June 21, 2006

China to rein in industrial use of corn to limit imports
 

China's growing industrial uses for corn, could increase consumption by 25 percent by 2010, forcing the country to import 10 million tonnes a year by then.

While corn use for ethanol would increase 10 percent a year, starch use would increase by 20 percent and feed use would increase by 2 percent, said Zhu Changguo, chairman of the state- backed Chinese Cereals and Oils Association

Increased demand would come from the ethanol, corn starch and the feed industries, Zhu said, speaking at a Commodity Exchange conference in Dalian.

China would try to limit corn imports through seed subsidies for corn, reining in new ethanol projects, conducting transgenetic research, improving transport and agricultural financing and limiting exports, Zhu said.

Beijing is hoping to cap imports at 5 percent of China's total grains needs to maintain an appropriate level of self sufficiency, he said.

Zhu concedes that China would need imports to meet the corn deficit. However, import policies must take into account price stability and grains security, Zhu said.

In 1995, international prices for corn reached US$204 a tonne when China was importing corn. Now, the price has fallen to US$160 a tonne.

Corn consumption accounted for 125 million tonnes last year, Zhu said. China's bumper grain harvest last year included 139 million tonnes of corn, a 7 percent rise on-year.

Although China has suspended corn exports earlier this year, corn futures prices have risen strongly.

China expects corn consumption to rise at an average 5 percent a year through the end of the decade, Zhu said.