Wednesday, January 23, 2013

China's grain self-sufficient rate drops to below 90%

This year, China's grain yield is expected to hit a record high and to achieve the ninth consecutive annual increase for the first time since half a century ago. According to the National Bureau of Statistics of China, the domestic grain yield is predicted to increase to 589.57 million tonnes in 2012, up 3.2% over the previous year. Meanwhile, the import of grain also increases accordingly. In the first eleventh months of 2012, the import volume of grain in China has hit 65.89 million tonnes, accounting for around 11% of the nation’s total grain yield according to official statistics, which means that China’s grain self-sufficient rate has dropped below 90%, according to CCM’s December issue of AgriChina Investor.
For years, China has attached importance to achieving and maintaining high grain self-sufficient rate. On 2 July, 2008, the Medium and Long Term Plan for National Grain Security, which planned to stabilize China's grain self-sufficient rate above 95%, was passed by the State Council. At the beginning of 2012, the Ministry of Agriculture also indicated that China should maintain the goal of grain self-sufficiency.

Li Guoxiang, a researcher of the Rural Development Institute of the Chinese Academy of Social Sciences, said that China’s grain self-sufficient rate has already decreased below the line of 95%, a target figure set by the government. Coupled with import volume in December, China's grain self-sufficient rate is predicted to surely drop below 90% in 2012. However, the large import volume of grain is to stabilize the price of agricultural produces, which will not last for a long time, and China's grain supply is still very adequate.
China is already the world's largest importer of soybean. With the decreasing planting area of soybean, the import volume of soybean is estimated to increase to 57.5 million tonnes in 2012 from 52.6 million tonnes in 2011, according to the National Grain and Oil Information Center. Besides, China has become a net importer of wheat, rice and corn since 2011. Experts believe that the current increasing market share of imported grain in China will make China's grain encounter some important changes and challenges.

First, since the area of China's arable land has already decreased to 120 million ha. (1,800 million mu), China’s grain is difficult to maintain complete self-sufficiency. With the acceleration of urbanization, the arable land is inevitably decreasing, and enlarging grain import volume will also be inevitable.
Second, since the grain import is inevitable, China should pay close attention to the trends and changes in the overseas markets. In the future, China should actively expand agricultural investment in overseas markets, including renting overseas land to farming, taking shares of foreign agricultural companies and agricultural trading companies, in a bid to increase the influence in the field of grain production and trading.
Third, in domestic market, it is urgent for China's agricultural industry to upgrade and China should introduce more investments into the agricultural industry. In addition, China should adjust macroeconomic policies and industrial policies to better serve grain production. For years, China has issued many preferential policies on supporting agricultural industry, which should continue in the future.

Source: AgriChina Investor 1212

Content of AgriChina Investor 1212:
No. 1 central document of 2013 again to focus on agricultural issues
Government’s import tariff adjustment for specialty infant formula
2012 China's agricultural machinery purchasing subsidy soars by 25.6% YoY
Government purchasing: a double-edged sword
Legend Holdings invests in kiwi business
Kenfeng Seed cooperates with PETKUS in corn seed processing
Ausnutria's ongoing expansion strategy overseas
Chuying Agro-Pastoral's ecological pig project to start mass production in 2013
China's grain self-sufficient rate drops to below 90%
Substitution of wheat for corn declines in Q4 over Q3 2012
2012 Annual review of corn products industry
Opportunities and challenges co-exist in China's bio-pesticide industry
China's first state-level agricultural industry fund founded   
Jan.-Nov. 2012 China’s pesticide technical output hit 3.2 million tonnes
North Grain Agriculture to establish laying hens demonstration base with USD186 million
2012 China's newly added corn harvesters hits 52,600 aided by financial subsidy
Nestlé completes acquisition of Pfizer's infant nutrition of Wyeth   
CAAS signs strategic cooperation framework agreement with COFCO
CATAS signs cooperation framework agreement on agricultural technology
Number of Xinjiang's imported cotton pickers soars greatly in 2012

AgriChina Investor, periodically published on 31th every month, offers timely update and close follow up of agriculture investment in China, analyzing market data and trends, as well as related policies. Major columns include investment environment, investment dynamics, market watcher, market review etc.

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