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 Cabinet.
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 said.
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 grain.
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 Nations.
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