Drought prompts concerns over grain output drop

08:19, May 05, 2011      

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With one of the driest springs on record, farmers in most areas of central and south China are desperate for rain. However, rainfall has been substantially below normal since the beginning of the year.

"The wheat is thirsty for rain during its growing period, but we have received little rain in recent months," said Xu Changshun, a farmer in Xuwan Village of Xuchang City in central China's Henan Province, while pointing at his parched farmland.

"Although we did have rainfall during the past several days, the precipitation was too small to offer any relief to crops," Xu says.

In April, Henan Province saw 50 percent less rainfall than usual. The drought has affected 16.17 million mu (1.08 million hectares) of cropland by the end of the month, according to data from the local government.

The situation in Jiangxi Province is no better. The province, located in the heart of the country's grain belt, has received only 253 millimeters of rain over the past four months, 53 percent less than that of previous years.

Minimal rainfalls this spring have not only crippled agriculture, but also dried up the region's rivers and reservoirs.

In Jiangsu Province, the water level of the Biandan River has fallen to 1.7 meters, the lowest level recorded in half a century, says Ji Jingde, a local official in charge of maritime affairs.

The lingering drought has left 1.09 million people and 380,000 livestock short of drinking water nationwide as of last Friday, according to the Office of State Flood Control and Drought Relief Headquarters.

The drought has also affected more than 1.33 million hectares of farmland in seven provinces, including Guangdong, Hunan, Hubei and Jiangxi, which are cornerstones of China's grain production.

Hubei Province will definitely see a drop in wheat output this year while the lingering drought will also affect the growth of paddy seedlings,according to Governor Wang Guosheng.

The possibility of diminished grain production has fueled concerns over higher food prices and climbing inflation.

China's consumer price index accelerated to 5.4 percent in March, the fastest pace in more than two years, while food prices soared 11.7 percent higher than last year's prices.

Wang Jing, an analyst with the Guan Tong Futures Brokerage Co., says the drought will not have a large impact on wheat prices, but it is likely to increase expectations that wheat prices will rise in the future.

The price of flour produced by a large mill in Henan Province hit 2,480 yuan per tonne on Tuesday, a decrease of 20 yuan from the previous week. However, wheat futures for November rose 0.33 percent on Tuesday to 2,748 yuan per tonne.

"The drought will add to the country's inflationary pressures and test the government's ability to tackle inflation," says Huang Dejun, chief analyst with Beijing Orient Agribusiness Consulting Ltd.

"The country's grain stocks are enough to cover weather-related losses, as China has recorded seven years of bumper harvests. The country's grain supply is essentially self-sufficient," he adds.

Zheng Fengtian, deputy dean of the School of Agricultural Economics and Rural Development of the Renmin University of China in Beijing, says that the drought has exposed weaknesses in China's water conservation infrastructure.

China has pledged to invest 4 trillion yuan (608 billion U.S. dollars) in water conservancy projects over the next decade, according to a document issued by the government at the beginning of this year.

"With the government's massive investment in water conservation, China will have effective drought relief and flood control systems by the end of 2020. Its farmland irrigation infrastructure will also be improved," Zheng says.

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