January 7, 2015

 

China's tight grains control disrupts supply, industry leader warns

 

 

China's stranglehold of its grains stockpiles could lead to supply disruption in the country's grains market and food processing industry, an owner of a food processing company, Mu Yiankuei, has warned.

 

Despite the noble intention behind it, which is to stabilise prices and protect farmers' income, grains stockpiling is tampering with market forces, which could have serious consequences, like artificial shortage and supply disruptions, he says

 

With grains being kept in warehouses for up to three years, grains quality could be a serious concern over time, Yiankuei adds.

 

Trouble is in fact been brewing in the grain processing sector. Lately, some companies were forced to shut down due to a supply shortage.

 

With controlled supply in the market, domestic grains prices have been rising, causing a spike in imports. It has also led to smuggling from neighbouring countries where grains are much cheaper due to current global bumper supply.  

 

Yiankeui says some farmers have also started taking advantage of the situation. Farmers in northern China are reported to have moved tonnes of corn to other parts of the country where demand and prices are too high, causing artificial shortages in the North.

 

According to statistics, over 5 million tonnes of corn had crossed to Liaoning province from Hebei in 2014, according to Yiankeui.  

 

Yiankeui believes that in order to improve China's grain management, the government should strengthen its support for the modernisation of the grain processing industry.