China's foreign trade in farm produce went into deficit in the first two months of the year, compared with a surplus during the same period last year, the Ministry of Agriculture said yesterday.

Both exports and imports increased over the January-February period, but the growth of the latter was significantly higher, a ministry official who refused to give his name said.

Chen Hongzhou, an analyst with Galaxy Securities, said the figures suggested that the government's measures to rein in exports to protect supplies to the domestic market were taking effect.

The ministry's announcement coincided with a statement by the State Administration of Grain (SAG) that it will keep grain prices stable amid supply shortages and rising agricultural costs.

Zeng Liying, deputy director of the SAG, said at an industry meeting on Monday there is growing pressure to increase the prices of major grains this year as a result of supply shortages, soaring agricultural costs and fluctuations on international futures markets.

However, the country has sufficient reserves and will ensure price stability, she said.

The demand-supply gap has narrowed from 50 billion kg in 2003, to 15 billion kg now, following four years of bumper harvests, Zeng said.

Last year, China harvested 501.5 million tons of grain, 15 million tons less than the total demand, official figures show.

In the first two months of the year, China's foreign trade in farm produce was $14.67 billion, up 38.6 percent on the same period last year. Exports rose 7.4 percent year on year to $6.3 billion, while imports soared 77.4 percent to $8.37 billion. The trade deficit was $2.06 billion, compared with a surplus of $1.15 billion a year earlier.

China exported 673,000 tons of cereals, down 71.5 percent, and imported 378,000 tons, down 10.5 percent. Net exports fell 84.8 percent to 295,000 tons.

Net exports of rice increased against price rises on international markets. The country exported 345,000 tons of paddy (mainly rice), up 35.6 percent, and imported 139,000 tons, up 13.4 percent. Net exports rose 56 percent to 207,000 tons.

However, net exports of maize fell by 96.5 percent and wheat exports by 17 percent.

The volume of edible vegetable oil exports also fell to 31,000 tons in January and February, down 25.9 percent year on year. Imports of edible oil rose 7.3 percent to 1.26 million tons.

Reducing grain exports is a feature of the priority work agenda of the State Council for 2008. After earlier scrapping export rebates for wheat, paddy, rice, maize and soybean, the government has said it will this year impose export duties of between 5 and 25 percent.

(China Daily, Xinhua News Agency April 16, 2008)