|
Commercialization of Food Consumption in Rural China
Fred Gale, Ping Tang, Xianhong Bai, and Huijun Xu
Economic Research Report No. (ERR-8), July 2005
Many analysts anticipate that China's changing food consumption
patterns will affect world agricultural trade and create new
export opportunities for farmers in the United States and other
countries. Much of the attention is focused on the effects of
the emerging consumer class in China's cities, but a careful
assessment of China's food and agricultural markets requires
an understanding of rural food consumption patterns as well.
China's rural population—historically about 80 percent
of the country's total but now just over 60 percent—has
in the past been isolated from the urban economy, mostly engaged
in semi-subsistence farming with relatively little cash income
available.
What Is the Issue?
Much of the food in China is consumed on the farms of households
who produce it. Consumption of self-produced food is a key difference
between rural and urban food consumption and is a factor often
ignored in studies of China's food markets. Though China's rural
households carry on the tradition of growing most of their own
food, as they enter the mainstream of the country's economy,
they are purchasing more of their food than ever before. With
its vast size, China's rural population is thus emerging as
a huge viable market capturing the attention of food and agricultural
industries in the United States and other countries. The addition
of tens of millions of consumers into China's food system will
likely affect world markets.
To measure the potential effects, it is necessary to first
evaluate trends in the consumption of self-produced and purchased
food by China's rural consumers over a recent period. In the
context of China's increasingly market-driven and globally integrated
economy, it is also necessary to measure changes in rural consumption
patterns, and changes in the way rural households allocate their
cash expenditures among various food and nonfood items.
What Did the Project Find?
China's rural households averaged just $107 in food expenditures
per person per year in 2003, yet rural residents are generally
not malnourished. Rural households minimize their expenditures
on food by relying on self-produced grain and other foods to
meet most of their basic energy and protein requirements. The
cost of self-produced grain is just a fraction of the cost of
purchased food, so consuming self-produced food frees up limited
cash to spend on nonfood items, such as housing and school fees.
While rural households in China show a persistent reliance
on consumption of self- produced food, trends show a rise of
7.4 percent per year in commercialization, or cash purchases,
of food from 1994 to 2003. Over the period, consumption of self-
produced grain and vegetables declined and cash purchases of
food rose at rates faster than can be explained by income growth.
Until the early 1990s, food accounted for roughly half of rural
household expenditures. By 2003, consumption of self-produced
food declined sharply, but purchased food maintained a steady
share of rural household budgets. Households with higher incomes
and those in the more developed eastern region of China purchase
most of their food, while those with lower incomes and those
in western provinces still grow most of their food. Since 1995,
consumption of nonstaple commodities, such as meats, eggs, fruit,
and fish, is most commercialized, while consumption of grains
and vegetables by rural households is still reliant on self-production.
Food's share of rural household budgets in China is shrinking
as rural residents spend proportionally more on school fees,
housing, heath care, transportation, communications, and household
goods. However, expenditures on food consumed away from home
in restaurants and cafeterias are one of the fastest growing
items in rural budgets, doubling in share between 1995 and 2001.
Analysis of household expenditures also reveals that the shift
from self-produced to purchased food cannot be explained by
income growth or changes in other household characteristics.
The commercialization of rural food markets may be attributable
to factors that are difficult to measure, including improved
communications, transportation, increased interchange between
rural and urban populations, increased numbers of rural food
stores and restaurants, and a shift from subsistence agriculture
to cash crop production. The commercialization trend is integrating
rural areas into larger regional and national markets, and food
retailers and distributors are beginning to include the rural
population in their marketing plans.
How Was the Project Conducted?
This study analyzes patterns of food consumption and expenditure
using data from an annual rural household survey conducted by
China National Bureau of Statistics. The analysis uses both
published and unpublished data to provide a glimpse of China's
rural households not previously documented. Trends analyzed
include rural food expenditure and consumption patterns from
the early 1990s to 2003, a period of rapid change and development
of markets in China's rural economy. Econometric analysis of
household survey records from three Chinese provinces for the
years 1995 and 2001 helped show how expenditures vary across
households at different income levels.
|
