Fears of grain shortage mounting
Thursday, November 6, 2003
china.scmp.com
JOSEPHINE MA in Beijing
There are growing fears of a grain shortage in China as farmland continues to shrink and production drops.
A debate on the situation has been raging in the mainland press as prices of major agricultural commodities, including rice, wheat, corn and oilseeds, have soared in the past month.
Although the increase is good news for farmers, who have suffered from years of sluggish grain prices, analysts warn that the rebound is being partly pushed by demand outstripping supply.
Li Jingmou, general manager of Zhengzhou Grain Wholesale Market, one of the largest grain markets in China, was quoted by newspapers as forecasting that China would face a serious grain shortage in 2005.
Han Jun, of the Development Research Centre, a government think-tank, said China recorded an annual grain production shortfall of 50 to 70 billion jin (25 to 35 million tonnes) in each of the past three years. China consumed about 960 billion to 980 billion jin of grain annually since 2000, and produced 910 billion jin, according to Outlook Magazine. Mr Han expected the shortfall would expand to 80 billion jin this year.
He said China's food supply was safe due to the abundant stocks kept in government warehouses, but urged the authorities to increase grain production to 950 billion jin in the next two years.
Two weeks ago, Premier Wen Jiabao vowed to increase grain production next year, saying it was crucial for the nation's survival.
The government was quick to reassure the public yesterday. Analysts and officials were quoted by official media as saying food prices would not go up.
Outlook Magazine quoted a grain official as saying the government would intervene to stabilise grain prices.
The government was concerned about speculation in the commodities futures market - which might push prices even higher - as well as the potential public panic if rumours of a price rise or food shortage became widespread, analysts said yesterday.
"This topic is very sensitive, but I don't think there should be panic. It is more a result of speculation," an official from the Ministry of Agriculture said.
According to official figures, the amount of land used for farming on the mainland shrank by 1 per cent from 2000 to last year.
Part of the reason for the decrease was a policy by former premier Zhu Rongji to restore farmland to forests or grasslands.
Rampant seizures of farmland by local officials to build roads, factories and property developments have also contributed to the problem.
Li Chenggui, a government adviser on grain market reform, said it was overly simplistic to blame the price increases on a grain shortage without taking into account the role of market forces. Although grain production has dropped, overall food production has increased with more varieties entering the market. China could also meet demands by reducing its grain exports, he said. |
