How China's One-Child Change Might Affect Ag

November 25, 2015 02:27 AM
 
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The move is positive for demand, but don’t expect export growth soon

The announcement this fall that China will lift its one-child policy after three decades caught the attention of many in agriculture. After all, the end of the rule should lead to population growth in China and more demand for U.S. ag exports, right?

Maybe—and maybe not.

“It is really unclear what the impact of the one-child policy has been in terms of fertility,” says Joseph W. Glauber, a senior research fellow at the International Food Policy Research Institute in Washington, D.C., and former chief economist at USDA. “If you look at fertility rates in Thailand and China, for example, they had very similar fertility rates in the 1970s and today. This might have happened in spite of the one-child policy.”

Market analysts are sounding a similarly cautious note. 

“I think it’s positive in the long-term, but obviously it takes a few years to get that going, and there’s some skepticism as to whether some of these single children will want to have two children of their own,” says Alan Brugler of Brugler Marketing and Management in Omaha, Neb., in a “U.S. Farm Report” interview.  “It’s a long-term positive for demand because it implies so much population growth, but in the short-run, [it will have] very little impact on the market.”

More important than fertility rates, in Glauber’s view, is income growth, which hit an average of 11% in China’s biggest cities between 1998 and 2012. “As you move out of poverty, you change your diets,” he says. “We are seeing increased feed grain imports.”

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