Some of China's top agricultural policy advisors acknowledged that China has massive reserves of grain that are "hard to digest" given low international prices. In light of these problems, they say the "temporary reserve" price-control policies will have to be changed. The comments were made at a May 16 forum on food security held in Beijing.
Cheng Guoqiang, a senior agricultural policy advisor and advocate of "target price" subsidies, said reserves of corn and rice are at a historical high, and other commodities are at 60-70% of their record levels. Overall, he said, China has a half-year's grain consumption in inventories--that would be about 300 million metric tons.
Nie Zhenbang, former head of the Grain Bureau, said grain imports have been flowing into the country despite big domestic inventories of grain. This is because international prices are much lower than China's prices. Nie said granaries in the northeast were filled to capacity with corn and inventories are plentiful in the south, as well.
Ni Hongxing, director of the Ministry of Agriculture's Agricultural Trade Promotion Center, described the big grain reserves as "hard to digest." He said the big reserves ensured China's food security, but he sees the China-international price gap continuing for quite some time. Thus, China imports cheap grain that flows into the market while it stockpiles expensive domestic grain. In view of this situation, Ni said the temporary reserve stockpiling policy needs to be changed in favor of a more company-oriented policy.
The high-level food security forum was held at the Chinese Academy of Agricultural Sciences in Beijing and hosted by the Ministry of Agriculture's Research Center for Rural Economy and the China Agricultural Resources Fund.