September 23, 2011


China's corn self-sufficiency challenged; imports to surge


China's self-sufficiency policy in corn production is under threat from scarce water supplies and shrinking farmlands, making imports inevitable in the face of rapidly growing demand, traders and officials said Thursday (Sep 22).


China is the world's second largest corn consumer and producer, and it uses the grain largely for animal feed.


But its population's growing appetite for pork and other meats is generating more demand than domestic supply can cover, and propelling food prices to record highs, fuelling concern about risks of social unrest.


Major grains traders at an industry conference in the northern city of Changchun said China's self-sufficiency target of 95% corn production looked increasingly optimistic, despite expectations of a bumper harvest this year.


"China will still try to keep its self-sufficiency in corn production, because large imports could lead to global price volatility and supply problems to other poor countries," said Fang Yan, deputy director of the National Reform and Development Commission's rural economic division.


Fan Zhenyu, deputy general manager with state trader COFCO's corn division, said China may become a regular importer of between 5-10 million tonnes a year in the near future.


That figure could potentially jump to 20 million tonnes by 2020 if China's corn yield did not improve, he said.


A senior executive from a major state-owned trader said China had imported between 3-4 million tonnes of US corn since March this year, but new orders would have to wait.


"China is expecting a bumper corn harvest. So any fresh orders will have to wait until we get a clear picture of the harvest and how consumption grows in the coming year," said the executive.


China's corn imports in August rose 42% from the previous month to 244,502 tonnes, customs data showed on Wednesday, bringing total imports for the marketing year ended August 31 to 1.3 million tonnes.


Analysts have said China's agricultural policies, including biotechnology policies, will be crucial in determining future crop yields and crop import demand.


Fan also said China's use of wheat to replace corn in feed rations could fall in the new marketing year, as the price gap between the two grains has narrowed since August.


Around 8-10 million tonnes of wheat is expected to be used as corn replacement in 2010/11, before falling to around 4-5 million tonnes.

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