{"id":26948,"date":"2017-11-15T23:04:47","date_gmt":"2017-11-16T04:04:47","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/making-hay-how-drought-in-california-is-affecting-chinese-dairy-farmers-and-what-the-chinese-government-is-doing-about-it\/"},"modified":"2017-12-01T18:25:39","modified_gmt":"2017-12-01T23:25:39","slug":"making-hay-how-drought-in-california-is-affecting-chinese-dairy-farmers-and-what-the-chinese-government-is-doing-about-it","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/making-hay-how-drought-in-california-is-affecting-chinese-dairy-farmers-and-what-the-chinese-government-is-doing-about-it\/","title":{"rendered":"Making Hay: How Drought in California is Affecting Chinese Dairy Farmers and What the Chinese Government is doing about it"},"content":{"rendered":"

Chinese consumers are hungry for beef and dairy. Domestic milk production has risen 10-fold in the past 20 years. [Wang]. And thirsty Chinese consumers mean hungry cows. Productive dairy cows can consume several tons of hay per year. [UNL] Unfortunately, Chinese production of hay has not kept up with demand \u2013 imports of US hay in the form of alfalfa increased from .2 MT in 2010 to 1.3MT, of 60% of overall consumption, in 2016 [USDA].<\/p>\n

Economic overseas trade of hay is an oddity of our times. Historically, due to its low value:volume ratio, dairy farmers have typically looked to local \u2013 and certainly domestic \u2013 sources for their alfalfa. Now, container ships dropping off goods manufactured in Chinese factories are sailing back across the ocean packed with alfalfa. Shipping rates are had at bargain basement prices as the giant ships would otherwise return empty. [NPR][LA Times]<\/p>\n

The practice is not without controversy. California alfalfa cultivation consumed more water than any other application during California\u2019s historic drought over the past decade. [Hanson] In Arizona, water from the Colorado River feeds thirsty desert alfalfa farms producing silage destined for export. [NPR] As California residents are asked to tear up their lawns, limit their showers, and invest in pricey desalinization plants, is it sustainable to, in effect, export more than 100 billion gallons of precious water in the form of alfalfa to Chinese dairy farmers? Droughts in California are only becoming more common. [Stanford] Can the Chinese government afford to roll the dice on alfalfa imports from the USA?<\/p>\n

Indeed, the Chinese government is taking numerous steps to domestic alfalfa supply. In the short term, the government has incentivized alfalfa production with annual tax credits and other financial incentives totaling $44m [Biomin][USDA]. In addition, the FAO (Food and Agriculture Organization of the United Nations) has been allowed to train farmers in the Ningxia Hui Autonomous Region on modern Alfalfa cultivation practices [FAO] To address the problem in the medium term, the government took a major step forward in its 13th<\/sup> 5 year plan for the agriculture sector, released in January 2017. [BMI][USDA] Specifically, the Ministry of Agriculture released its regional and nation strategies in the \u201cNational Alfalfa Industry Development Plan (2016-2020).\u201d The report lays out a continued focus on the expansion commercial operations in the North and Northwest at the expense of grains, on local production\/consumption in Northeast China and Inner Mongolia, and the production of silage in the South. [USDA][CN Chemicals]. Nationally, the five year plan calls for the development of new alfalfa varieties, expansion to 6 million mu<\/em> (1\u00a0 mu<\/em> is approximately 1\/6th<\/sup> acres) of alfalfa production, modernization of planting\/harvesting techniques, and the construction of hybrid hay farms and dairy facilities. [USDA]<\/p>\n

Through the five year plan, domestic hay production is expected to increase from 1.8MT in 2015 to 5.4MT in 2020. However, due to explosion in demand for beef and dairy products, import volume is expected to actually increase from 1.2 to 1.5MT in the period. [AgriHQ][Wang] The 1MT shortfall presents a risk to Chinese dairy farmers as suppliers in the western United States face increasing pressure to reduce water consumption. More needs to be done.<\/p>\n

While data on alfalfa yield in China is limited, \u201cfield research suggests that most regions have low yield and low quality\u201d [Wang]. US farms, by contrast, generated >3.3. tons per acre in 2015. [USDA Yield] To accelerate alfalfa yield improvements, the Chinese government should consider attracting American producers to form JVs with local Chinese alfalfa farms. In exchange for increased access to the Chinese alfalfa market, US firms can educate their Chinese counterparts on state-of-the-art farming practices.<\/p>\n

In addition to enhancing domestic production, Chinese authorities ought to look diversify their hay supply geographically. Many studies suggest climate change will have different impacts on agriculture in different regions. [FAO Climate] In order to ensure economical import, additional international suppliers will have to already be receiving Chinese goods at their ports. Subscale but wealthy exporters such as Australia ($73M in 2015 hay exports to China in 2016, compared to $417 from the US) and Canada ($16.8m) may be good candidates. It may make sense for the Chinese government to with other major alfalfa importers such as Saudi Arabia (expected to import >1MT by 2018) to develop these markets. [UCANR]<\/p>\n

The author is left with several open questions:<\/p>\n