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China Grain Supply Getting `Tight'

April 16, 2008 (EIRNS)—China has enough grain for the time being, but stabilizing its supplies will get more and more challenging, State Administration of Grains (SAG) Director Nie Zhenbang said at an agriculture meeting in Beijing April 14. "We should always keep alert in guaranteeing grain security," Nie was quoted by Xinhua today. China is more and more integrated into the world economy, and changes in the world market are increasingly affecting the domestic situation, Nie said. On top of this, limited arable land, water shortages, and internal transport problems are all affecting grain supply stability, Nie also wrote in a signed commentary for the Peoples Daily. "We now have less room to increase acreage planted with grains, and it is becoming more and more difficult to steadily raise yields," due to shrinking amounts of arable land and water shortages, Nie wrote. "It is increasingly difficult now to keep domestic grain market and price stability." China already has one of the lowest arable land and water ratios per person in the world.

Maize and soybean supplies have tightened, and in some big grain markets, there are even shortages. Cooking oil is a special problem, and China will not be able to change its dependence upon imports, which is now 42% of yearly demand. In January, Nie had told a Beijing agriculture conference that "As consumption grows and shortages spread, grain imports have been increasing. "There is huge pressure to secure the supply of cooking oil and keep prices stable."

Deputy SAG director Zeng Liying also said that pressure on grain prices in China is increasing due to deficient supplies, soaring agricultural product costs and fluctuations on international futures markets. China's grain situation has improved drastically in recent years, Zeng Liying said, with its grain deficit sinking from 50 billion kilos in 2003 to 15 billion now. This year will be difficult, however, due to the worst winter in over 50 years and severe drought in the north.

Nie told the Beijing conference April 14 that uneven stock distribution in producing areas and selling regions is also a problem. The China Economic Observer reported today that important grain-growing regions such as Heilongjiang are badly hampered by lack of sufficient transport and storage facilities for their crops, and this is lowering prices because farmers cannot get their crops to markets. (mmc)

Food Trade Deficit in China

April 16, 2008 (EIRNS)—China's trade in agricultural products has gone from surplus to deficit in the first months of 2008, as the growth rate of imports "dwarfed" the rate of exports, Xinhua quoted a Ministry of Agriculture official today. Beijing began to restrict food exports already late last year, by ending export rebates and then imposing a 5%-25% export duty on 57 agricultural products from January. The measures are taking effect. Overall, China's net food exports fell 84.8% to 295,000 tons this year. Rice exports were up by 56% to 207,000 tons. China produced about 186 million tons of rice this year, several million tons more than is needed, the Chinese Economic Observer reported today — but maize exports were down 96.5% and wheat exports by 17%. Edible oil exports were also down. The agricultural trade deficit was $2.06 billion, a big shift from the $1.15 billion surplus last year. In 2007, China had sharply increased exports of wheat, maize and soybeans. Wheat exports were up 200% until the policy shift in December, the China Daily reported.

China's State Council has made curbing grain exports a top priority, and, in addition to the export duties on grain, will also impose export quotas on wheat, maize and rice flours. But China had to increase imports of soybeans, a key source of protein and animal feed, by 36% in volume, to 7.8 million tons, but that meant a 140% increase in the cost, as soybean prices have nearly doubled in the past year. China bought about 25% of the US soy crop last year.