Despite a bumper harvest last year, the prices of major grain
crops, including wheat, corn and soybean, are on the rise.
Agriculture expert He Kaiyin, of the Anhui provincial
government, attributed the price hikes to government controls and
the upward movement of prices on the international futures
market.
He said an annual grain supply of 190 million tons would be
enough to secure market stability, but last year's overall grain
output was estimated around 490 million tons by the Ministry of
Agriculture.
"Since the government is the only buyer of all grain crops, a
production increase doesn't necessarily lead to oversupply," said
director Xiong Genquan, of the Grain Bureau of southeastern Jiangxi
Province.
"The grain stockpile in our local government granaries stands
around nine million tons, for instance, which is pretty high in
comparison with the past," Xiong said. Both Anhui and Jiangxi are
China's top agricultural production bases.
Grain price hikes in the international market have been widely
viewed as another reason leading to the soaring domestic
prices.
The lean years of wheat caused by droughts in the United States
and Australia have provoked sharp price spikes in global grain
futures. As China continued to be a net importer of grain, its
domestic price could hardly remain immune from fluctuations in the
international market, analysts said.
After the government called for the development of bio-energy,
corn, a major raw material for fuel ethanol, saw a rising
demand.
Estimates of the Dalian Commodity Exchange and the National
Grain and Oils Information Center put the gap between domestic corn
output and demand at 3.5 million tons in the five-year period from
2006 to 2010, turning China from a net corn exporter to a net
importer.
Some experts contend that with the tightening of government
controls over arable land and the improvement of farming
technology, China has great potential for further production
increases.
Since Nov. 25, the government has allowed increases in the
supply of grain by releasing some of its national stockpile to
offset price jumps.
(Xinhua News Agency January 10, 2007)