Urbanization sways future of food
June 9, 2014
by Morton I. Sosland
Of the many geopolitical, cultural and economic forces that drive demand for food, often causing broad changes that impact grain milling, hardly any is more important than expanding urbanization. Even in America, where the grand movements of people from rural to urban settings may appear to have run their course, shifts still are occurring as different locations favored by various ethnic populations cause fluctuations in consumer demand for specific foods. It is mainly the developing nations of Africa, Asia and South and Central America that have large population, as much as half, still residing in rural areas. Most of these people are primarily engaged in sustenance agriculture, in turn having little or no influence on commercial grain-based food demand. These are areas where changes are likely in the near future.
Weighing how future surges in urbanization will affect the unfolding of the food industry in these countries is essential to appraising the future of the grain business. That is especially the case if the prospective urbanization has sufficient power to prompt major changes in the structure of the global food industry, in manufacturing as well as retail distribution.
It is no surprise that China has captured the lead in people moving by announcing a dramatic program to relocate millions from rural settings where they have mainly been engaged in basic farming to established as well as new urban centers. This is the first time that China, or indeed any nation, has ever announced such a formally coordinated program aimed at a people movement of this dimension. In the past, urbanization, in China or in other nations reaching back to the 18th century when agriculture experienced its first modernization and thus required less labor, occurred in reaction to where jobs vanished and new employment opened. The new China program envisions 100 million additional people being transferred from rural areas to cities by 2020 along with improved living conditions for 100 million who had previously moved into urban settings that are not deemed desirable.
The current effort in China actually represents a cutback from a proposal made last year that aimed at having 70% of the country’s population of 1.4 billion people residing in cities by 2025. The new plan targets 60% living in cities by 2020, compared with a current urban-dweller share of 54%. Dealing with a population well in excess of a billion means that these numbers are huge, especially as this is the first time that the government has assumed responsibility for designating from where rural dwellers will be moved as well as their new location.
The plan emphasizes attention to the quality of life in cities, which certainly includes food availability and distribution systems. The plan’s goal of better integration of former rural dwellers into urban lifestyles only hints of the massive investments that the government will be required to make for improved roads and construction, for better schools and hospitals, and for expanded local transportation systems. Huge infrastructure spending is promised by the new plan to meet the target that every city with a population of 500,000 and above will have high-speed rail service and smaller cities will have expressways.
Relating such ambitious urbanization plans to China’s grain industry matches well with the broad belief expressed by Beijing that urbanization is the same as modernization, and that its implementation represents the nation’s future. The plan itself underscores this by pointing out that every developed nation is urbanized and industrialized, a combination that practically assures tremendous change in the food industry. Considering that China is only part way toward achieving these goals, the path now being pursued is of consequence for the global grain and food industry. After all, moving as far as China has toward urbanization has radically transformed its food system and has done much to change how the global food system is structured. Hundreds of millions of new consumers promise even greater change.