April 7, 2008

China sees tighter grain supply on drought reports

The grain supply pressure is rising in China, especially with the meteorologists' forecast on Tuesday that the worst drought in five years will continue in north China.

Wen Tiejun, head of the School of Agricultural Economics and Rural Development at the Renmin University of China, told Xinhua that the grain pressure is rising in China, with or without droughts.

Wen pointed that this was an inevitable fallout of lower returns in rural production as the country is in the middle of industrialization.

Despite China's fourth consecutive rise in grain output last year that met over 95 percent of domestic needs, Wen pointed that it is getting harder to maintain the balance.

The economist explained that rural Chinese have been turning away from their lands as they can increase their income three to four times by working in cities.

Rapid industrialization has seen income flow out of the countryside each year, while appropriation of arable lands has not been effectively checked, both adding to the grain production pressure.

Meanwhile, the vice agricultural minister Yin Chengjie, said demand has expanded as a yearly average of 15 million rural laborers moved to cities, needing an extra 4.5 million tonnes of commodity grains each year.

Statistics show that China's population increased by 90.59 million and per-capita grain supply decreased from 412 kg in 1996 to 378 kg in 2006.

Chinese Premier Wen Jiabao said the government needs clearer, straighter and stronger signals to mobilize and protect the initiative of farmers to plant crops.

The State Council on Thursday pledged another RMB25.25 billion (US$3.6 billion) in addition to this year's rural budget, mainly to subsidize farmers' purchase of seeds, diesel, fertilizers and other production materials.