July 23, 2007

China worries about grain production as pests and heavy rains takes its toll

China's Ministry of Agriculture has called on local governments to take steps to stabilize autumn grain production as widespread flooding threatened the nation's crop output this year.

In an emergency notice last week, the ministry said stabilizing the autumn grain supply would be "challenging".

Natural disasters aside, China's crop production also saw a drop in farmland this year as more space is given to industrialization, according to Minister of Agriculture Sun Zhengcai.

In what has become an almost yearly cycle, severe floods have hit southern China in summer, while drought and insect infestation is threatening northern China.

The Ministry of Finance has disbursed more than RMB 60 million towards flood relief. Beijing has increased subsidies for grain production 63 percent to RMB 42.7 billion this year.

A decline in grain production would drive up food prices, which would affect the nation's bond market, some traders said. 

However, Huang Jikun, director of the Chinese Academy of Sciences' Research Center of Agricultural Policy, told China Daily that barring a nationwide natural disaster, floods in southern China would not cause fatal damage to the nation's grain output. Huang is also a top advisor to the nation's leading policy-makers.