China, despite years of bumper harvests, is unlikely to produce enough grain this year to meet consumption and the deficit will be covered by its reserves, a senior grain official was quoted as saying.
China is expected to harvest about 500 million tonnes of grains this year, lower than the projected 518 million tonnes that will be consumed, Zeng Liying, a deputy director with the State Grain Administration, told a conference. Her speech was published on official grain Web sites.
Despite high grain stocks, which were sufficient to keep prices in check, there was pressure for prices to rise, she said. Premier Wen Jiabao said in March that the country's grain reserves stood at between 250 to 300 million tonnes, but local media and grain experts have expressed doubts about the amount of reserves held in local silos.
China's cabinet this week reaffirmed that the country had to be self-reliant in grains and would take strict measures to protect farmland, which has been shrinking after years of industralisation.
It also promised to improve its grain reserve system and structure. The cabinet outlined a blueprint for grain production that aims to increase output to more than 540 million tonnes a year by 2020 and be 95 percent self-sufficient in feeding China's rising population. The government also mapped out a plan to raise grain output in the northeast province of Jilin, also the country's largest corn area, by more than 5 million tonnes.
An increase in corn consumption to satisfy the country's rising meat demand and expanding processing capacity led domestic prices to hover near record highs in recent months. The government has tried to avoid importing corn as it imports soybeans, particularly after world corn prices surged to record highs on an ethanol boom and supply tightness.