Pork Barrel Politics, Chinese Style

Forget the battle over raising the national debt ceiling. Purge your memory of memories of rich folks – like the Hunt family – trying to corner the silver and other commodities markets. Ignore global warming, and damn the recession. There is a diabolical movement afoot to corner another market, precious ponderous porcine products! Beware! It is more petulantly pernicious than you think.

Start with your last visit to your local Chinatown. If you don’t have one of those nearby, then at least think Chinese menu (and please ignore those Kosher Chinese restaurants!). Notice how much pork there is on the menu? Cha shiu steamed buns (stuff with pork), pork ribs, sweet and sour pork, black bean pork, garlic pork, etc. Pig tremble in fear at the sight of a Chinese chef, and as China’s average per capita earns rise, one of the biggest losers is the universe of pigs. As Americans cherish beef when they can afford meat, so the Chinese value pork. “[T]he average citizen’s meat consumption has quadrupled since 1980, while pork consumption has doubled in the last two decades. And China’s meat packers are just getting started--only 22 percent of China’s pork production takes place in industrial feedlots, compared to 97 percent of America’s.” FastCompany.com, July 14^th. So has demand for soy beans

Pork is big business in the Peoples Republic. “China is a porcine superpower as well as a human one. The Middle Kingdom boasts more than 446 million pigs -- one for every three Chinese people and more than the next 43 countries combined. So when there's a major disruption in the pork supply it hits the economy hard; the ‘blue-ear pig’ disease that forced Chinese farmers to slaughter millions of pigs in 2008, for example, drove the country’s inflation rate to its highest level in a decade.

“To prevent further disruptions, the Chinese government established a strategic pork reserve shortly afterward, keeping icy warehouses around the country stocked with frozen pork that can be released during times of shortage. The government was forced to add to the reserve -- taking pigs off the market -- in the spring of 2010 when a glut led to prices collapsing.” Foreign Policy Magazine, May/June. The “Strategic Pork Reserve” was a top secret effort, and while this program might draw an American chortle or two or a shoulder shrug from Middle Eastern Countries, there are serious ramifications in the global commodities markets for food generally, as the People Republic reaches out to control pig farms not only inside China but wherever they can.

“[M]aintaining all those pigs has led to a massive dependence on corn and soybean imports for animal feed, which in turn is leading China’s agribusinesses to fan out abroad in a quest to control the means of production. China's attempts to control the means of production in other countries just rising out of developing world is causing tension with its natural allies, and could be just the first step in an ever-escalating series of resource-based conflicts… China’s strategic pork reserve is the direct consequence of an emerging, meat-eating middle class and a government determined to feed them. As the sociologist Mindi Schneider points out, [former PRC Chairman Deng Xiao ping’s] economic reforms in the late 1970s privileged industrial farms over small plots to guarantee a steady supply of cheap pork.” FastCompany.

The impact on the global markets is particularly strongly felt in feed grains, and given pigs proclivity towards soybean and corn, China has been focused on those grains in particular… just as the United States is coveting corn to be converted in to fuel as ethanol. And since such feed grains impact the price of just about all meat products, there has been an upward pressure across the global commodities markets pushing American agricultural products to swelling price increases… good for farmers, bad for consumers.

But only buying corn and soybeans on the open market is too scary for China’s strategic planners, so they have begun sucking up farmland, though leases, long-term output deals or even purchase, all over the world: “The Politburo’s solution was to command state-owned enterprises to ‘go out’ and buy or lease farmland by the millions of acres. Last fall, Heilongjiang Beidahuang Nongken Group--China's largest state-run agricultural conglomerate--agreed to develop almost 500,000 acres of farmland in Argentina, followed by another 200,000 hectares this year. A month later, Chongqing Grains’ announced a $2.5 billion deal to produce soybeans in Brazil.

“While much has been written about China’s lopsided deals in sub-Saharan Africa, Latin America is a more likely candidate to become the world’s next bread basket. Last fall’s controversial ‘land grab’ report by the World Bank noted that, since 1990, Latin American soybean yields grew at twice the speed of America’s.” FastCompany.com. The undercurrent here is the battle or dwindling resources between rising superpowers with lots of growing cash reserves and mature Western powers whose cash reserves have been drained. Put another way, China’s standard of living will rise as our quality of life falls. Sobering, huh?

I’m Peter Dekom, and the increasing pressures toward America’s turning inwards create an isolationist movement that simply does not work in our globally connected world.