Grain price increase unlikely to affect world market

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Last updated at: (Beijing Time) Friday, November 21, 2003

Grain price increase unlikely to affect world market

Chinese agricultural analyst He Kaiyin told Xinhua Thursday that the recent grain price hike in China was unlikely to substantially affect the world market.

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Chinese agricultural analyst He Kaiyin told Xinhua Thursday that the recent grain price hike in China was unlikely to substantially affect the world market.

"China will continue to import appropriate amounts of grain to adjust the domestic market and to remind Chinese farmers of the existence of competition," said He, a senior scholar with over 30 years of study on agricultural issues and an advisor of east China's Anhui provincial government.

He said that the price hike will not mean a food shortage but are bound from a lower level. "Food prices have decreased for about six consecutive years and so a rise is quite normal," he said.

In Anhui, one of China's major grain producers, grain prices rose about 10 percent from last year and in Heilongjiang province, northeast China, wheat prices grew 32 percent. In spite of that, the prices of Chinese food kept on dropping for the past six years and the current level is almost the same with that in 2000 and roughly 85 percent of that in 1998.

Han Jun, head of the Department of Agricultural Studies under the State Council Research Center on Development, reiterated that the price hike does not mean a food crisis.

"The acreage of farmland in China has dropped in the past few years, but it did not harm the nation's agricultural productivity and a sudden rise in people's food demand will be virtually impossible," Han said. "So I don't think there is any problem about food security in the nation."

In the long run, even if the Chinese population exceeds 1.6 billion in the future from the current 1.3 billion, the nation can still ensure food security and there is no need to worry about who can feed China, He Kaiyin said.

Official statistics indicate China currently has around 500 billion kg of grain supply, which is roughly the amount of one year's total yield.

On the contrary, the price hike has effectively stimulated Chinese farmers, who for a long time suffered from price falls due to continuous good harvest from 1995 to 1998, said He.

Famous for his thorough and systematic investigation in the field, He noted that the farmers have become more passionate than months ago about planting.

China has also started a comprehensive rural reform on taxes and fees to alleviate farmers' economic burden and farmers can sell grains to the government at a "protective price", usually slightly higher than market price.

However, the expert did express concern about the food supply structure, which in his eyes needs big adjustment. The traditional Chinese food policy was to guarantee enough to eat but now it's time to consider how to eat better, he said.

It is the prices of fine breeds of grain that grew significantly this time, which clearly demonstrates people's higher requirements for quality, but among the national food stock, the portion of fine breed grain is small, the expert said.

He noted that one of positive results of the price hike is that more farmers will realize the quality trend and start to plant improved fine breeds of grain.

The Chinese government is alert to the food issue as well. Premier Wen Jiabao reiterated that China must adopt the most rigorous measures to protect farmland at the latest national conference on agriculture.

He also requested the government to insure food security by providing more support to main bread baskets and farmers, strengthening infrastructure construction in the countryside and promoting technological applications.

According to the Ministry of Agriculture, the nation is likely to yield 460 billion kg of grain next year.

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