China’s rapid economic growth and gradual transition toward a market economy have brought about significant changes in its food consumption patterns and trade behavior. Chinese consumers, especially those in urban areas, are shifting their food consumption from grains to meats. As rapid economic growth continues in the future, consumption of meat dairy products, alcohol, and fish will increase in China.

The ongoing transition in food consumption patterns has important implications for international trade and U.S. exports. With only 9 percent of the world’s arable land, efficient use of Chinese agricultural resources favor labor-intensive crops such as vegetables and fruits over feed grains because feed-grain production is land intensive and labor extensive. For these reasons, many analysts of international agricultural markets believe China may become a significant importer of either feed grains or livestock products in the near future.

The magnitude of China’s future feed shortfall depends, in part, on feeding practices and feed efficiency in its major livestock sectors. Pork is a staple meat in Chinese diets, accounting for more than 80 percent of total meat consumption. Swine production is the dominant component of China’s total livestock output, and China is the world’s largest pork producing country, accounting for 52.55 percent of world pork production in 1997. Given the great importance of the swine sector in determining China’s future feed grain demand, this article takes a brief look at swine feeding practices in rural Chinese households. In the process, we expose some general trends related to production scale that have important implications for China’s future feed grain demand and, long term, for U.S. exports.

During the past two decades, the configuration of swine production in China has been changing. Households specializing in pork production and commercial enterprises have historically accounted for only a small percentage of total output. Traditional household or "backyard" producers continue to raise the vast majority of hogs in China. In 1965, backyard producers accounted for 83 percent of total Chinese pork production. With the dissolution of many collective farms and the institution of the Household Responsibility System (HRS) in the early 1980s, backyard production increased to 92.9 percent by 1982. China’s rapid transition toward a more market-orientated economy in the 1980s and 1990s reduced backyard pork production to 80.7 percent by 1995, as an increasing number of households began specializing in pork production. This trend toward specialized and commercial production is likely to continue as China’s agricultural economy continues to modernize.

Traditional pork producers in China have typically exhibited low feeding costs and low net income. "Raising cattle for plowing fields and feeding hogs for fertilizer for crop cultivation" has long been the slogan depicting the motivation for Chinese farmers to keep cattle and hogs. There has been little emphasis on quality and efficiency, and this is reflected in the feeding practices of small household producers.

Estimation of a simple unit feed demand equation for farm-mixed grain feed, using the household survey data, reveals that feed prices are significant determinants of the average household’s feed grain demand. However, this demand is not very responsive to changes in the oilseed meal, formula feed, and grain prices. Disaggregating the data by production level shows that producers desiring only to meet their household pork consumption needs behave differently from those more oriented toward market sales.

The use of farm-mixed grain feeds by households with annual pork production of less than 200 kilograms (kg) is not responsive to most feed prices, primarily because virtually all of their feed grain is provided by household production. On average, these farmers feed only 1.53 kg of grain each day per kilogram of pork, and more than 60 percent of the pig’s diet is composed of by-products and green feeds. The use of feed grain by these households changes very little as the price of purchased formula feed fluctuates, because manufactured feeds are substituted more frequently for green feeds and food by-products in hog rations.

Households producing more than 500 kg of pork each year exhibit more market-orientated production responses to changes in feed prices. The response to oilseed meal and formula feed price movements is more than twice that of the average household in the survey sample. A one-percent increase in the average price of feed grain prompts these producers to reduce their farm-mix grain feed use by 1.26 percent for each kilogram of pork they produce. This response is more than twice as large as for households with lower annual pork output.

Moreover, regional differences play a much smaller role in determining feed grain demand in households producing more than 500 kg annually, because a larger proportion of total feed is purchased from input markets. Finally, the length it takes to raise a hog to slaughter weight has a significant negative impact on feed grain demand. Consequently, as these producers continue to adopt more modern management practices that reduce the time for hogs to reach slaughter weight, their feed grain use per kilogram of pork produced increases.

Traditional households are the primary pork producers in China, and the empirical results discussed above imply that the amount of feed grain these farmers use per kilogram of pork is increasing over time. This fact is important for China’s future feed needs because it suggests that feed grain demand in China will rise more rapidly than meat production in the coming years. Given the potential for considerable growth in Chinese meat consumption, it is likely that Chinese feed imports, and potentially meat imports, will become substantial in the near future. With the strength of U.S. agribusiness in both international pork and feed markets, U.S. producers are apt to benefit from the prosperity of Chinese consumers. •