COMMENTARY

------By Daniel Inman

What's missing at AgriChina compared to most other shows of its kind is the fun of the fair. There is little of the banter and the ruddy-faced cheer of similar agricultural fairs in Europe and the United States, and there are few farmers climbing onto tractors to shift the gears or pound the wheels. That's because most of the Chinese visitors to the annual agricultural show, organised in collaboration with the German Farmers Association (DLG), were government officials this year.

They come as delegations of grey-suited officials, bearing clipboards and business cards, not the hallmarks of your typical French or Ohioan farmer for whom purchasing a tractor or showing a prize cow is a milestone repeated through generations. The turnout is testament to how much China's agricultural scene remains in state hands.

Right now there are two kinds of farms in China: big, state-owned grain farms in the country's northeast and little plots in south: 240 million small farms work on average half a hectare and 2,000 state farms sit on 5 million hectares, mostly in the northeast of the country. Neither type of farm serves the country's needs.

It's easy to forget that it's in the agricultural sector that China's reform process began. When China's small holders got the chance to till their own plots, agricultural production rose sharply and excess produce sold on the free market created prosperity. A later roll-out of the concept to industry worked too, absorbing some of the excess agrarian labour force and helping ease poverty in China's predominantly rural population.

Once the catalyst for China's economic boom, the agricultural sector has become a poor cousin to other sectors. A constant obsession with quantity has done for quality of much of China's agricultural output. China obsesses about meeting wheat production targets, yet much of the country's grain and milk is of questionable quality.

What's missing in China is the medium-sized private farmer who has proven the backbone of European and American agriculture. Aside from a few large milk champions like Mengniu and Yili there are few decent food producers in China - there's no meat processors or food conglomerate of a similar size. It's no secret that some of the best-known meat and milk brands in the EU started off as privately run farmer cooperatives.

Most of the shareholders of those coops are mid-to-large size farmers who supervise the quality of their products because it's ultimately their company's reputation and profit that's at stake. The bulk of output from China's farm sector on the other hand has been from state-owned farms run by government officials and staffed by workers who toil for the same monthly paycheque as their counterparts in any other state-owned firm.

Rather than have bureaucrats running state farms with a crew working in the iron rice bowl economy, China should make farming the middle-class profession it is in the Western world (and also in Korea, Japan) by offering high school graduates the chance of a practical agricultural college training course, the likes of which farmers all over the EU are now compelled to have. These farmers should ultimately be allowed to take over, by lease or purchase, the state-owned farms.

Moooment of truth

There is now a chance to create and test out such a new breed of farmer in beef farming. Only 9 percent of China's meat production is currently in beef, compared to pork, which accounts for 60 percent of output. All the signs point to rising consumption - China's per capita beef consumption stands at 5.46 kilograms, small by international standards. A dramatic rise in cattle numbers, from 60 to 141 million between 1980 and 2005, has been outstripped by a rise in consumption. Local abattoirs are complaining that by 2008 China won't be beef self-sufficient.

Cheap labour and state ownership/favouritism won't give China the inevitable edge in the beef industry that it enjoys in some other industries. Low-wage agricultural producers like Brazil and Argentina have already proven far more effective at producing beef for export. Brazil in 2006 overtook the EU to become the world's number-two beef exporter, behind the USA. China, which exported only 6,419 of its tonnes 50,000 of output in 2006, is a long way behind.

Yet beef farmers have reason for courage: Given that Chinese beef consumption and world beef prices are both increasing the industry stands in good stead here. But the industry must not be allowed to fall into the mess that characterises the dairy scene, which epitomises much of what's wrong with China's agriculture. A bloated network of state farms compete with peasants trying their hands where there's the hint of a quick buck to be made from keeping a couple of badly fed milking cows in the back yard.

China doesn't need these hobby farmers in beef production. In any case, they don't have the expertise. Larger feed lots with good-quality feed and cattle must be run by skilled private farmers who know what they're doing. Reform of the agricultural sector ignited China's economic reform. Now the country needs to let farmers, not bureaucrats, learn how to do the farming. Alas, judging by the clipboard brigade at AgriChina, the chances of that are not likely soon, so we're stuck with a state-dominated farming sector producing mediocre products.