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December 4, 2008

 

China to increase grain reserves to protect farmers' interests

 

 

China's State Administration of Grain will buy another 14 million tonnes of grain to boost its temporary state reserves, amid weakening domestic prices, the official Xinhua News Agency reported late Wednesday (December 3).

 

The aim is to stabilise domestic grain prices and protect farmers' interests, Xinhua quoted the administration as saying.

 

The purchase will comprise 7.5 million tonnes of rice, 5 million tonnes of corn and 1.5 million tonnes of soy, it said.

 

A bumper grain harvest seen to reach a record high of 525 million tonnes this year and falling global commodity prices have greatly pressured China's grain prices.

 

Meantime, more competitive international grain prices have led to greater imports, further damping domestic prices.

 

China bought 30,000 tonnes of US soft red winter wheat in the week ended November 20, according to the US Department of Agriculture's most recent export sales report.

 

This signalled China's first big wheat import so far this year, as the country only bought 373 tonnes in the first 10 months, down 99.5 percent on year.

 

The government is expected to buy an additional 1.5 million tonnes of soy and 5 million tonnes of corn in the northeastern region, the same as its earlier purchases, said Liu Zhaofu, general manager of Heilongjiang-based soy consultancy Longma Consultation, earlier this week.

 

The National Development and Reform Commission said the government plans to invest RMB1 billion in building warehouses for grains and vegetable oils as well as facilities to house equipment to dry the edible goods for storage.

 

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