September 8, 2004

China '2004 Grain Output Expected To Exceed Target

China's total grain output this year is expected to exceed a government target of 455 million metric tons, state media reported Wednesday.

If no serious natural disasters occur before the autumn harvest, the most conservative estimate is that grain output this year will be up by 25 million tons, or about 6%, from the 431 million produced in 2003, the official Xinhua News Agency said, citing Cheng Guoqiang, an official at the Development and Research Center under China's State Council.

China's annual grain output peaked at 512 million tons in 1998. But it has been falling for the last five years, mainly because of shrinking acreage. Last year's output was the lowest in more than a decade.

As the result of the country's economic boom, a lot of arable land has been converted to more profitable industrial development. A decline in farming incomes amid low grain prices also led many farmers to abandon the land and move to the cities in search of more profitable employment.

However, a jump in grain prices and a decline in stocks last year raised concerns about food security, prompting the government to adopt measures earlier this year to encourage grain production.

Despite an increase in acreage of several million hectares, demand for grain still outstrips supply, according to Chen Xiwen, deputy director of the Central Finance and Economics Leading Group, a high-level unit of the Chinese Communist Party's policy-making committee.

In July, Zhu Changguo, deputy director of the State Grain Administration, estimated that if China's total grain production reaches the government's target of 455 million tons this year, and given demand of 492.5 million tons, there will be a deficit of 37.5 million tons.

China imported a net 730,000 tons of grain in the first half of this year, compared with a net export of 7.48 million tons in the same period in 2003, according to the Xinhua report.