BEIJING, July 8, 2005 (Dow
Jones via Cropchoice.com): China may have overestimated
its grain needs by assuming a food security requirement level of
more than 400 kilograms per capita a year, an influential analyst
with a government think tank said.
"The popular judgment held by many experts (in China) needs
to be reviewed," said Han Jun, rural department chief with
the Development and Research Center of the State Council, China's
Han told Dow Jones Newswires in a telephone interview Thursday
that an estimate of 400 kg of grain per capita a year isn't essential
to ensure China's food security.
"We have conducted a study, which is yet to be published.
(According to its findings) 370 kilograms of grain per capita will
roughly meet (China's) food consumption needs each year," he
Han said farmers had difficulty selling their grain whenever per
capita grain supply surpassed that level.
He didn't provide a demand estimate for the nation as a whole.
Demand growth to be slow and gradual
According to Han, China's demand for grains will continue to grow
in the years ahead but the pace of growth will slow significantly
in the coming several decades, even though population will peak
only in 2030, he said.
Urban consumption is expected to remain stable while that in rural
areas will decline in the coming years, he said.
Continuing rural migration into cities in search of jobs and a
switch in rural eating habits in favor of meat and other protein-rich
foods as rural incomes rise, are factors expected to aid a drop
in rural grain consumption.
The expected decline in rural demand will likely be more than enough
to offset incremental demand from around 10 million people added
to the population each year in the coming decades, he said.
Grain consumption in the form of feed will, however, continue to
grow, as China's meat consumption remains at a comparatively low
level, according to Han.
However, grain consumption for feed use tends to stabilize, or
even decline, when per capita meat consumption surpasses 60 kg a
year, a conventional saturation level in most markets.
Currently, Chinese urban residents on average consume around 40
kg of meat per capita a year, the figure is expected to rise to
between 45 and 50 kg as incomes grow.
Growth in meat demand will come mainly from rural areas, where
consumption now is around 19 kg per capita a year, Han said.
Govt measures to boost production paying off
While Han's views may force a rethink in government strategy on
what it takes to ensure food security, the Chinese government is
expected to go ahead with its programs to boost grains production.
Amid reports that the government's food grain stocks had fallen
to 30% of annual demand at the end of 2003, a level not seen since
1974, the government took some unprecedented steps such as subsidizing
grain growers, aiding seed and agricultural machinery purchases
and scrapping a tax on production to encourage farmers to grow more
Those measures, along with favorable weather, lead to a rise of
9% in Chinese grain production to 469.5 million metric tons in 2004.
Government officials have projected production to be flat to slightly
higher in 2005.
However, despite a forecast supply gap of nearly 25 million tons
in 2005 -- up from around 20 million tons in 2004 -- domestic grain
prices have mostly remained unchanged or even fallen in some cases,
partly because of frequent releases of government reserve stocks
into the market.
To halt a decline in wheat prices this year, the government even
had to order state warehouses to stop selling old wheat and instead
buy new wheat from farmers in the summer season.
China's grain reserves, for which no reliable estimates are available
from the government, are still considered to be far higher than
the usual international standard of 17%-18% of annual consumption
advocated by the Food and Agriculture Organization of the United