Asian Pacific Trade and Food Safety and Security - Case Study Example

World Agribusiness and China: The Trend of Development in 20th Century Introduction: The of the global trade of agribusiness is very important for all the developed, developing and underdeveloped countries. The trade of agro business is directly associated with the prospect of the food systems of developing as well as poor and non-developing countries across the globe. In the recent time, it is a very common trend that all the poor underdeveloped countries and some of the developing nations have been a bulls eye of business investments from the onset of the industrialized food system. Although the process of investment from the corporates in agribusiness trade process has been not even in the entire poor and underdeveloped nation. The investment is not equal in all verticals of the agro business as through the times commercialventure has dedicated on various parts of the food system depending upon the demand and profitability. Till today, in the twenty first century as well, this irregular and sometime ungainlyventure of businesswealth is still overpowering the farming and native food markets, mainly the agribusiness market of various developing nations. Wilkinson in his analysis mentioned that the trend of corporate investment particularly overpowering the food market of smaller, peripheral nations across the globe particularly those which are going through a rapid urbanization process and most importantly process which is taking place mainly due to the needs of global agribusiness. On the other hand, in some of the some of the larger emerging nations, however, national industrialists are the key force in arrearsof developing urban food system. (Wilkinson, 1) Like the national venture capitalist in the developing countries, the participation of direct foreign investment in the food industry is also a common matter now days. Generally the FDI concentrated in the more classy food segments associated or focusing on the developing urban middle class, and also in order to earn foreign currency by exporting the processes agrifoods to the to wealthy countries. As there are very rare patent protections in place in terms of agribusiness processing, the corporate sector or the capital investment is very less in the Agri-genetic input industry, and the companies are more inclined on investing processing of ready to eat or ready to cock Agrifoods.(Wilkinson,1-2). Objective of the Paper: The main focus of the study is to analyze the trend of Agribusiness in the modern world with a focus on trade and agri-business of Asian countries and Food safety and security. The case study taken up for analysis is that of China and the study discusses how trade of Agribusiness evolved in the country and helped the nation and its economy, how the Agribusiness processed in this nation and what are the future opportunities. Down growth of Agri Market Growth in Developed Economies: During1980s and 1990s, there was a distinct change in the arrangements and degree of the international business perception about the agrifoods systems in the developing countries. If one analyzes the trend of world economy and social structure, from the middle of 1970s, per capita food feeding of staples in the developed countries was close to its saturation point. As a result the general growth underwentthe clumsy effects of the end of the baby boom. As a result, there was an indifferent concentration in the agribusiness market and the market formed an oligopoly situation where a handful of companies started to take control of a large proportion of the market. This continuous slow growth of food purchases in different developed nations was partially increased by some of key development of the world food market in the 20th century. Earlier the demand of agrifoods was there throughout the year in various parts of the world mainly in the developed countries where the opportunity of harvesting was very limited. Wilkinson in his review has mentioned that, the invention of growing numbers of crude specific variations in affected the sale of homogeneous commodities.This situation has led to a propagation of managed food products, and vast segmentation of markets. (Wilkinson, 2) Apart from the vast segmentation of the market, there was a new trend of “non-traditional exports”—particularly in the section of seafood, fruits, and vegetables, throughout the year from the developing countries to metropolitan markets. This new trend also affected the market of agrifoods all over the world as there were a number of alterations available for the people across the globe. There was also transformed consideration towards the potential existence of the domestic markets of in various developing nations, where increasing demographic growth rates and fastprocess of development were creating an ideal opportunities for various food establishments to counterbalancethe slow growth rate of the developed country markets. As a matter of fact, as Wilkinson mentioned in his review, for a longer periods of time, the Latin American countries were the key center of investments focused to national markets within the boundary. But with the continuous development in demographics and economies as well as in the field of science and technology, currently a larger proportion of theconsideration was being readdressed towards Asia where number of developing nations is in verge of sustaining high growth rates. (Wilkinson, 2-3) In the past, during the 1980s, the subject of biotechnology was in a straight linerelated with the agribusiness. The expansion of agroindustry was deeplyassociated with the patents of various organizations. As a matter of fact, growth of biotechnology was a vitalpoint of concern behind scheduleprocess of transfiguring the genomic and agrichemical participationssegments. If we analyze the fact then it is very clear that the seed, various kinds of fertilizer, and different types of chemical inputs sectors, mainly of those emerging countries with an graduallylarge-scale and export based agriculture eco system in various nations such as Southern cone countries of South America, were in the line of new waves of market compression from foreign-based transnational system. However, during 1990s, a more comprehensive foreign businessinfiltration of the retail subdivision got under way. It was initiated in the highly urbanized Latin America and later on it spread all over in various key Asian countries. From the analysis of Wilkinson; European retail was leading the way in this parameter and slowly companies like Wal-Mart started to capture the business perspective. “Urbanization in developing countries also brought with it a shift in lifestyles and food habits favoring the rise of convenience foods, which, in turn, stimulated the expansion and large-scale entrance of foreign corporations into the fast-food sector.” (Wilkinson, 4) Alternate source of Global Food Systems: In the recent years with the continuous change in the process of foreign direct investment, there are large numbers of changes associated with the global food systems. The continuously changing global dynamic forces of claim and the approval associated with the free market generous method adopted by the various developing nations led to a growing existence of various multinationals in various phases of agrifoods systems. These phases involved various processes such as comprisingdirect foreign investment (FDI) in land and water assets, “encouraged both by the moves to grow crops for agro fuel feed stocks and by concerns with food security in an increasingly uncertain environment for world commodity trade.” (Wilkinson, 4) There are large numbers of significant awareness of regulator associated with food and agriculture which had already happened in most innovative capitalist nations. For example, in the United States, attentiveness ratios for the top four to five firms have been considered for the main upstream involvements (involvements such as resources, capitals, vitality, fertilizers, etc.) and downstream productions (such as farm foodstuffs, meting out, and markets associated with sales). The key segments have proportionsbe an average of over the 40 percent level which was measuredas the verge for a market oligopoly and sometimes the range go high, as much as 70-80 percent range. As a matter of fact, academics have recognized comparative high levels of awareness in the retail sectors of Europe and the United States (Wilkinson, 5). On the other hand, the major farming merchandises which make up the world trade are also associated with high levels of absorption (grains and oils, coffee, cocoa, and bananas). In addition to that, a considerable quantity of trade is now prepared and coordinated by leading firms. This is predominantly the case for non-traditional exports (exports of seafood, fruits, vegetables, and flowers), and often within the direct regulator of large-scale sellers.(Kneen)On the other hand in the smaller market there are comparatively higher stages of attention concerning both duopolies as well as monopolies. Most of the leading firms can control their own behavior, in order to ensure an overall control over the market. In most of the countries, be it developed or the developing nations the major firms generally grow both horizontally and vertically (assimilating both downstream dealers and upstream markets for a particular industry) - principal of awareness and financial power that encompasses to comprehensive segments of the agrifoods system. As a matter of fact, it is this particular activity throughthe market segments that helps to transform the market attention into a better location of planned financial power. If one analyzesthe market scenario either vertical and/or horizontal integration- it is now being accompanied by different strategic alliances with firms in various complementary areas. Emergence of New Players in Agrifoods Economy: There were two comprehensiveinclinationsthat helped to transformthe North/South relationship since the 1970s in terms of Agrifoods economy. In addition to existenceof a foundation for old-fashioned tropical exports, developing countries became graduallysignificant in the supply of the constituents of what has known as nutritional transition which include high animal protein food (including seafood) and the cumulative ingesting of fresh fruit and vegetables. If one analyzes the trend of agrifoods business, the increasing demand of seafood, fruits and vegetables provided the opportunities for the expansion of business associated with domestic foods and countries like Brazil, Argentina, and Thailand became the major suppliers of animal feed and other agrifoods. (Ambler-Edwards et al.12) The present trend in the agribusiness has shown varieties of operation. Predominantly in the white meatssector (poultry and pigs), there are domestic agribusiness firms such as Sadia and Perdigão in Brazil, and Charoen Pokphand Group in Thailand. In the recent times, there has been a comparable rush of national companies in the red meat sector, with the Brazilian firm JBS and Friboi now become the world’s largest firm in the red meat sector. Likewise the Charoen Pokphand Group also goes on board in terms of foreign direct investment. (Burch & Goss, 7) As a matter of fact, “foreign investment and increasing coordination have also transformed developing countries into major suppliers of seafood, with a key driver being the explosion of shrimp-based restaurant chains in developed countries. This has involved new transnational, such as the animal (and fish) feed company Nutreco, the entry into this sector of leading firms from the agricultural inputs and genetics sectors, such as Monsanto, and the emergence of domestic players”. (Wilkinson, 5) The New Focus of Agribusiness in China: For a long period of time, China was not a member of WTO and able to had a greater control over trade and flow of investments. For the very long period of time, the vast opportunity of China’s imports, exports, and national urban nutrition market has made the country the main center of attraction of foreign investment.The foreign organizations are more interested in downstream activities such as retail and processing. For a longer period of time, the ruling government of China has conventionally acclimatized foreign direct investment (FDI) on the formation of joint schemes with the involvement of localwealth and arrangements on knowledge transfer. Capitalist Agriculture in China: Historical Framework: Braudel in his detail analysis ofvarious way of switch to industrial agriculture in various European colonies before the nineteenth century has given a clear indication about how far entrepreneurship was able to infiltrate systems structurally, “either by head-on assault, or by dominating production from a distance merely by controlling it at the bottleneck of distribution” (Braudel 265). From the above point of view it is very clear that capital had developed an extraordinary capability to re- structure agriculture not only directly (by means of launching entrepreneurial farms and involving salary labor) but indirectly as well (by means of credit and occupation mechanisms). Braudel in his analysis provided various examples in whichlarge volume of urban capital pass intocultivationnot only as enterprise of production but also, by means of monetary and profitable wealth funding and resulting agricultural development in broader networks of addition by means of credit and trade relations (Braudel 272-297).If one considers the case of China, the description of capitalist agriculture internments two distinct kinds of associations where the capital seizes the excess value from labor. The first type of relationship among the capital and labor was bearing a strong resemblance with Karl Marx’s ideal description of capitalism in Capital, was the use of wage labor by the entrepreneurs (Marx). On the other hand, the second type of association among capital and labor can be defined as contract farming. Marx opposed that comprehensive deficiency of the straight manufacturers was not the only way of wealth gathering and the entrepreneurs could readily leave the wealth of creation in the hands of the creators “as sham property to ensure the fact that production cost could be minimum. (Marx 510) From the Chinese perspective, the revolution during 1949cancelled out any kind of possibility of the “Prussian/Junker path” by means of eliminating the existence of landlord class from the society. De-collectivization of farming by means of egalitarian land sharing from the year 1978 to 1982 therefore opened up the American path for China. Although, the “American path”, in its modelcharacteristic form, became adoption in the extraordinary conditions of the United States where there was no imperative population pressure on land as compared to China.(Lenin 255) Due to the unequal ration of total farmer and adequate farming land, the American path was not become dominant to reform the Chinese agriculture. The process of Capitalist transition in China with the implementation of the “American path” has unwrapped the opportunity for different kinds of involvements straight from the center or the state solely or as a combination of both such as the state-private partnerships etc.The central administration’s policy shift in the second half of the 1990s towards an emphasis on agricultural industrialization and vertical integration by large agribusiness companies are also important in terms of agricultural context in the future. The Establishment of Semi-Private Landownership in Rural China: In order to develop the Agri trade and to ensure equal opportunity for all the people in the farming group semi-private landownership concept was introduced by the Chinese government. The main objective of the Chinese government was to ensure more secure, longer-term land use rights and developing land rental markets. In other words, the semi-private landownership process was introduced to tackle the problems of the decollectivized agriculture, which was developed during 1978-1982 due to implementation of the Household Responsibility System (HRS). Bramall and Jones in their review has mentioned that “the HRS brought de facto private control of land and the agricultural means of production for most rural households” (Bramall and Jones, 264) and most importantly this was without legalizing private landownership. The process of de-collectivization decreased the scale of agricultural production in China. The process of dividing agricultural land among all the farmers in the country has decreased the amount of available land for every farmer as each household’s land was also distributed in form of many small plots spread across the villages. One of such example is in rural households of Anhui province where every household on an average received 7.8 plots of land and normal plot size was only 0.74 mu (0.049 ha) (Bramall and Jones 52). If one analyze the trend used in the China’s agricultural industry, at present 200 million out of China’s 248 million total rural households on average have access to less than 0.65 ha of land (OECD 36). This present data approves the continuousness of the supremacy of the concept of smallholder agriculture in China. During the initial part of 1980s when farming production was rising dramatically, the amount of crop production did not appear to be a big difficulty for the Chinese governancethatduring that phase of time was busier with the concept of the superiority of small-scale farming. In China, to ensure the growth in the status of agribusiness the government has taken several key measures. One of such measures is the policy of strengthening land tenure security. The policy of consolidation in the land tenure security is a direct result of the regular discussions regarding growing farmers’ motivations to capitalize and produce more. During the initial phase of the HRS, the term associated with the land agreements was only schedule for three years (Zhu and Riedinger 50) and intervallic land reorganization among the farmer households was permitted depending upon the size of the farming family. Various authors in their writing have considered this process as a foundationor reason behind problems of agriculture in the China. This has been considered as a source of tenancy insecurity compelling the provincial inducements to capitalize and produce more. Later on, to fix this problematic situation associated with the agriculture, the Chinese government has stated in 1984 that the extent of tenure agreements could be maximum of 15 years and put boundaries to land rearrangements within this agreement term (Zhu and Riedinger 50; Kung 703). The importance of implementing land rentalsafety concept and its proper implications persistent among scholars and policy makers and later on in the year 1993, the Chinese government extended the tenure from 15years to 30 years (Zhu and Riedinger : 50), This decision was later on legalized by means of revising Land Administration Law in 1998. The same law also used to tighten the limitations on land reorganizations. During the revision of law in the year of 2004, the thirty years-long contract terms and limitations on land reallocations were kept intact and further established by the first Property Rights Law of the PRC which started operating since 2007 (Land Administration Law; Property Rights Law). In addition to that, though the process of local governments’ land acquisition continued in the 2000s, consequential land laws and CCP papers have repeatedly highlighted the significance as well as the importance of limiting government’s right to take farmers’ land. As stated by Zhang and Donaldson, “Another cause of the establishment of semi-private property rights has been the goal to increase the scale of agricultural production by land concentration through developing land rental markets. The need to scale up agricultural production became a consensus among the Chinese policy makers and intellectuals in the 1990s” (Zhang and Donaldson 28). In this context, the concept of HRS was identified as first leap and later on the same was followed by a “second leap” which means “properly developing scaled-up operation. (Zhang and Donaldson 28). During the middle of 1990s, the Chinese government under the leadership of Jiang Zemin specified the goal of “synchronized and large-scale operation” in agriculture (Zhang and Donaldson; 29). Later on, during the leadership of Hu Jintao and Wen Jiabao, which ruled China between 2003 and 2013, has continued this importance of emerging “modern, large scale agriculture to ensure stability in the Chinese economy. For the CCP leadership, emerging land allocation markets is one of the most profitable and acceptable process to increase the scale of farming production. The ongoing Rural land laws in the country have been altered in order to achieve the target set by the ruling government. If one analyze the chain of process that lead to this development in the Chinese agricultural industry, the process was initiated way back in 1986 when as a first step, land transfers within the villages were legalized (Deininger et al. 4). The boldest and most drastic step in order to establish a national land market was incorporated during 1995 when the ruling Chinese government started to license the outsiders to rent farmland. This process was later on legalized and got the official recognition of the government of China with the implementation of Law of the People’s Republic of China on Land Contract in Rural Areasin the year of 2002. This law therefore started to allowdelegating, renting, swapping, and transferring of land by a written agreement between two parties. (Law on Land Contract in Rural Areas). This legal policy line was reinforced by the Third Plenum of the 17th Central Committee of the CCP that assembled during 2008 which highlighted the permission of the farmers to “lease their contracted farmland or transfer their land use right” in order to “boost the scale of operation for farm production and provide funds for them to start new businesses” (Zhao 131-137). Government Process and Scaling up Agriculture: There are two key types of government contribution in order to increase the agricultural production in China. The most common form of contribution from government in order to increase the production of agriculture is based on consent. In this case, the local administration is competent to persuade the farmers to give up their allotted land without using any kind force. After getting the land from the farmers, the local authority used to developed these areas all together and lease them as a lump to an agroindustry enterprise in order to get maximum result. The farmers used to handover this land to the government due to various reasons. Some of the farmers used to give consent to the land deal because they are satisfied with the rental income which they receive or sometimes they used to be happier with the allotted jobs to them in various farm organizations. This is known as active consent. On the other hand, in some cases farmers used to hand over the consent out of fear. Some of them used to believe that the government would use financial or extra-economic resources against them if they refuse to accept the offer from the government (Jun 186-187). On the other hand, there is another kind of land deals in rural parts of China where the local governments are not successful to getagreement from the villagers. In some of these cases, villagers’ able to provide resistance against the land deals and get success without a long battlemainly due to the termination of the disputed deals by higher authorities. For example, in Guyuan county of Hebei province, two freelancersacquired large amount of grassland from the local administration and started to use those lands before finalizing the entire legal process. Those freelancerstransformed the grassland into cropland, and enclosed it off from the residents of villages nearby. But this process was not acceptable according to the Grassland Law of China. Due to continuously growing local resistance, in the year of 2006 the Ministry of Agriculture declared its decision to penalize the local government of Guyuan. (Zhao 11) In some other cases, the local government though tried to surpass the objection raised by the people through the process of coercion (Zhang and Donaldson 266). Local government’s land grab in Jiangxiang township of Nanchang county of Jiangxi province in 2000 is an example of people’s protest and countrywide notification. In this case, the local government leased 50,000 mu (about 8000 acres) of land to a corporationestablished in Guangdong province, which was supposed to carry out ecological farming. Farmers of that particular region started complainingagainst the deal as in their opinion, the compensation packages offered by the company in association with the local government was very insufficient. To prevent and control the ongoing protest, the local government then organizedmilitary action to suppress the protests, but the incident got the notification of the entire nation. (Qin 98). Some Example of Company Initiative: Dragon Head Enterprises and Company-like Cooperatives: Dragon head enterprises are the most endorsed type of initiatives by central and local governments in the vertical incorporation process of Chinese agricultural industry. (Zhang and Donaldson: 29; Huang: 119). This process is developed based on the existence of private companies, state-owned enterprises, and state-private partnerships.With the government support associated with areas such as tax, credit, land, electricity, and irrigation provisions, both the central government as well as the local governments have helped this form of companies with very high subsidies. From 2000 to 2005, central government gave selected “national key dragon head enterprises” 11.9 billion RMB as financial aid to boost the agribusiness in the country. (Huang 119-120). According to official figures, there were 110,000 dragon head enterprises in China in 2011 (Hui). Farmer Co-operatives: Company such as farmer cooperatives establishes the second kind of enterprises that have grown during the course of vertical integration process of the Chinese government. As on 2009, there were 246,000 particular farmer cooperatives in China, with a membership of 21 million households. This is accounted for which 8.2 percent of all rural households in the country. (Zhao 680). Similar to dragon head enterprises, all these farmer co-operatives also entitled with different kinds of government support. A nationwide survey organized during 2008 found that a total of 30 percent of the villages in the country used to receive financial support for their cooperatives in forms of grants, subsidies, and tax exemptions from the central as well as local authorities. If one adds up the number of cooperatives that receive non-financial types of backing, the total share of the cooperatives receiving administration support rises to 68 percent (Deng et al. 502) Contract Farming: Contract farming, is often considered as companies and company-like farmer cooperatives –with a key objective to upsurge the scales of production without engaging wage labor. This process is widely applied in today’s China (Guo et al.). There are diverse kinds of predeterminedagreements between farmers and companies in terms of members and business involvement in the process associated with the production. There are two distinct models associated with this process. The first model includes the direct association between the company and the farmer and there is no intermediary in between them. This is entirely based on a written contract signed by two involved sides. Whereas, the second model includestransitional agents between farmers and the contracting companies (agents or intermediaries such as such as farmer cooperatives, middlemen or village collectives etc.). In the second type, the major proportion of the contract (85% almost) are based on written agreements whereas the rest are based on oral agreements. Mutual understanding is a key component in this form of contract. (Guo and Jolly, 574). From company’s point of view, there are also two diverse types of contract farming. In the first form, companies used to provide different ways of construction for the farmers such as seeds, fertilizers, technology and other inputs. In most of the cases all the basic amenities are being provided by the companies. In the second type the organizations are only involved in purchasing of the finished good from the farmers, without providing any means of production support to farmers (Zhao, 689). In China, the number of organizations involved in contract farming improved from 8,377 in 1996 to 58,186 in 2002 (Zhang, 469). The number of smallholders who have promised relations with these corporations was approximately 72,650,000 as on 2002 (Guo and Jolly 570). In China, the percentage of contract farmers among total population of rural producers improved from less than 10 percent in 1996 to about 30 percent in 2002.To sum it up, it is very clear that with the passing time the concept of contract farming is getting stronger in China. However, the extent of contract farming in China differsprovincially. The main reason of this variance is the existence of differences in the local political economy. For example, the smallholders can advertise and sell their products comparatively easily in areas close to cities or large market and they do not have to depend on companies for marketing their products. As a result, various agribusiness companies face serious problems in creating contract farming activities in such regions” where balance of power does not tilt towards capital vis-à-vis the smallholders.” (Zhang, 24-25). Conclusion: The essential points of this paper can be briefed below. Firstly, successive land tenure improvements since 1978 intended to endorse capitalist expansion in agriculture with the process of land transfers from small farmers to larger farmers and agribusiness companies. Secondly, the roots of entrepreneurial cultivation lie in the initial years of de-collectivization where handful of farmers are able to transform themselves into capitalist form by swelling their scale of manufacturing through obtaining more means of production. Thirdly, the development of American Path in the early 1990s, the “agribusiness path” of vertical integration of the entire farming industry by the urban capital therefore becomekey pattern of agrarian expansion as well as policy example of the Chinese state.Finally, with the implementation of various associations, farmer driven companies and other process various state alongside the central government of China is looking to boost their own agricultural industry side by side helping the farmers to get more independent over the course of time. Works Cited 1. Bramall, Chris & Jones M. E.; Rural Income Inequality in China since 1978.” Journal of Peasant Studies; 1993; 21.1; pp. 41-70 2. Braudel, Fernand. 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