Without destructive natural disasters, current grain reserves in China plus this year's outputs are more than enough to feed its people, said Zeng Liying, deputy director of the State Administration of Grain.

The country's grain inventories, including the government's, enterprises' and farmers', are currently at around 250 million tons, accounting for half of national annual grain consumption, and this ratio is much higher than the international warning line of 17 to 18 percent, said Zhang Xiaoqiang, deputy director of the National Development and Reform Commission, on April 27 at the 6th annual conference of Chinese importers and exporters.

If there are no natural disasters that affect Chinese agriculture this year, grain output is expected to continue to grow with the same momentum we enjoyed in the last four years', Zeng said confidently. China's grain production totaled more than 500 million tons last year, 70.85 million tons more than in 2003.

With the exception of a portion of demand for soybeans, which is supplied from overseas, China is more than self-sufficient in wheat, rice and corn. Currently skyrocketing grain prices are primarily driven by soaring demand for biofuels as well as rising machinery, fertilizer, labor and farming land costs. But China is working to stabilize grain prices.

This year, the government has appropriated 130.7 billion yuan more in agricultural investment than last year, and the central budget added 25.3 billion yuan in subsidies for farmers and further leveraged minimum grain purchase prices.

Zeng also introduced that China's current wheat and rice prices are far below international averages. Regular price fluctuations are related to the balance of domestic demand and supply, and proper price raises could increase farmer's incomes and keep them working the farmlands.

Regarding some reports on regional shortage of grain inventories, Zeng explained that grain inventories are a dynamic number, and peaks following large scale seasonal purchasing and gradually falls over the period of a year. The reported shortage in grain reserves is based on a few deserted or idle storage facilities, used during late 1990s when China experienced years of plentiful harvests.

The State Administration of Grain is now collecting national grain purchase, sales and inventories statistics once every 10 days, and promises to keep an eye on nationwide grain market balances, said Zeng.

(Chinadaily.com.cn May 5, 2008)