Increasing water shortages in China could have implications for cotton and wheat production in the U.S. and elsewhere, USDA analysts say in a report released at the annual Agricultural Outlook Forum at Arlington, Va.

China is the world's largest wheat-producing country and a decrease in production could have a significant impact on international markets.

“Cropping patterns in China will likely change as farmers address water conservation issues,” says the Interagency Agricultural Projections Committee, which outlined its projections for the period to 2013. “Effective conservation policies will induce farmers to use water in ways that are more in accordance with its economic value in production.”

Water uses that bring a low return, such as wheat irrigation, are likely to be replaced by uses that provide higher returns, such as cotton, with lower irrigation needs. The introduction of Bt cotton in the North China Plain region has also made cotton much more profitable in that area.

“Because of the profitability of Bt cotton, and low wheat prices, increasing numbers of farmers are forgoing winter wheat and planting full-season, spring-sown cotton instead, which they irrigate one to three times before the rainy season begins. In addition, cotton tends to be more salt-tolerant than wheat, and much of the North China Plain's shallow water table has salinity problems.”

Additionally, the analysts say, some irrigated wheat land could be switched to vegetable production, using modern water-saving practices. “A shift to vegetables would also be in accordance with China's underlying resource endowment, which is labor-abundant and land-scarce.