August 20, 2010

 

China's grain output secure amid natural disasters

China's grain supplies during the remainder of the year would not be significantly affected by the drought in Russia and recent floods in some of China's grain-growing regions, said Zhang Zhenghe, professor at the China Agricultural University.

 

The country is largely self-reliant in grain production, as its imported grain accounts for only 5% of the total consumption per year, he said.

 

Global wheat prices climbed sharply in recent days, pushed up by record-setting heat and drought in Russia, the world's third-largest grain exporter, which announced August 5 it would ban grain exports.

 

However, the proportion of imported wheat is small, as statistics from China's Ministry of Agriculture showed that the country imported 845,000 tonnes of wheat in the first half of the year, compared with China's annual wheat output of 110 million tonnes.

 

"I don't think Russia's ban on wheat exports will boost domestic wheat prices because China's wheat market is a relatively closed one and the country has diversified channels for wheat imports. Apart from Russia, China also buys wheat from the US and Australia," said Li Guoxiang, an agricultural analyst.

 

China suffered a string of natural disasters this summer, including a devastating flood in Jilin, China's main grain-growing region, which affected at least 1.25 million hectares of crops and caused RMB45 billion (US$6.6 billion) of damage.

 

"Despite a drop in the summer grain output this year, China had six years of bumper harvests running to 2009. Its grain inventory is far above the international warning level," Zhang said.

 

The Chinese government also worked to avert price hikes in agricultural products and clamp down on speculators who force up prices of farm produce such as mung beans and garlic.

 

The central government Wednesday (Aug 18) ordered the expansion of vegetable production, with increased funding and rail links, in a move to stop an "increasingly serious" food supply situation in some major cities.

 

Further, it ordered local governments to stabilise and expand vegetable farms in the suburbs of large cities with minimum planting areas, and to set up vegetable reserves to meet demand for five to seven days in large cities like Beijing and Shanghai.

 

"The central government's move will help stabilise food prices and ease public expectations of higher inflation," Zhang said.