According to the Organisation for Economic Co-operation and Development, China has 40% of the world’s farmers — yet just 10% of the world’s arable land. Taken together, that means its agricultural operations are generally small-scale, hard to manage, and woefully inefficient. Carter also pointed out that although farmers are 40% of China’s labor force, they produce less than 12% of the GDP. Finally, China has produced just 1% yield growth over the past 10 years, while the U.S. has increased its own yields by approximately 2.5% annually.
For a country seeing a rapidly increasing demand for food, these are damning statistics. It means that without substantial improvements to efficiency, the world will see rapidly rising food prices and the possibility for food shortages as the Chinese government — flush with cash — buys up more and more of global supply. This could ultimately lead to countries, fearing scarcity, shutting down their agricultural export markets, which would have an enormous slowing effect on the global economy.
Source: Motley Fool.