October 25, 2010

 

Added farmland aids China's annual grain output

Grain output from increased farmland will offset the impact of inclement weather and help China reap a seventh consecutive year of surplus crops, senior agricultural officials and researchers said.

 

The official estimation for this year's total grain supply has outstripped last year's level, which was 530.8 million tonnes, experts said.

 

China released its macroeconomic data on Thursday (Oct 21), with the consumer price index (CPI), a main gauge of inflation, rising 3.6% in September. The rise, a 24-month high, has triggered growing concerns that the index will get out of control if no effective measures are taken.

 

Surging food prices following "adverse natural conditions" were the major reason behind the accelerated CPI growth, analysts said.

 

The output of summer grain dropped by 0.3% on-year and the yield from early rice harvests fell by 6.1% on-year due to drought and flood.

 

Fortunately, a newly added farm area of 890,000 hectares in 2010 for autumn grain, particularly corn, will offset the loss and ensure the year's harvest, said Xu Xiaoqing, a senior researcher of the Development and Research Centre of the State Council.

 

Of the farm area covered, about 66,667 hectares for autumn grain were transferred from those used for growing cotton.

 

As a result, cotton prices almost doubled from last year's level.

 

"China's corn imports will continue to grow in the long run, but China won't rely entirely on imported corn," Xu said, adding that the country's 160 million tonnes of annual production for corn can generally meet the nation's demands.

 

A stable grain output will help ease inflation expectations amid international and domestic price fluctuations, analysts said. Food prices account for about 30% of the factors used to calculate China's inflation.

 

As prices surge, the Chinese agricultural industry has seen significant investment in the past months and the next five to 10 years will be the "golden age" for agricultural investment, analysts said.

 

Since 2009, about 14 agriculture-related enterprises have listed on the small and medium-sized enterprise board and the growth enterprise board, with raised funding of RMB11.88 billion (US$1.78 billion).

 

Eight listed agriculture-related companies achieved refinancing of RMB5.47 billion (US$0.82 billion), according to official figures.