When examining pork producers’ access to finance and capital in Chinese markets, it is important to remember that one is dealing with three levels of production: the smallholding farm, which produces less than five pigs per year and also raises other crops and livestock; the specialized household farm (SHF), made up of professional farmers focusing on pork production on smaller plots; the large-scale producers can raise or buy and slaughter tens of thousands of hogs per annum (Schneider, 2011). Because of variations in inputs and price cycles, subsidies generally will favour only some of these producers, depending on the level they are best geared toward. Moreover, the subsidies themselves are not centralized and have the tendency to be rather piecemeal, and generally favour large producers and trends towards standardization of feeds and breeds and industrialization of production (Gale et al., 2012). Gale (2012) lists some of the main subsidies offered by central and local governments, often cooperatively. These include subsidy payments for breedable sows, subsidized insurance and free vaccines. However, many of the subsidies show bias towards standardization and industrialization:

• A “fine breed” subsidy for artificial insemination using semen from boars of approved breeds (such as Duroc, Landrace, and Yorkshire).The subsidy is 10 yuan ($1.46) for each insemination, for up to 4 attempts per year for each sow.

• • Financial awards (grants) of approximately $1 million each to local governments of 362 major pork-supplying counties for financing invest­ments in hog housing, manure handling, immunization, and veterinary work.
• • Financial awards to large farms holding at least 500 sows ($146,000) and to standardized farms and village “production zones” where at least 500 hogs are slaughtered annually (from $30,000 to $117,000 according to farm size and province)” (p15-16).

When focusing on costs that affect all levels of production, feed is one of the major inputs that must be considered. The types of feed used, however, do vary. Large producers use large amounts of soybeans in their feed, in addition to corn and other inputs. This was one of the reasons that China liberalized its soy production in the mid-1990’s, ending its former self-sufficiency in soy. This sacrifice was intended to help it remain self-sufficient in end-product pork production by preserving its limited arable land (less than 10% of the world’s arable land, as opposed to a fifth of its human population). This means that 25 million small producers of soy in China have faced problems competing in markets characterized by falling prices and GM soy. Indeed, Schneider (2011) estimates that 30% of them have already fled to the cities. Soy is also viewed as being a feed better geared toward shorter-cycle, leaner pork. Corn, on the other hand, is controlled as a strategic food crop and is commonly grown on-farm and used along with other feed crops by smallholders. SHF’s usually use both corn and soy commercial feeds (Schneider, 2011).

Out of these three varieties of production, it is the large producers who have fared best with the new models of feed production and how they fit into Chinese pork and agricultural markets. The input-intensive system has been able to develop in China, expanding from 2.5% to 22% of pork production between 1985 and 2007 (Schneider, 2011). Their main markets are urban centers, meaning that their stability has been key government policy. Because of their size and varied ownership (ranging from State-owned, private, State-private partnerships, and both foreign and domestic), business moves such as vertical integration are much easier for them to achieve. That said, the production of feed is extremely land-intensive, with Schneider (2011) estimating that one kilogram of industrial pork requires an average of thirteen kilograms of feed (p. 22). This means that large parcels of land are necessary to maintain and expand the system further, and China has indeed been buying such land parcels in South America and Africa. Moreover, the environmental effects of such a system come with hidden costs, and it is reduction of these costs that may allow large-scale production to become far more economically and environmentally sustainable in the long term. The amount of manure produced by industrial pork practices can lead to nutrient overload, which damages the quality of land and watersheds, and can have effects reaching outside the immediate area. One remedy to this problem which has a strong precedent in China is the employment of methane digesters to create biogas. The Ministry of Agriculture has estimated that these are in use by 35 million of 140 million rural households already, thanks to government subsidies for small farmers. They are used by less than one percent of large producers, however, which represents a great loss of input supplementation in the form of natural gas substitutes and fertilizer. Extending this subsidy to large producers as well as small farmers would allow for a reduction in the cost of this negative externality. Moreover, the amount of land required for feed inputs for large producers is damaging to biodiversity, and brings with it the negative side of monoculture, including the draining of nutrients from the soil, the loss of biodiversity, and a risk of being more damaged by natural and biological disasters (Grant, 2012). One way of doing this would be to encourage large producers to use the varying domestic forms of soy and corn in their feeds. Twenty-five million small-scale producers of soy are currently operating in China, and are in need of markets in order to maintain a living. Re-creating markets for local soy has been an area of interest for the Chinese government as well as producers, with the northeast and Inner Mongolia being particular areas of interest for future production. The Chinese Soybean Industry Association (CSIA) recommended mandatory amounts of domestic soy in domestic foodstuffs as a possible way to develop such markets (Schneider, 2011). With regards to large-scale producers, it may be of interest for the government to mandate a certain percentage of soy used in industrial feeds to be domestic. In order to allow the domestic market to develop, this would have to be introduced incrementally, with large producers being able to take the time needed to form business relationships with local producers. Indeed, extending the trend of vertical integration to include local producers of soy and corn would be beneficial in creating closer cooperation between different stages of production, especially with regards to innovation and information exchange. That said, it would be in the interests of consumers to encourage competition between local producers by not allowing too large a concentration of market power to develop among either the soy and corn producers or the companies which may choose the path of vertical integration.

According to the WHO, it is not true that obesity rates are higher in industrialized countries. This is evident base upon the data collated and shown in Figure 1, the diagram shows the top 9 countries that has the highest prevalence of obesity as define by the WHO as having more than or an equivalent BMI of 30. It is shown that the Nauru has the highest obesity rate followed by American Somoa, Tokalau, Tonga and other non-industrialized countries with exception to the relatively wealthier countries such as Saudi Arabia and the US. One observation from Figure 1 is that the top few countries are all from a similar geographic region, the pacific islands.  Nauru has one of the highest obesity prevalence in the world at 71.10% followed by the American Somoa at 74.6%, this is much higher as compared to industrialized countries like the US (33.9%). It is also important to note that most of the top ten countries have a higher obesity rate for woman, with the exception of Nauru that is relatively balance for both adult women and men.

Evans et al. (2001) describes the increasing prevalence of obesity in the nation of Tonga over time, his team analyzes the causes of this phenomenon and further reiterates the consequences of globalization and international trade. The study looks into the various impacts of imported food, and how the increasing consumption of imported food has led to the increase prevalence of obesity within its population. One should also note that Tonga is part of the pacific islands, and many of these reasons could also explain the obesity problems experienced by the pacific island nations stated in Figure 1.

Evans et al. (2001) proceeded to investigate the effects of imported food products, in which 430 Tongans were surveyed for their preferences, perceived nutritional value, and consumption frequency of common food ingredients. Results from the study suggests that Tongans does not have a preference for imported food products, and do have an accurate perception of food ingredients that are unhealthy. Thus, the authors conclude that the increase in consumption frequency is not correlated to increase in preference or the lack of nutritional education.

This study reiterates that the shift from low-fat, nutritious, indigenous source of food to high-fat, non-nutritious imported food products could be largely attributed to the phenomenon of substitution. That is, with trade liberalization the prices of imported food such as chicken parts, mutton flaps and bread are much lower than local, indigenous food sources such as indigenous chicken, fish, taro (local yams). This is supported Tonga’s deteriorating balance of trade from T$56 million at 1989 to T$90 million at 1999; sausage imports increase by 450 tons, while chicken imports increased drastically by 1780 tons. It should also be noted that the population growth rate during this period remained relatively constant. The impact of this increase in consumption of imported food ingredients have also shown to be relatively detrimental to domestic food security by discouraging local food production due to cost disadvantages (Evans et al., 2001) Thus, unlike that of Canada where education plays an important role in addressing obesity problems through alterations of perceptions and preferences, it seems that Tonga’s obesity plight is due to globalization and its impact that made nutritious domestic food products unaffordable for locals. Evans at al. (2001) also concluded that a ban on imported food products could likely improve Tonga’s obesity problem in the long run.

References

World Health Organization, (2009). Who global database on body mass index (bmi). Retrieved from website: http://apps.who.int/bmi/index.jsp?introPage=intro_1.html

EVANS, Mike; SINCLAIR, Robert C.; FUSIMALOHI, Caroline  and  LIAVA’A, Viliami. Globalization, diet, and health: an example from Tonga. Bull World Health Organ [online]. , vol.79, n.9 [cited  2013-02-01], pp. 856-862 . Available from: <http://www.scielosp.org/scielo.php?script=sci_arttext&pid=S0042-96862001000900011&lng=en&nrm=iso>. ISSN 0042-9686.  http://dx.doi.org/10.1590/S0042-96862001000900011.

The British Columbia government should not institute a tax on sugar-sweetened beverages.  Although there is considerable evidence regarding a relative reduction in sugar sweetened beverages, and the substitution towards the consumption juice and milk (Friedmen and Brownell, 2012). However, it should be noted that given the current market power of major carbonated beverage companies. Similarly it should be noted this tax will likely effect major soda companies like PepsiCo and Coca Cola , furthermore it also should be noted that both firms also produce and market juices. A potential strategy for these companies is raise prices across their entire product line both non-sweetened and sweetened beverages, thereby eroding the impact of such a tax.

It also should be noted that this tax is targeted to all consumers, regardless of their health status. Healthy and active individuals have no choice but to pay the additional cost of consuming any beverages added with sugar, even beverages such as sport drinks and sweetened juices. It is thus unfair for this segment of consumers to be paying for a deterrent tax that has its main focus on reducing consumption to unhealthy and obesity prone consumer segments.

The long term impact on such a tax is uncertain, it is of my personal opinion that companies and corporations will seek out new ways to continue to market its products, given most taxes are implemented on a per unit basis, companies might provide larger size packaging.