China Faces Grain-Supply Shortage as Farmland Shrinks
By William Bi
Jan. 26 (Bloomberg) -- China, the world's most populous country, may struggle to meet its grain needs as farmland shrinks and rising demand triggers shortages that can't be met by imports, the Ministry of Agriculture said.
The nation must keep at least 260 million acres for growing grains, boost yields and increase use of agricultural technology, Xue Liang, a ministry spokesman, told a press conference yesterday. Preventing natural disasters, or mitigating their impact, is a ``titanic task,'' Xue said.
China's government regards food security as key to maintaining social stability after a famine between 1959 and 1961 killed millions. Premier Wen Jiabao has said falling grain output ``poses a threat'' to national food security.
``China's agriculture, unlike the U.S., is always under threat from a small and shrinking arable land base and frequent natural disasters,'' Dr. Chang Qing, who heads futures and derivatives research at China Agricultural University, said by phone today. ``The ministry is right to be on its guard.''
The area sown to wheat in China plunged 27 percent between 1997 and 2004 to 54 million acres, leading production to fall by almost 30 percent to 87 million metric tons, according to data from the U.S. Department of Agriculture. Rice, the staple food for most of China's 1.3 billion people, had a similar decline, the U.S. said. China is the world's biggest rice grower.
`Complex Problems'
``We can't solve China's grain problems through imports: they cannot be depended upon,'' Xue said. The government ``must have a sober understanding of the sustained, tremendous, and complex nature of China's grain-supply problems.''
China's rapid urbanization led cereal production to fall more than 20 percent between 1997 and 2003, according to the Australian Bureau of Agricultural and Resource Economics.
The deteriorating situation prompted China's government to introduce subsidies in 2004, including state-mandated minimum prices for rice and wheat, which helped production recover for three years. Agricultural taxes for farmers were ended last year.
``The decline in arable land is a trend,'' Xue said, without giving figures. The country ``has complex weather patterns with many natural disasters every year,'' he said.
The probability that wheat yields this year will be lower than 2006 is ``fairly high'' because of drought and high temperatures during the early growing season, the state-owned China National Grain and Oils Information Center said in a statement yesterday.
While China's grain production rose for third year in 2006 ``overall supply and demand is in a tight balance,'' Xie Fuzhan, chief of the National Bureau of Statistics, said yesterday.
