On September 28, a glowing report from the Ministry of Agriculture carried on many web sites announced that the fall grain harvest is well underway and it looks like another year of big grain production. According to MOA, the area planted in fall-harvested grain is up 10 million mu (1.5 million hectares) and yield is on an upward trend in all regions.
The MOA report gives no concrete evidence for the rosy forecast. Instead it lists this year's serious setbacks -- a horrendous drought in the southwest last winter, cold temperatures in eastern provinces, serious flooding this summer.
The report does recount all the efforts made by "central leaders and comrades" to guide anti-disaster work. The State Council held many special meetings, subsidies for special seeds and machinery purchases were increased, other subsidy funds were given out earlier, minimum support prices for rice and wheat were raised. The Ministry requires agriculture officials at all levels to resolutely carry out field management, pest control, and other measures to mitigate disaster losses.
Another article citing the MOA forecast of a big harvest reveals that officials are somewhat frantic about ensuring a big grain harvest. Officials are worried that a short grain harvest could set off price increases that might spread to other commodities, sparking wider inflation.
The article repeats the official mantra that the domestic grain market is insulated from the international market since China is close to self-sufficiency in rice, wheat, and corn; therefore rising prices in the international market will not affect China's grain prices. However, the article notes that basic food grains have no substitutes and an increase in grain price has "high conductivity". Rising grain prices could spread to other agricultural commodities and raise downstream prices for feed, edible oils, meats and eggs, ultimately increasing the CPI.
Officials are on edge after prices of several small commodities -- garlic, mung beans, and ginger -- soared last summer. However, the article assures us that the government immediately stepped in, clamped down on rogue investors, and prices receded.
The article also cites policy measures that encouraged farmers to plant grain. It notes especially that farmers had strong incentives to plant corn. It says a China Grain Net corn tour estimated that this year's corn harvest will be up 5.5 mmt (4.8%) from last year, reaching 165 mmt. It also recounts how the government has increased its ability to control prices by building up reserves of grain. As an example, the article says the government arranged for sales of reserve corn when that commodity's price was rising quickly in mid-June.