BEIJING (Reuters) — China will strengthen control over grain im-ports and crack down on illegal activities such as smuggling in a bid to cut oversupply, China’s vice-premier said last week.
Record stockpiles are creating storage problems for the new harvest.
China’s stockpiling policy, under which it buys from farmers at inflated prices, has made cheaper overseas supplies more attractive for end users such as feed mills, forcing the government to take action to try to curb surging imports.
“We will strengthen import and export controls for grains while severely cracking down on irregularities like smuggling in order to stabilize the domestic market,” vice-premier Wang Yang said at a national conference.
Read Also
Critical growing season is ahead for soybeans
What the weather turns out to be in the United States is going to have a significant impact on Canadian producers’ prices
China’s rejection of cheap U.S. corn cargoes on the grounds that it contained a genetically modified strain not permitted for import was also seen as part of Beijing’s efforts to curb cheap imports and support domestic corn prices.
However, buyers in the world’s second largest corn consumer have turned to non-traditional exporters, including Bulgaria and Ukraine, to fill the gap following the restrictions on U.S. supplies. There has also been an increase in smuggling.
“The wide price gap between domestic and overseas markets has spurred an increase in grains im-ports,” said Wang.
“Stockpile of autumn grains face many difficulties and problems.”
The gap between U.S. and Chinese corn prices is at a record high as a huge American crop pushes down prices there while China’s support for corn growers remains un-changed.
Beijing pays farmers US$362.9 to $369.5 per tonne for corn. U.S. corn is now at $143 per tonne.
Commercial storage facilities should be used and more companies will be encouraged to stockpile grains to ensure that farmers are able to sell their crop, Wang said.
China does not reveal details of its total grain stockpiles, but analysts estimate the country was sitting on close to 100 million tonnes of corn stocks before the current harvest began. That is equivalent to about half of annual domestic consumption.
Industry analysts expect Beijing to stockpile a big volume of corn for a third year in a row in the marketing year to September 2015.
Wang said China is facing new challenges boosting rural income and production amid an economic slowdown and sliding fiscal revenue. Rising production costs has forced the government to continue increasing subsidies to keep farming profitable.
Overuse of resources and environmental pollution have also threatened sustainable development, he said.
