China's grain and oil supply, feel at ease

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Last updated at: (Beijing Time) Monday, November 24, 2003

China's grain and oil supply, feel at ease

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A sudden price-hike of grain and oil last month roused worries from people of various circles about the grain supply in China but the worry turned out unnecessary. Experts point out that there is sufficient grain and oil supply and no risk of grain shortage in China.

Safety grain supply, barometer for changes of people's living conditions in urban and rural areas

At the initial stage of reform and opening-up the gross grain output was only 300m tons in China. However, the agriculture development in China entered into a new stage with its focus putting on increasing the peasants' income and strategic restructuring as its mainstream when China's grain output broke through 500m tons in 1996. Though this period witnessed the decline of gross grain output, yet there has been a great growth in other farm produces and the diet structure of the people improved considerably.

For many years in succession China has been at the world's top in output of grain, oil, fruits, meat, poultry, eggs, and aquatic products and the amount per capita has reached or exceeded the world's average. Experts of agriculture generally agree that China now boasts of the most secured grain supply since the founding of the PRC in 1949.

As the Engel index indicates that the grain consumption of residents has been down in recent years, Experts concerned hold. Take Beijing for example, food consumption only accounts for 30 percent of the overall consumption of the residents. To be more specific, less than 10 percent of grain and oil are needed and the consumption of staple food per capita averages at about 80 kilograms a year.

As the impact of foodstuff price hike on consumption structure has been greatly tempered, this wave of increase in grain and oil prices has not pushed the general prices level up as much as that ten years ago and there is no evident fluctuation in the market.

The grain and oil supply is sufficient at present.

Han Jun, director of the Rural Department with the Development Research Center with the State Council, said that there is no possibility of grain crisis in China despite of the upswing in grain prices. In fact, the good harvest for successive four years since 1995 has laid a good foundation for China's grain stock and the supply is in surplus and guaranteed.

China holds a grain stock of over 480b catty this year and peasants' stock of grain is about 40 b catty. This year's gross output of grain amounts to 880 b catty. The demand for grain in the coming years is estimated ranging somewhere from 960 b to 980 b catty. When the amount of demand plus the reasonable security reserve of 200 b catty offsets the preserve, China still has a balance of about 400 b catty grain in stock.

Based on this fact, experts came to a conclusion that, so long as China keeps its domestic grain output at or above 900 b catty annually in future years, there will be enough grain supply and no shortage of grain will loom large.

The improvement of the production condition and the agricultural technology has enabled China to maintain its comprehensive production capacity of grain at a high level. And an annual output of 900b catty can be guaranteed. Furthermore, China is able to import grain from the international market to make up the deficiency if it is necessary.

A long-term plan should be made on the issue of grain supply. Though there is no problem for the grain supply, the grain security has direct bearing on the national economy and the people's livelihood. The Chinese government does not treat it lightly. It has declared that it will set going in its reform of the grain circulation system. The reform is going to be focused on the protection of main grain growth area and on the motivation of peasants' incentive in growing the grain. Reform has been launched on the rural tax and fees system to alleviate the peasants' burden. The policy of "protective pricing", government's procurement of grain priced higher than the market, has been carried out. Indirect subsidy via the circulation process has been changed into direct subsidy to peasants.

Some experts suggested that a fixed portion from the annual national grain risk fund be set aside to establish a special fund against grain risk within five years to ward off the rise and fall of the grain price in the market.

China is endowed with enough grain resources and the key is to strengthen market operation and achieve free flow of the resources and information, argued some others. The secured grain supply should be steered from focusing on production security to that of circulation and logistics, from output to the capacity and employment and income of peasants in the main grain growth areas, they strongly suggested, and from supply volume to taking pricing security into account.

(Article written by People's Daily and translated by PD Online)

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