China: Grain Overview
18 March 2008 China’s commitment to self-sufficiency in rice, wheat, and corn is driving increased grain area, aided by support programs and strong market demand, according to the US Dept. of Agriculture’s Foreign Agriculture Service (USDA-FAS). In 2008/09, the Chinese government will continue to encourage grain production through a series of policies, including direct payments, price supports, and a machinery subsidy.
Corn production for 2007/08 is estimated to be 137 million metric tons (MMT), down 6% from the previous year due to lower yields caused by unfavorable weather conditions in the major production region. Corn production in 2008/09 is forecast at 143 MMT.
As the Chinese government tightens control on exports, corn exports are forecast to drop to minimal levels in 2008/09. Forecast growth in the livestock sector and increased industrial use will further draw down stocks.
Wheat production in 2007/08 is estimated to be 106 MMT, up slightly from the previous year, and rice output for 2007/08 is estimated at 185 MMT, also up slightly from a year ago. This marks four straight years of expanded wheat and rice production.
Rising agricultural commodity prices since 2007 have been the leading factor for the surge in overall Consumer Price Index (CPI) in China. To ease the inflationary pressure and guarantee the domestic supply, the government has tightened its control on grain exports by a series of policies including the removal of tax incentives on exports and the reduction of the export quota in 2007/08.
In order to fulfill a long term policy objective of self sufficiency in grains and raising farmer’s income, the government will continue to expand support programs designated for the agricultural sector, and especially in grain production, for at least the next five years, USDA-FAS reports.
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