High grain stockpiles to ensure food security in China

 

 

China, the world's biggest grain consumer, will keep high levels of stockpiles to ensure food security and may increase soy imports, said Bao Kexin, president of China Grain Reserves Corp.

 

''Maintaining 150-200 million tonnes of grains in inventories at hand is necessary,'' because of the ''tight balance'' between supply and demand in China and given current logistics and infrastructure, Bao said.

 

China consumes about 500 million tonnes of grains a year, with the government keeping stockpiles equivalent to about 40% of demand to safeguard food supplies and control prices, Bao said.

 

Earlier last week, Premier Wen Jiabao said the government would seek to increase production of grains and oilseeds, raise minimum grain prices as well as continue stockpiling agricultural commodities.

 

China's government has bought soy, rapeseed, corn, wheat and rice from farmers to be stored in silos across the country for emergency use and to prevent excessive price fluctuations. The country has the world's largest grain reserves, Bao said. Sinograin, as the company is also known, is a state- run entity that stockpiles grain for the government.

 

China's production is roughly equivalent to demand, with the government rotating stockpiles annually to maintain the 40% ratio.

 

The stockpile-to-use ratio is almost double the world level of 23% estimated by the UN's Food and Agriculture Organization (FAO) for 2009-2010. Canada, the US, Brazil, Argentina and Australia have grain surpluses and are net exporters so it is not necessary for them to keep large reserves, Bao said.

 

''We also might want to increase the grain reserves in the big cities in the form of ready-to-eat food, rather than in the form of raw wheat and unhusked rice, so when it is released into the market the food can be consumed immediately without further processing,'' he added.

 

Even as China is self-sufficient in wheat, rice and corn, the country buys more than half the world's soy exports, according to figures from the USDA.

 

Imports reached a record 42.6 million tonnes in 2009, customs data show, as consumption grew and domestic supply dropped after the government stockpiled more than six million tonnes.