April 16, 2008

China ensures grain price stability for 2008

China announced to keep grain prices stable throughout this year despite rising agricultural costs, as the demand-supply gap has narrowed to 15 billion kilogrammes, boosted by bumper harvests, the State Administration of Grains (SAG) said.

Zeng Liying, deputy director of SAG acknowledged the rising price pressure for major grains in China this year as a result of deficient supplies, soaring agricultural product costs and fluctuations on international futures markets.

However, Zeng assured in an industry meeting that China can keep grain prices stable due to abundant grain reserves for the past four years.

This year, the demand-supply gap has narrowed to 15 billion kg compared to 50 billion kg in 2003.

Over the past two years the SAG has auctioned more than 50 billion kg of grain and has purchased 28.9 billion kg of wheat in 2007 to secure market supply, all based on minimum purchase prices, Zeng explained.

The grain authority forecasts China's grain output to be around 500 billion kg this year.

Meanwhile, Chen Xiwen, director of the office of the central leading group on rural work, said that the past winter and severe drought would challenge China's aim to ensure huge grain harvest.

In 2007, China harvested 501.5 million tonnes of grain, 15 million tonnes less than the total demand, official figures show.