March 18, 2009

China's Ministry of Agriculture (MOA) on Tuesday (Mar 17) said the country is likely to face an across-the-board oversupply of farm produce in 2009, leading to a drop of prices in the future.

The country achieved five consecutive years of grain output gains up to 2008, which has ensured sufficient supply on the market.

However, the surplus farm products have not been transferred to exports. China's trade deficit in farm products deepened to US$18.16 billion last year which was 3.4 times of that in 2007.

The country's total import and export of farm produce reached US$99.16 billion last year, with exports of US$40.5 billion and imports of US$58.66 billion.

Statistics show that prices of wheat and corn are declining and the central government has to purchase millions of tonnes of grain to maintain a stable price.

MOA said weak consumption and increasing output have led to the fall in grain price. In addition, China's control over grain export in the first half of 2008 also resulted in falling grain prices.

Under such circumstances, China's grain reserve is estimated to take up 30 percent of the total grain output.