August 29, 2008

China will spend RMB 26 billion (US$3.81 billion) over the next five years to boost grain output in Jilin, its largest corn producing province, by 20 percent to help meet rising demand, the governor of Jilin said on Thursday.

The northeastern province aims to increase grains output by 5 million tonnes to 30 million tonnes, amongst which would be a 3-million-tonne increase in corn output and 2 million tonnes in rice, Han Changfu, the governor, said at a press conference.

The proliferating corn processing industry in the province has already reduced supply to feed mills in the southern China, which rely on the north for its grain supply.

Jilin's processing industries consume 8 million tonnes of corn a year, or about 40 percent of its corn output. Major corn processor Global Bio-chem Technology Group Co. Ltd is based in Jilin.

Jilin will use the investment to expand cultivation, improve low-yielding land and upgrade its irrigation system.

The province would also put a stop to the building of new corn processing plants but would continue to encourage local feed mills and food processors, Han said.

Beijing has already banned corn exports and restricted use by industry after domestic prices hit a record high last year.

Currently, the country has a balanced supply and demand of the commodity, with this year's harvest expected at 156 million tonnes with consumption at 150 million tonnes.

The government aims to produce 95 percent of the grains it needs to limit its vulnerability to international price swings.

Jilin expected its corn output this year to increase by 5 percent to more than 20 million tonnes.