Grain Safety

cctv.com 02-04-2004 11:35

China, which feeds a fifth of the world's population on seven percent of the world's arable land, is facing a crisis in food security as economic development eats away at available land.

Alarm bells are again ringing in China over the food security of its 1.3 billion people as grain prices rise and food reserves drop. China expects to see at least a 40 million ton shortfall in grain output in 2003 with the annual harvest dropping for the 6th straight year. Premier Wen Jiaobao has called for increased efforts to raise farming incomes, preserve cropland, and increase grain production capacity, signaling a renewal of concern over grain security at the highest levels.

China's grain output has dipped from a record high of 512 million tons in 1998 to a ten-year low of 435 million tons in 2003. Output for this year is expected to come in at between 440 and 450 million tons, giving China a grain shortfall of up to 45 million tons. The shortfall is roughly equal to the annual grain production of Canada, one of the world's major grain exporters. China's total demand for grain averages between 480 million tons and 490 million tons annually, and will grow to approximately 640 million tons in 2030, when the population hits 1.6 billion, far outstripping its present production capacity.

An official from the Ministry of Agriculture discussed the problem with our reporter.

Liu Zhiren, counsellor of State Council of P.R China, said, "China's grain production capacity is 500 million tons a year. As of 2003, China's grain production has dropped for 4 consecutive years. Yet, at present our reserves are still sufficient. Annual demand for grain is between 480 and 490 million tons. Each year, 40 million tons come from the reserves which are decreasing every year. We should be okay for now, as the reserves, including the turnover grain, are enough for at least two years."

A shortfall in four consecutive years has resulted in a sharp increase in grain prices, forcing the country to consider importing supplies of grain. Official statistics show that recent prices for paddy rice in east China��s Anhui Province reached 1050 yuan or 126.8 dollars per ton, up 80 to 120 yuan over the same period last year. In the past few months the purchase price for wheat in northeast China has shot up 32 percent, while the price of maize in Hebei and Shandong provinces has doubled, and rice prices have gone up by 13 percent.

Driven higher by increases in the price of grain, the cost of flour, edible oil, meat, eggs, and fodder have all gone up since October 1st in key grain-consuming areas, according to market data. This has fuelled concerns about the impact on inflation. November's consumer price index jumped to three per cent, its highest level in six years, largely on the back of rising food prices.

US environmentalist Lester Brown, the author of the books Plan B and Who Will Feed China, warned last November that sudden food price hikes in China could be the sign of a coming world food crisis, brought on by global warming and increasingly scarce water supplies among major grain producers including China, United States and India. Brown said as China��s population grows and living standards rise, its people will demand a more meat-based diet, and China will increasingly have to look to world markets to satisfy grain needs for both food and feed for livestock. He said that, when China turns to the world market for grain, it will need 30 to 50 million tons, more than the amount imported by anyone else in the world.

However, Brown's friend, Counsellor Liu, holds a different view.

Liu said, "Importing grain is equivalent to importing water and cropland. China has limited cropland. Importing grain reduces the pressure on domestic cropland, but excessive imports will be too disruptive to both domestic and world markets. At present, China's supply is more than demand. Massive importing will lead to a price drop on the domestic market, and the price drop will reduce farmers' incomes. It's a chain effect. Imports should be limited to, I believe, no more than 20 million tons a year. It won't be, as some scholars have said, that China��s self supply capability will go down and its imports will go up to between 40 and 50 million tons. That won't happen."

Less than two months ago, China signed contracts with US businesses in Chicago totaling 1.59 billion dollars. The bulk of the purchases consisted of deals for 1.4 billion dollars worth of soybeans. The purchasing group is the second in weeks to have gone to the United States, timed around a visit to Washington by Premier Wen Jiabao. The visit is an effort to balance bilateral trade.

Chinese Premier Wen Jiabao said, "We'd like to increase imports from the U. S., but you cannot always make Chinese eat soybeans while taking in aeroplanes."

Then, what exactly is causing the shortfall in grain output at home? According to Liu, supply exceeding demand contributes to a drop in grain prices, which in turn hurts farmers' incentive to grow grain. Urbanization and the growth of special economic zones have resulted in heavy losses of cropland, while at the same time the government is trying to bring down stockpiles and free up farmland for more lucrative cash crops. All of these have contributed to a drop in grain prices. This is likely to trigger price rises in food and other commodities and eventually inflation. It's a chain effect. The grain security issue has caused concern among authorities at the highest levels, who have given the issue top priority on the government working agenda this year. The central government said it plans to enact legislation to bring farmland under strict control, and to promote reform in the government's land requisition and management systems. Experts hope that the establishment of a standardized land management system will benefit farmers, stop the illegal transfer of land-use rights and effectively protect farmland and grain production.

The central government has decided to use 10-billion yuan in 2004 to subsidize grain production mostly at the country's 13 major grain production bases. This will be coupled with additional policies favorable to grain production.

Editor:Zhang Wenjie  Source:CCTV.com