Tight supplies in key categories and rising global prices are
making it difficult to stabilize the domestic grain market, the
governing authority said yesterday.
Nie Zhenbang, head of the State Grain Administration (SGA), said
the country's food supply is secure and grain reserves are abundant
following four successful harvests.
"But it is still a challenge to keep the market balanced over
the long term," Nie said at a conference yesterday in Beijing.
He said supplies of some key grain categories, including corn
and soybeans, have tightened and that there are even shortages in
some major grain markets.
The country consumed 517 million tons of grain last year, amid a
shortage of about 16 million tons of certain grains, including corn
and soybeans, SGA figures show.
The country produced only 9.62 million tons of cooking oil last
year, about 42 percent of the regular annual demand of 23 million
tons.
"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," Nie said.
In addition, with China becoming more integrated into the global
economy, changes in the world market are increasingly affecting the
domestic one, Nie said.
The United Nations' Food and Agriculture Organization (FAO) has
estimated that the global grain market will continue to face supply
pressures, and that grain prices will remain high due to surging
energy prices and increasing demand for corn and soybeans to make
bio-fuel.
The global food reserve dropped to its lowest level in 30 years
last year, FAO figures show.
Driven by the high global prices, China's wheat exports
increased by 200 percent year-on-year in the first 11 months of
last year. Corn exports grew by 85 percent during the period, while
those of soybeans expanded by 24 percent, according to customs
figures.
In response, the authorities slapped export tariffs ranging from
5 percent to 25 percent on 57 categories of major grains and powder
products starting this month. They will remain in place for a
year.
The authorities also imposed export quotas on rice, corn and
wheat powders.
The moves came 10 days after the government scrapped tax rebates
for grain exports in 84 categories of grains and powder
products.
"These measures show the government's determination to ensure
the domestic supply and stabilize grain prices through taxation,"
An Tifu, an economist with the Beijing-based Renmin University of
China, said.
However, policies alone are unlikely to check increases in grain
prices because global factors such as demand for bio-fuel, surging
energy prices - oil futures touched $100 per barrel yesterday - and
tightened global grain supplies will remain in place over the long
term, he said. An also called for more incentives for farmers to
increase their production.
The authorities have been ordered to come up with incentives for
farmers who plant grains for cooking oil.
To ease the regional grain shortage, the SGA will release more
corn from its reserves in major corn-consuming provinces and set
aside more reserves of corn, soybeans and cooking oil.
(China Daily January 4, 2008)