In 2016, around 44mn tonnes of crops were lost due to droughts & floods
Chinese farmers have long been suffering from water risks – droughts and floods (note: floods in this article include floods, waterlogging, landslides and debris flow). According to the Ministry of Water Resources (MWR), in 2016, about 2.6 million hectares of China’s cultivated land, about 9.5x the size of Hong Kong, suffered from crop failures due to droughts and floods. These resulted in the loss of around 44 million tonnes of crops. Although these account for less than one percent of agricultural value-added of Chinese GDP, it is still around RMB47 billion. Indeed, the Chinese government has been focusing on ways to develop agriculture while also alleviating crop failures. This can be seen from the agricultural focus of China’s No.1 Document for many years.
|Crop failures definition
According to Ministry of Water Resources, the area of crop failures due to floods (or droughts) is defined as the portion of the area affected by floods (or droughts) in which there is at least 80% less crop products compared to normal production years.
Below we share 5 facts that you should know about crop failures in China due to droughts and floods from differences between the north and the south to provincial level exposure and what actions the Chinese government is taking.
1. Crop failure due to drought the most severe in northern China, while no clear pattern for floods
Crop failures caused by droughts have been the most severe in northern China, which can be seen from the map below. Inner Mongolia has particularly suffered from relatively serious crop failures, especially in 2007 (it was the No. 1 ranked province for crop failures due to droughts), 2009 (No.1 ranked) and 2010 (No. 3 ranked). However, from 2011 to 2013, crop failures due to droughts lessened. In fact, during these years, crop failures caused by floods in Inner Mongolia worsened (No. 1 ranked in term of crop failures due to floods in 2011 & 2012 and No. 3 ranked in 2013). In 2014, there was another shift with droughts becoming prevalent again (No. 3 ranked in 2014 and No.1 ranked in 2014 & 2015).
Comparatively, the pattern for crop failures due to floods is not clear with occurrences in northern and central parts of China (see map below). Heilongjiang in northern China and Anhui in central China are two such examples.
Crop failures due to floods impacted an area 3x the size of Hong Kong in Heilongjiang in 2013
The biggest instance of crop failures due to floods occurred in Heilongjiang in 2013, where around 815,000 hectares, equivalent to 3x the size of Hong Kong, was impacted. This is related to the 2013 China-Russia flood, which was caused by unusually heavy rainfall near the Amur River which divides the border of China and Russia.
2. Crops grown in northern and southern China are not the same
When we are talking about crop failures in China it is important to realise that crops grown in northern and southern China are different. About 83% of corn and 72% of wheat came from northern China (see chart below). Clearly, crop failures caused by droughts in northern China can potentially affect corn and wheat supply chains in China.
3. Heilongjiang: Crop production affected by droughts & floods
In 2015, Heilongjiang was the largest national beans producer, accounting for around 28% of total beans production in China and 6% of the total crop production in Heilongjiang. According to FAO, China was the fourth largest beans producer in the world.
There appears to be a link between crop production; in this case beans, and droughts & floods
As can be seen from the right chart below, there appears to be a link between crop production, in this case beans, and droughts & floods. In 2007, there is a significant downward spike in beans production, which corresponds to a period of severe crop failure due to droughts. Similarly, there is another downward spike in 2013 though this time with a period of crop failure due to severe floods. It should be noted that other factors may also contribute to these spikes.
4. Overall crop failure due to droughts & floods appears to be falling
As can be seen from the chart below, overall crop failures due to droughts and floods seem to be decreasing. In 2016, overall crop failures were about half of the level a decade ago. Note that there are fluctuations over the period shown.
Crop failures caused by floods were relatively steady throughout the period; thus, the decline in the overall crop failures was primarily due to the reduction in crop failures caused by droughts. In 2016, floods accounted for about 59% of the overall crop failures compared to 38% ten years ago.
5. Government funds driving water-related projects with minimal private sector contribution
In order to mitigate crop failures due to droughts and floods, the Chinese government is increasing investment in measures and infrastructure to prevent their occurrences.
Funds invested in flood control projects doubled in 2011-2016
Funds invested in flood control projects increased from RMB101.8 billion (33% of total water funding) in 2011 to RMB207.7 billion (34.1% of total water funding) in 2016 – double the amount (see chart below).
In 2016, about 7% of total funding was raised from enterprises & private investment
According to the MWR, while the total amount being invested in water-related projects, such as flood control projects, soil and water conservation projects, has been increasing over the last 10 years, only a small portion was from the private sector. In 2016, about 7% of the total funding was raised from enterprises and private investment. To increase this portion, the Ministry of Finance is pushing the Public-Private-Partnership (PPP) model (See more in this article). However, the 7% portion was a significant increase (126% increase) from the 2015 value. The proportion of private investment is expected to keep proliferating in the near future.
The private sector has a role here & can tackle future challenges arising from crop failures with the Chinese govt together
Crop failures due to droughts and floods can be an issue in China on a national and provincial level. With climate change, extreme weather events including droughts and floods are going to become more common. The positive news is that the Chinese government is already on the right track to reduce crop failures. The private sector also has a role here and can tackle future challenges arising from crop failures with the Chinese government together.
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