November 16, 2004

China May End VAT Waiver on Wheat Imports
 

China may end a value-added tax (VAT) waiver on wheat imports next year after stockpiles of the grain increased, according to a government report. The country is the world's biggest wheat producer and consumer.

China had introduced a waiver on the tax at the start of this year to boost stockpiles, said the China National Grain & Oils Information Center, a state grain administration body.

The end of the tax waiver may result in a fall in imports next year and help extend a decline in wheat prices that have slumped 17% in Chicago since January 1. China's wheat imports jumped over 16-fold in the first nine months of this year to 4.97 million metric tons compared with last year.

China signed contracts to buy about 10 million tons of wheat from the United States, France, Canada and Australia so far this year, China National Grain said last week. Delivery will take place mainly in the marketing year ending on May 31, 2005.

Farmers in China may boost harvest by 2.7% to 88.4 million tons of wheat from the current winter crop.