Mao Rui: Enhance global supply chain and ensure food security

2023-04-26

The agricultural supply chain refers to the network structure formed by upstream and downstream enterprises involved in the production and flow of agricultural products. Currently, China is actively strengthening cooperation with countries around the world to inject new energy into the stability of the global agricultural supply chain and sustainable agricultural development. How to enhance the resilience of the global supply chain and maintain food security? Professor Mao Rui from the China Academy for Rural Development at Zhejiang University was recently interviewed by our reporter on the issue.

 

Mao Rui believes that China's global agricultural supply chain has good resilience and has played an important role in ensuring food security. However, it has also been affected by multiple challenges such as external dependence, concentration of sources, constraints on seed industry and critical technologies. Comprehensive strengthening of the foundation of food security is the bottom-line goal of building a strong agricultural country and a strategic guarantee for promoting China’s modernization. China must comprehensively improve its ability to prevent, guarantee, control, and resolve global supply chain risks and ensure food security.

 

China Daily: The global supply chain of agricultural products, while ensuring food security, also brings challenges. What are the potential risks?

 

Mao: First, climate change will exacerbate the instability of imports. In 2022, global food production decreased by 2% due to sustained high temperatures and droughts, and this might accelerate stricter ecological policies in Brazil and other countries.

 

Second, trade changes will cause uncertainty in the circulation section. The proportion of non-tariff barriers to trade in agricultural products in new trade measures has exceeded 80%, and risks related to energy and transportation are increasing.

 

Third, lack of pricing power will lead to inflationary pressures on the consumption end. For example, the United States has gained major pricing power in agricultural trade through trading currencies, futures markets and multinational corporations, causing import prices of wheat, corn, and soybeans in China to increase by more than 20% year-on-year in 2022 due to the US quantitative easing policy.

 

Finally, upstream monopolies will weaken the competitiveness on the production end. The total research and development investment of the top 50 seed companies in China is less than one-seventh of Monsanto's. A large number of original patents are monopolized by Western countries, and the international competitiveness of agricultural products has continued to decline from the 0.8 level in 2002. The self-sufficiency rate of potassium fertilizer, for example, has remained at around 50% for a long time.

 

China Daily: We know that promoting global food security cooperation and climate change governance is an important way to prevent and resolve food security risks. What specific measures should be taken?

 

Mao: On the one hand, we need to seize opportunities such as international food security cooperation initiatives, the Belt and Road strategy, and regional comprehensive economic partnership agreements to improve the multilateral and bilateral cooperation framework for food security.

 

On the other hand, we need to tap the potential of food imports from regions such as Southeast Asia and Central Asia, and build a diversified import pattern, focusing on reducing the concentration of sources of major varieties such as soybeans and corn.

 

In addition, we need to coordinate and promote international negotiations on global climate change, actively promote strategic dialogue and cooperation with key regions such as Europe and the United States, accelerate technological innovation cooperation and platform building, and play a greater leading role in global climate change governance.

 

At the same time, we need to fully rely on international organizations such as the United Nations and South-South Cooperation and China's relevant regional cooperation strategies to provide technical and equipment support for the green transformation of developing countries in the field of agriculture adaptation.

 

China Daily: How can we improve the risk monitoring and early warning system and strengthen the emergency response system for food security?

 

Mao: First, we should firmly uphold the multilateral trade system based on the World Trade Organization, lead the development of global food trade through high-level institutional opening-up. It is important to push for greater trade and investment liberalization and facilitation, and improve coordination mechanisms for international trade policies.

 

Second, we should strengthen the tracking, investigation, and evaluation of production levels in the global main food-producing areas and the safety of key shipping channels, rely on trade barrier warning points and research teams at all levels to carry out trade policy simulation, judgment, and warning, and establish a comprehensive risk monitoring system.

 

Third, we should improve storage conditions and technical level, accelerate the construction of a modern food logistics system, vigorously promote the development of national hubs, international channels, shipping capacity and multinational circulation enterprises, and continuously expand the global circulation network.

 

Finally, based on cost analysis and risk assessment, we should develop the comprehensive emergency plans for the structure of imported food products, source channels, and transportation routes.

 

China Daily: How can we enhance the management capacity and bargaining power of global industrial supply chains, and improve the level of risk control?

 

Mao: First, we should optimize the reserve storage system and regional layout of important products, strengthen the construction of the food emergency support center and its reserve regulation capacity, and improve the demand assessment and generation mechanism to solve the problems of "what to store" and "how much to store".

 

Second, we should strongly support domestic grain traders to invest overseas to achieve a global layout of the entire industry chain from production, processing, trade to sales, and actively explore the management mode of "capitalized control, specialized operation, industrialized development, and digital empowerment" to enhance the management capacity of the supply chain.

 

Third, we should deepen the market-oriented international reform of agricultural futures trading, optimize the pricing and settlement mechanism of agricultural futures, expand opening-up and encourage diverse participation.

 

Finally, we should establish an international agricultural standardization system based on key products and major strategies, strengthen the basic research, tracking evaluation, and formulation and implementation of international standards, and enhance the discourse power and influence over prevailing standards.

 

China Daily: Accelerating the construction of a modern grain industry system, achieving modernization and independent control of the grain industry chain, is of great significance for enhancing food security capabilities. What specific measures should be taken?

 

Mao: First, we should promote the construction of a national food security industry belt. This involves relying on grain-producing areas, characteristic grain and oil-producing areas, and key logistics nodes to create a cluster of grain industry and processing enterprises, build a modern grain industry production and operation system, and promote quality improvement and efficiency enhancement.

 

Second, we need to accelerate the protection, utilization, and introduction of germplasm resources. This involves strengthening basic research, technological innovation, seed breeding base construction, and cultivating leading enterprises. We should also establish sound mechanisms for financing guarantees, property rights protection, and joint innovation. In an orderly manner, we should promote the application and promotion of biological breeding technology to ensure seed industry safety.

 

Third, we should promote the supply-side reform and upstream-downstream cooperation of the fertilizer and pesticide industry, coordinate domestic production expansion and overseas plant construction to enhance the supply and stable price capacity of potassium fertilizer and important raw materials.

 

Finally, we should continue to promote the reduction of fertilizer and pesticide usage and the adoption of green technologies, accelerate the construction of a more sustainable food security guarantee system.