As alluded to by some previous blog contributors, H7N9 (a novel bird-flu strain) is spreading faster than the previously most-feared Avian flu (H5N9). Of course the disease is still not contactable from other humans, and contact with birds–usually chickens–is required for infection. Last month, the not-for-profit think-tank Institute for Agriculture and Trade Policy released a series of four academic reports on issues related to the rise of agriculture, changes in preferences, and food security. The reports, which I have linked to below, were about: the increased demand for meat as China’s middle class expands, the negative externalities associated with government subsidy of pork production, the horizontal and vertical integration of the dairy industry, and the externalities associated with the rise and conglomeration of the poultry industry, respectively.
- The Need for Feed: China’s Demand for Industrialized Meat and Its Impacts
- China’s Pork Miracle? Agribusiness and Development in China’s Pork Industry
- China’s Dairy Dilemma: The Evolution and Future Trends of China’s Dairy Industry
- Fair or Fowl? Industrialization of Poultry Production in China
There are some interesting paradoxes in China’s agricultural policy. China subsidizes agriculture and promotes vertical and horizontal integration of agricultural industries, while engaging in trade protection behavior–including levying high tariffs on agricultural imports and banning many agricultural products for reasons such as genetic modification. This is all while Chinese agricultural businesses demand these genetically modified strains, including by (as mentioned by previous posters) smuggling in patented seeds from the US and importing large quantities of pig semen from the UK. China’s financial assistance to the agricultural sector, downward pressure on costs, and changing consumer preferences have come with huge societal costs, similar to those experienced in the US. These include the aggravation of agricultural fertilizer and pesticide runoff, methane emissions, evolution of antibiotic-resistant bacteria and virus strains, water shortages, and decreasing food safety. The central government is not adequately taking into account these costs when pursuing aggressive subsidy of dairy produce and animal feed–but neither is the United States. Perhaps global treaties are needed, at least in terms of antibiotic use and subsidy of meat production, to effectively internalize these effects. The global nature of the agricultural industry means that the free-rider problem exists for any country considering reforms.