China will stick to its rigid controls on grain exports for the time being despite the rampant smuggling of grain that has eaten into its tariff, grain experts said.

Grain smuggling is becoming more common because of the gap between record-high international grain prices and domestic ones, customs officials said.

Customs officials in Ningbo, Zhejiang province recently reported they had detected five cases in the past several weeks, preventing almost 470 tons of flour and rice from being shipped out of the country illegally.

Customs officials in Dalian, Liaoning province, said they had detected three grain smuggling cases last month, preventing 5.77 tons of rice and 3.66 tons of corn from leaving the country.

"Grain smuggling causes loss to not only the country's tariff, but also to the huge amount of subsidies the government grants to farmers to ensure stable output and prices," Wang Zhongming, director with the China Market Monitoring Center, said.

While some people argue that the country has ample grain supply and is expecting its fifth successive summer harvest, Wang said the country is not likely to loosen its controls on grain exports.

"The country now maintains a balanced grain market in supply and demand. If grain smuggling gets worse, it will likely tip the balance," Wang told the China Times.

International grain prices have risen to a record high since 2005, while domestic prices have only experienced mild hikes.

The price of rice in Thailand, benchmark of the international grain market, shot to $1,000 per ton in April.

Though there has been a slight decline in grain prices since last month, the international price for rice has remained at about 15 yuan per kilogram, while domestically it is only 3 yuan.

The authorities launched a series of export restrictions to ensure domestic food supply late last year.

In December, for example, they abolished export tax rebates for wheat, rice, corn and soybeans.

In late January, the Ministry of Commerce announced that grain exporters would be given export quotas before signing new foreign export contracts this year.

However, despite the restrictive measures taken to rein in grain exports, the country's grain exports have increased in the past few months.

In the first five months of this year, the country exported 650,000 tons of rice, about a 20-percent rise compared with the same period last year, State General Administration of Customs statistics show.

The country also imported 910,000 tons of grain in the first five months, about a 15- percent rise compared with the same period last year, the customs said.

Professor Li Guoxiang with the Chinese Academy of Social Sciences, said the country should increase grain exports to a rational level which could prevent smuggling.

(China DailyJune 20, 2008)