China's corn stockpile surges, planning to curb output

China is planning to cut domestic corn production over the next five years to help ease its bulging state stockpiles, which could exceed more than a year's worth of consumption by the first half of next year, industry sources said. Production cuts by the world's second-largest corn consumer would also help reduce global stocks, which have hit a record high.
China aims to eventually reduce the acreage given over to corn by about a fifth, targeting a crop of 175 million tonnes by 2020, said three industry sources, citing proposals by the National Development and Reform Commission (NDRC), the country's top planning body. This would be down 24 percent from a record 229 million tonnes forecast for the 2015/16 marketing year. "China's corn acreage will reverse course from next year and will fall gradually every year over the next five years," said a source with a government think-tank. A government scheme to stockpile corn, designed to boost rural incomes, has distorted domestic prices, pushing them as much as 50 percent above their global counterparts this year. The policy has encouraged farmers to abandon other crops and plant more corn.
Domestic corn production has risen every year for a decade, while the use of chemical fertiliser has also surged, forcing the agriculture ministry to take action to ease pressure exhausted water and soil resources. Beijing will stockpile more than 40 million tonnes of corn under the current scheme, bringing reserves to more than 200 million tonnes, for more than a year of consumption. "Only a large corn acreage reduction can ease the massive stocks," said Li Qiang, chief analyst with Shanghai JC Intelligence Co Ltd.
Earlier this month, the agriculture ministry said on its website (www.agri.gov.cn) that parts of the country should cut their corn acreage, and said corn should be rotated with cotton in parts of north China. It said farmers near China's north-eastern border with Russia were being encouraged to grow soybeans instead of corn, while other northern and north-western regions would be given subsidies to switch to silage corn as forage for cows. Trial proposals in Beijing's new "five-year plan" are also expected to allow farmland in some regions to lie fallow. China's cabinet, the State Council, this week urged local governments to speed up the construction of new storage space in the north-east and speed up the rotation of corn and soybeans in the region.