November 5, 2009

China will focus on raising corn output in the coming decade by paying higher prices to farmers while also limiting expansion in the corn processing industry, the country's top planning body, the National Development and Reform Commission (NDRC), said on Wednesday (Nov 4).

 

As the demand for animal protein keeps rising and coupled with limited farm land and water supply, it has challenged the country's ability to produce enough corn, the feed grain for animals.

 

Analysts expect China will soon begin shifting its attention to imports as Chinese consume more meat in line with the country's rapid economic development and improved living standards.

 

However, Beijing said it has to rely on its own corn production as the global trading volumes of grains can only meet about half of the country's demand and the worldwide expansion in ethanol production has raised uncertainties in supply.

 

To tackle a possible supply shortfall, China will encourage the major corn growing areas to expand their planting areas while paying higher prices to farmers to try to maintain self-sufficiency, the NDRC said.

 

The commission added while they aim to increase their grain production in the coming 12 years, they will still face output imbalance among the different varieties due to restrictive factors such as climate, water and farmland resources.

 

Wheat and rice production will be larger than demand while there will be a shortfall in corn and soy supplies, said a NDRC's spokesman on China's master plan to increase grain production till 2020.

 

The government will encourage more feed mills to use wheat while appropriately limiting the expansion of corn processors, NDRC said.

 

China has targeted an annual grain production capacity of 550 million tonnes by 2020, which is 50 million tonnes more than the current levels of production.

 

According to the master plan, the target is calculated based on consumption seen at 572.5 million tonnes by 2020 while the country aims for 95 percent self-sufficiency in grains supply.

 

In order to achieve the target, China needs to maintain its farmland at 120 million hectares, of which 105 million hectares are for growing grains, the commission pointed out.

 

Following its rapid urbanisation and industry development, China's farmland has shrunk over the past years, with the lowest level recorded at 99 million hectares in 2003.

 

Besides providing better irrigation facilities, high-yield seeds and more technologies to raise grain production, the Chinese government has chosen some key grain growing areas, including the largest corn production province of Jilin, which will be encouraged with incentives to increase their output for the market.