[FoRK] That which was foretold...

Adam L Beberg <beberg at mithral.com> on Mon Jun 18 21:27:43 PDT 2007

... comes to pass. But I'm sure the 60m+ men who will never find wives 
since they killed all the girls will handle this added burden just fine.

http://atimes.com/atimes/China_Business/IF16Cb02.html
China wants food first, not fuel
By Antoaneta Bezlova
Jun 16, 2007

BEIJING - A customary Chinese greeting from the years of rations and 
shortages - "Have you eaten yet?" - is being jokingly resurrected as the 
public watches the prices of key staples, particularly pork, soaring by 
the day.

Chinese economic minders, however, are not amused. Worried about social 
instability fueled by inflation, they have been mulling over whether to 
steady prices by using the state strategic reserve



of hundreds of thousands of live pigs kept at special farms for 
contingencies.

Disturbingly, this is the second time in seven months that the Chinese 
leadership has had to resort to the country's strategic reserves to 
stave off politically dangerous increases in food prices. In December, 
Beijing ordered the auctioning of some of the state wheat reserves to 
halt the rise in crops prices and prevent panic among the public.

"Almost every inflationary crisis in the past 20 years has begun with an 
increase in food prices," noted Xia Yeliang, professor of economics at 
Peking University. "Historically Chinese people have always regarded 
food as their first necessity. For people of middle age and the elderly, 
the memories of most recent times when food was lacking still endure."

The last big famine China experienced - arguably the greatest in human 
history - during the disastrous Great Leap Forward experiment with 
communist industrialization in the late 1950s, killed up to 30 million 
people. Since then, ensuring food sufficiency for the country's 
population of 1.3 billion has been regarded by Chinese leaders as a 
matter of national security.

Current hikes in both grain and pork prices are blamed on the same 
culprit - the ethanol industry, whose explosive growth has been gobbling 
up a growing share of China's corn (maize) harvest traditionally 
preserved for food and animal feed.

Having promoted the production of the environmentally friendly gasoline 
additive for years, Chinese economic planners now fear the sector has 
grown too much and too quickly, presenting them with an uncomfortable 
dilemma of choosing between the country's green agenda and its national 
food security.

Leadership fears were clearly manifested late last month when Premier 
Wen Jiabao visited a meat market in Xian, central China, to check the 
prices of pork. He called on local officials to pay pig breeders to 
increase production and tried to reassure the public that the situation 
was under control. As of mid-May, prices of pork were up by 43% compared 
with the same period last year, said the Agriculture Ministry.

Soaring pork prices have been partly blamed on outbreaks of contagious 
pig disease, which swept 22 Chinese provinces, killing 18,000 pigs in 
the first five months of the year and disrupting the pig industry. About 
a million pigs died from the disease last year.

Yet the root of the problem, according to officials, is not the disease. 
"The main reason is the big price increases of animal feed that began 
last June," Jia Youling, director of the Veterinary Bureau affiliated 
with the ministry, said at a press briefing this week.

Pig feed, which is made mostly of corn, simply followed increases in 
corn prices. Prices of the commodity have risen by up to 30% since the 
latter half of last year, according to the ministry.

What is more, producers have ignored a government limit on converting 
about 3 million tonnes of corn into ethanol a year and used up to 16 
million tonnes of the crop in 2006, the ministry said in April.

China has been encouraging the production of biofuel such as ethanol and 
bio-diesel from renewable resources to satisfy the country's voracious 
appetite for energy and reduce its growing dependence on imported petroleum.

Biofuel is also touted as green panacea for environmental problems 
caused by oil. Chinese planners have made the development of green 
energies a key priority in the country's five-year economic plan. By 
2020 they want renewable energy to account for 15% of the country's 
total supply.

While a relative latecomer to the biofuel market, in the past two years 
China has grown to be the world's third-largest producer after Brazil 
and the United States.

The National Development and Reform Commission (NDRC), China's top 
planning body, reported in December that the country's ethanol capacity 
had reached 10 million tonnes, or 10 times the amount approved for the 
four government facilities in Jilin, Heilongjiang, Anhui and Henan 
provinces.

The excess amount has been coming from a cluster of small, unlicensed 
producers, who sell their production to officially approved mills or oil 
refineries. Industry insiders say that just Jilin, one of the nine 
designated provinces where ethanol is sold, has more than 400 ethanol 
mills, all of them producing the fuel from corn.

Fearing that the explosive growth of the ethanol industry was making a 
serious dent in the country's grain reserves, the central government 
stopped approving new corn-based ethanol plants in December. This month 
it took another step, announcing that it would stop the production of 
ethanol from corn altogether.

Xiong Bilin, a senior official with the NDRC, said the State Council, 
China's cabinet, has decided ethanol should be developed without 
occupying arable land, large-scale consumption of grain, or damage to 
the environment.

Despite three straight years of bumper harvests, Chinese planners are 
still worried that fast-shrinking farmland could affect grain supply in 
the near future. Arable land is said to have shrunk by 8 million 
hectares between 1999 and 2005.

"The country will not approve new projects of food-based ethanol," Xiong 
told a development forum in Beijing last week. "The current four [state] 
plants engaged in making ethanol from corn are urged to switch to new 
sources."

This, however, might not see the end of corn-based ethanol production in 
the country. Chinese press reports say domestic corn processors are 
rapidly expanding their capacities to resume ethanol production when the 
government relaxes its stance.

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