February 17, 2011

 

China looks to domestic output for grain self-sufficiency

 

China should realise grain self-sufficiency by raising domestic production as it is unrealistic to rely on imports in a backdrop of tightening global supplies, said Nie Zhenbang, head of the State Administration of Grain (SAG).

 

The country can totally ensure grain security given ample state reserves. Furthermore, local governments are also active in replenishing grain stocks, Nie added.

 

Currently, global grain trade volume only accounts for more than 40% of China's consumption. Therefore, it's unrealistic to rely on imports to meet domestic demand, he said.

 

China's grain production and consumption respectively take up over 20% of the world total.

 

Although natural disasters have cast some negative impact on grain production in 2010, China has reaped grain harvests for seven years running to basically keep the balance between output and demand, he pointed out.

 

As of Sunday (Feb 13), the drought, which started ravaging China from October of last year, had affected 108.24 million mu (7.22 million hectares) of crops in eight winter wheat-growing provinces of Hebei, Shanxi, Jiangsu, Anhui, Shandong, Henan, Shaanxi and Gansu, of which, about 23.9 million mu were severely affected. Although recent rainfall has alleviated the drought in some regions, market is still worried about output decline this year.

 

According to Nie, China's oilseeds and edible oils stocks have been increasing in recent years. Local grain and edible oil reserves in 2010 respectively increased 26% and 208% over 2005.

 

In a breakdown, wheat and rice are oversupplied while corn market starts to become tight with development of breeding and grain processing industries. But China can still satisfy corn consumption on the whole. Its corn imports last year surged almost 17 folds on-year to reach 1.57 million tonnes.

 

However, China needs to depend on large amount of imports to meet domestic consumption of soy and vegetable oil. Its edible oil imports usually accounts for about 60% of domestic demand.

 

Domestic grain market is facing increasing supply pressure in consideration of rising population as well as booming demand from processing and livestock breeding mills. Meanwhile, factors including limited arable land and water resources also add to pressure on sustainable growth of grain supply.

 

China should insist on self-sufficiency of grain by way of promoting balance of layout of grain producing areas and grain product mix, Nie said.

 

To encourage farmers to plant more and increase production, the country will increase minimum purchase prices for grain produced in 2011 by up to 21.9% from that in 2010.