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Review & Outlook
China¡¯s Grain Production Decreases in 2003
According to the information from the recent National Grain and Oil Conference, the estimated total grain output in 2003 would decrease about 1% from the total grain out of 2002. The main reason for that is the decrease of the total sown areas of grain, which is 3% less that the total sown areas of 2002. The farmers have used more arable land for cash crops because of the potential of more income from plating cash crops.
The officials from the State Grain Reserve Bureau said that the total domestic grain consumption in 2003 would be about 489 million metric tons (MMT), which is a growth of 1% from 2002. The increasing demand of feed grain by the feed industry causes the increase of total consumption of grain. In 2002, the total consumption of corn would be about 118 MMT while the total consumption of wheat would be about 105 MMT.
The fluctuation of the grain production has little effect on the grain consumption because China has a relative large national grain reservation. According to the officials from the State Council Development and Research Center, the total grain production in the past three years was less than the total grain consumption in China. The shortage of grain production was about 2.5-3.5 MMT per year. Because the grain storages at provincial level are abundant, the total supply is more than the total demand.
The officials from the State Grain Reserve Bureau indicated that the government would supply 35 MMT grain from the national grain warehouses in 2003 due to the domestic grain production cannot meet the domestic grain demand. The continually decrease of grain production has led the government to take more grain from the national reserve, in turn, the national grain reserve will be less and less.
By 2005, the estimated total grain production in China would be 470-475 MMT per year while the total grain consumption would be 500 MMT. If the grain production in the next 2-3 years would not be increased and the government has to continually reduce the grain reserve to make the shortage, China would need to import large amount grain in 4-5 years. Some industry specialists indicated that China might import 25-30MMT grain in 2010. It is impossible for the National Grain Reserve to continually supply some large volume grain without increasing the reserve.
It is estimated that China would import about 18 MMT of grain in 2003. The soybean will take the dominant position on grain import. Wheat, barley and rice are other major grain products will be imported.
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