Cash Crop Conference: Taking a look at agricultural development

Some 50 international agroeconomists met at the Cash Crop Conference from 4 to 7 June 2018 in Beijing, China. The conference was organised by the agri benchmark Cash Crop Network together with the Chinese Academy of Agricultural Sciences. Agri benchmark Cash Crop is a global non-profit-network of agroeconomists coordinated by the German Johann Heinrich von Thünen Institute and the non-profit company Global Networks.

Decline in global commodity prices?

Crop production remains a tight-margin business, the experts stated. Despite tight margins, output has not been reduced so far. On the contrary, the newcomers in global commodity markets in Eastern Europe and Latin America boosted their output in recent years. Consequently, global commodity markets are growing at a remarkable pace: since 2012, the top 10 soybean producers increased exports by about 8.2 per cent per year; in corn the annual growth rate was 7.4 per cent and in wheat 4.9 per cent.

With the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO) projecting a clear growth-rate drop in the demand for cereals and oil seeds, experts anticipate a further decline in commodity prices.

Strong boost in China’s cooperative farms

The farm tours in China and the scientific exchange with Chinese economists revealed the strong and increasing financial support for crop production: import tariffs, minimum prices, area payments and input subsidies are very important for wheat, rice and corn. This leads to domestic grain prices being up to 60 per cent above world market prices.

Furthermore, cooperatives investing in machinery and installation investments such as irrigation equipment are subsidised by up to 80 per cent. The downside from this development: land rents are very high, which makes it hard for producers to grow their business.

The Chinese government puts a lot of effort into the creation and growth of cooperatives and so-called conglomerates which are basically private companies: in 2016 more than 44 million farmers were members of a cooperative – up from 1.3 million in 2008.

The business model of the latter is based on two pillars: either individual growers stop producing themselves and just rent out the land to the cooperative; alternatively, they remain operators and outsource some key operations such as seeding and harvesting to the cooperative.

China’s great potential to mitigate greenhouse gas emissions

Crop production in the north of China is very intensive: more than 200 kg N/ha for 8 t/ha of corn are very common. Due to the short growing season and cool springs, potato ridges are often covered with plastic sheeting; irrigation is the rule in these regions, often even drip irrigation.

With regard to mitigation of greenhouse gas emissions, it appears that China would have a huge potential by adjusting fertilisation to actual crop needs, was the conclusion from a presentation given by Daniel Tudela from the German agri benchmark Centre.

Thailand’s cassava value-added chain a model for Africa?

Orawan Srisompun, agri benchmark partner from Thailand, reported that cassava-chip and starch value-added chains in Thailand were important income opportunities for rural households – not just on the farms themselves but also as contractors and – to a lesser degree – in the further processing chains.

Processing for cassava chips is a small-scale but profitable enterprise, while processing for starch relies on significant investment and development of infrastructure to handle the large volumes of cassava required. The evolution of the Thai cassava sector provides some suggestions for how African countries may develop cassava as a cash crop to improve smallholder incomes.

(Thünen-Institute/agri benchmark/ile)