China, the world's top consumer and producer of rice, on Monday increased its purchase price of the grain, under a government stockpiling plan aimed to encourage planting and boost farmers' returns. The higher floor price could push up food inflation in the world's second largest economy, which is already battling soaring global prices of corn and soybean as a drought grips top grains exporter United States.
But the impact on rice imports from China's move should be negligible as the country imports little late-season rice. The government set the minimum purchase price for middle- and late-season long-grain rice at 2,500 yuan ($390) per tonne, up 16.8 percent from last year, the National Development and Reform Commission said. The purchase price for short-grain rice, China's most popular variety, was set at 2,800 yuan per tonne, up 9.4 percent from last year, said the commission, the country's top planning body. The government will start buying rice from farmers for reserves if domestic prices fall below government prices. Currently, market prices are higher.
Lower output of early long-grain rice in parts of the country and government stockpiling had propelled domestic prices to record highs this year, prompting China to turn to cheaper imports and pushing up benchmark 100 percent B grade white rice prices. China imported 1.4 million tonnes of rice in the first seven months of the year, a rise of 244 percent on the year.
Its unmilled rice output hit a record high of 200.78 million tonnes in 2011, nearly matching annual consumption of around 199 million, according to the China National Grain and Oils Information Center, leaving China with a razor-thin surplus. China is already the world's biggest soybean buyer and accounts for 60 percent of global imports, while its entry into the corn market in the last few years has contributed to global supply tightness of that commodity.