China, China, China …

It was 10 years ago this month that I traveled to China as a farm reporter and member of the Wisconsin Rural Leadership Program. It’s a fascinating place, but not always for the right reasons.  

A decade later, not a day goes by when the mammoth nation on the other side of the globe doesn’t come up when I’m discussing agriculture as the spokesman for the Wisconsin Farm Bureau Federation.

With about a fifth of the world’s population, what happens in China has never been more important to farmers (and consumers) here in Wisconsin. For the past couple years, Wisconsin farmers have benefited from China’s growing appetite. Millions of Chinese are making the transition from the lower to the middle class. That means eating more protein instead of just rice. That means more chickens, hogs, and cattle, and it means more corn and soybeans to feed them. There’s a fairly straight line that runs between China and the strong farm economy that Wisconsin has benefited from lately.

That’s why the cautionary tale offered up by Andy Shissler, a grain marketer from Roach Ag Marketing, Ltd., who attended February’s Corn-Soy Expo, caught my attention.

He didn’t talk about runaway growth and a thriving Chinese economy. Instead, he said the massive construction phase is over. I remember well the hundreds of cranes that pierced the skylines of Beijing and Shanghai. He also said that the first wave of first-time car purchases there is largely over. He said that instead of resembling our bustling nation during that time of prosperity after World War II, China is now entering a period of malaise like what the U.S. experienced in the 1970s.

Chinese factories produce mountains of petroleum-based products, so high crude and commodity prices have hurt China’s coffers. So have inflation and sluggish trade. I’m no economist, but I know that when China starts to sniffle, much of the rest of the global economy will catch a cold.

Shissler also explained how something called the Baltic Dry Index is the proverbial canary in the coal mine when it comes to the strength of world trade and the global economy. It’s a number issued daily by the London-based Baltic Exchange that measures the cost of hauling dry freight (like grain and coal) over the world’s oceans. Back in 2008, it was an early warning sign of trouble ahead for the global economy. Last February, it fell to a 25-year low.

China’s corn and changing countryside

Nowhere has China’s metamorphosis into a global economic powerhouse been felt more than in its rural areas.

I have to admit, I didn’t get outside of China’s major cities while I was there. With populations double the size of the entire state of Wisconsin, it’s not exactly easy to slip off to the countryside. Therefore, I wasn’t aware that the country grows much of its own corn.

Shissler said that China has about 80 million acres of farmland, but most of its soils are in poor condition. Its best corn-growing area is located along the latitudinal lines of Minneapolis. It has a slower growing season and doesn’t embrace technological advances like genetically modified organisms. About 80% of its farming is done by hand. As a result, it will never grow the type of yields that the average Wisconsin farmer does.  

There’s a human side to all of this as well. About half of China’s farmers have left the land to migrate to teeming urban centers to do factory work. That still leaves about 700 million farmers who mostly farm by hand. If they were to embrace modern agriculture, what would those people do for work?

Shissler, an Illinois guy who married a woman from China, told a crowd of Wisconsin corn and soybean growers that “farming here is great, but it’s depressing in China. You are very, very, very poor if you are a Chinese farmer.”

Most readers are probably aware of China’s one-child policy. Shissler said that a generation into that societal experiment, it is creating a rash of problems. The time will come when there’s simply not enough working adults to take care of the older generation.

He also shared a tidbit about the one-child policy that I had never heard before: Chinese citizens pay dearly (about U.S.$30,000) for a certificate that allows them to have a second child. For some reason, this costly option is not available to those employed by the government. It certainly put Wisconsin’s ongoing debate over the rights of state employees in a different light.

Final thought

As I write this, tensions are boiling between North and South Korea.

After North Korea recently spent approximately $850 million on launching a long-range rocket, South Korean President Lee Myung-bak urged North Korea’s new leader, Kim Jong-Un, to reform agriculture (and improve human rights) instead of engaging in military posturing.

Apparently, Kim Jong-Un took offense to his southern neighbor’s interest in the agricultural practices of his hunger-stricken nation. It’s been said the cost of that little rocket experiment could have bought enough Chinese corn to feed hungry North Koreans for an entire year.

As I said, it’s a fascinating part of the world, but sometimes for the wrong reasons.

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