organization (FAO) said ships carrying critical agricultural inputs must resume transit through the Strait of Hormuz “as soon as possible”.

Disruptions to the strategic waterway have pushed up prices for oil, natural gas and fertilisers since the war began on February 28, amplifying global risks.

“The clock is ticking,” FAO chief economist Maximo Torero said on Monday, as delays risked raising input costs and hitting crop yields.

“The last thing we want is lower crop yields and higher commodity prices and food inflation for the next year,” he said.