March 14, 2011

China will strive to achieve bumper harvests of grain for the eighth year running in 2011 and grain prices are expected to rise moderately instead of surging sharply, said Minister of Agriculture Han Changfu Thursday (Mar 10).

Price hikes of some farm products last year were mainly caused by high domestic inflation expectations, rallying international grain market as well as capital speculation, Han said, adding that increasing planting and land cost also contributed to price rise.

However, domestic grain prices have climbed by a smaller range than international prices, according to Han. China is able to ensure grain supply this year given adequate grain reserves and active efforts to guarantee production, he added.

China's grain output in 2010 rose 2.9% on-year to reach record high of 546 million tonnes, marking bumper harvests for the seventh straight year.

The drought, which started to ravage the country's major wheat growing regions from October last year, cast some negative effect on wheat growth, but now has been significantly relieved from recent rain and massive drought-relief efforts, Han said.

This year, the government will increase investment in agriculture and adopt supportive policies to boost planting enthusiasm of farmers.

Liu Yonghao, board chairman of China's largest feed producer New Hope Group, also stated that grain prices may rise slightly this year, but unlikely to fluctuate sharply.

Prices of agricultural products are determined by grain prices. If grain prices increase 3%, farm produce prices will correspondently go up by around 4-5%, Liu added.