Farm Progress

Milo Hamilton, rice marketing expert, explains issues facing Asia in bid to feed growing populations.Hamilton: "I argue that rice is a political and cultural ‘cement’ that holds Asia together."Water rights/use growing concern.

David Bennett, Associate Editor

March 25, 2014

9 Min Read

Feeding the rapidly growing world population is a daunting task that will only become harder in coming decades. Facing billions more mouths to feed means concerns about things like crop diseases, keeping yields on an upward trend, and the logistics of moving food are all legitimate.

But often other major issues facing agriculture are given too little consideration, says Milo Hamilton. Among those issues: worldwide water use and the necessity to change government policies and practices to pull poor farmers into the technological age.

Hamilton, president of and in the rice trading business for 34 years, says it’s hard to overstate the cultural and historic hold rice has over Asia. “Few know that the Great Wall of China is held together with cement made up of sticky rice and rice hull ash. It’s incredibly strong. I argue that rice is a political and cultural ‘cement’ that holds Asia together.”

Hamilton -- who spoke at the 2014 Farm and Gin Show in Memphis -- lays out his arguments in a recently-released book that he authored, “When Rice Shakes the World: The Importance of the First Grain to World Economic & Political Stability.”

Hamilton spoke with Farm Press in mid-March. Among his comments:

Overview of the book…

“The book started in my mind several years ago. I began to worry about farmers -- not just in the United States but also in Asia. I worried about the rice farmer in particular and how he’ll fare in the next five to 10 years. When I looked into it, the future looked very dark. But there were also possibilities of a much brighter future.

“It’s a bit of a policy book but focuses more on pressing issues like water and migration and where the farmer will end up.

“The general view I have is that you must turn farmers to modernity, not just in terms of inputs and production, but in terms of marketing and having flexible markets to place rice in.”

On rice in the Far East…

“Rice is shaking Thailand, right now. The West must understand that rice isn’t just another vegetable or grain in that part of the world. Rice is a very big deal and always has been.

“The overall thing that we must understand about rice in Asia is that it’s very different to other commodities. The primary issue is that there it’s viewed by these societies as something to be controlled centrally and it has inherent, strategic good.

“On one hand you have standing armies. On the other hand are standing rice stocks. It’s often hard for those in Asia to see the difference between armies and rice. That’s because rice, over the centuries, has toppled regimes. In the last 50 years, of course, there’s been enough government money for farmers to get all sorts of subsidies.”

On China…

“China rules everything. Every other Asian nation will be affected by the choices China makes. It was the first in the Socialist/Communist systems to begin to allow markets to happen. Half of their urban society now can buy and sell property to some degree.

“Unfortunately, in China there are not generational families on farms in the sense of owning and developing it. That’s because the farmland has been owned by the state, not the individual.

“That’s a big difference between China and India, where some land has been owned by families for many, many generations.

“China has come to realize that they can’t continue to have farmer daily salaries of $2 on two hectares and expect to enter the modern world of agriculture. They know that. So, there are large swaths of land owned by the state and farmed by individuals who have next to no financial resources of their own. How long would you stay and develop a plot of land without ownership? Not very long.

“Last November, the Chinese decided they’d put forth a policy of returning the farms to the farmers. Eventually, they should be able own, buy, lease or sell land. That’s a dramatic, new idea for them – a reversal of policy that has been in effect since the Communist Revolution.

“The best farming is done by people who own the land. Comparing farms in China to India shows that Indian farmers, who own their land, are often much more advanced.

“In addition, over the next five years, the Chinese government will increase the amount of people under their welfare system by 10 percent. That may not seem like much but it’s 100 million people. Those millions will receive all sorts of benefits and free up more money to buy food.”

Water use

On Chinese water issues…

“The problem in China is water. The average estimate of global stress is 1,000 cubic meters per year per capita. In China, it’s 250 cubic meters per capita per year, on average. In the case of Beijing, it’s 100 cubic meters.

“Their water tables are collapsing and the water is also polluted. In the Pearl River Valley there are farmers that won’t eat the rice they grow. I’ve never seen that before, a farmer that will not eat what he grows. The reason is they have toxic waste – cadmium and others things – that cause problems for kidneys.

“Fifty percent of China’s 50,000 rivers are drying up. Fifty percent of the water in urban areas is undrinkable.

“They’re now going to transport water from the south to the north, where most of the agriculture and population is located. In addition, China wants to go green so they’ll increase their hydroelectric capacity from 9 percent to 16 percent in the next decade. Almost all of that, except the Three Gorges Dam, will be in the south since that’s where the most water is.

“Now, if you increase damming of the rivers, there will be consequences. The fact is, 70 to 80 percent of all the trade in rice comes out of the countries south of China. The headwaters of the five rivers are largely under Chinese control. From time to time, as those dams are built, the river water levels are likely to diminish.

“China controls the headwaters that go into Pakistan, India, Vietnam, Burma. The only country in the Far East spared this is Thailand, a unique animal. Thailand is kind of like the United States in that sense. We have the Mississippi River and control all our water in the territory. That’s not the way it is in Asia, in Europe. In most of the world, water is shared between countries that may or may not be friendly.

“So, China wants to increase its rice and wheat production to be totally self-sufficient. The problem with that is they’ve been increasing rice production for 10 years and, due to the subsidy program, their rice is 2.4 times more expensive than rice grown in India.”

Labor costs, Mexico

On labor costs and an “accidental super-power”…

“Chinese labor costs are also skyrocketing. By 2015, Mexico will have labor costs 30 percent lower than China. There’s a giant sucking sound of industry heading south to Mexico even as we speak.

“The United States is an accidental super-power. Despite the mess in Washington, we’re getting stronger and stronger. Our reliance on world trade will go from 15 to 7 percent. We have our own credit. We have our own river system. We face two oceans. We have no enemy surrounding us except for the Mexican drug lords. These are the sorts of benefits the United States has due to its geography and demography.

“China’s work force is declining by 3 percent in the next decade while projections are that Mexico’s will rise by 58 percent. Think about it: over the next five years, in order to keep their farmers growing rice, China will have to keep raising the price. Right now, it costs $20 per hundredweight there. What Arkansas farmer can’t grow and trade rice for $20 per hundredweight?

“Well, (the Chinese) can do two things. First, they can continue to run the rice price up. Or, they can just import rice. They’re in a fix and it’s getting worse.”

U.S. rice to China?

What about U.S. rice going into China?

“The protocol for rice and cottonseed is now back with the Chinese government. It’s been there a month and we haven’t heard anything yet. Once they approve that, American rice could head to China. Uruguay, I believe, is the only country in the Americas that can sell rice to China now.

“If 10 percent of the Chinese rice market was eventually imported, it would mean 15 million tons. That’s about 40 percent of the world trade. These are real possibilities.

“The fact is, we don’t know how much rice the Chinese are already importing. One of the top experts in the Far East, a good friend from Vietnam, tells me he’s tearing his hair out trying to find out how much they’re importing.

“I believe China has been importing much larger quantities of rice than they’ve admitted for years -- at least since the 1980s. Most of that is coming out of Burma. Rice is the only internationally-watched commodity that we have no idea how much China is buying, or will buy.

“There’s an awful lot of mystery. Rice stock numbers are a military secret in China. One doesn’t know what they have.”

Any indication when Chinese decision will come down?

“The Chinese are first-class businessmen but they’re also political-minded. In the U.S., businessmen typically just think about getting the deal done. Not in China, and that’s very difficult for us to read – they want to make a buck but also want to balance that with Communist Party desires. That’s just the way it is and it’s very confusing for us.

“They’re very slow and methodical and always think in the long-term. There’s a proverb: ‘Those who do not pay attention to the far away will have trouble in the nearby.’

“I’m told the only hold up is down to bugs. If that issue can be overcome, the trade will come.”

Is China gearing up to import U.S. rice?

Producers group works to open Chinese market to U.S. rice

U.S. rice to hit Chinese supermarket shelves in 2013?

If the deal goes through, would you expect more short- or medium-grain rice to be grown in the Mid-South?

“That’s a very interesting question. There’s a very strong demand for short-grain rice in China. A lot depends on how much they like Jupiter, a medium grain rice. It also depends whether they like our Southern-grown long grain. Other than Jupiter in the South, there is a shortage of California Calrose rice this year due to the drought.”

Next: How Hamilton sees India’s future shaping up.

About the Author(s)

David Bennett

Associate Editor, Delta Farm Press

David Bennett, associate editor for Delta Farm Press, is an Arkansan. He worked with a daily newspaper before joining Farm Press in 1994. Bennett writes about legislative and crop related issues in the Mid-South states.

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