China should restrain exports of agricultural products and limit use of corn for industrial purposes to increase domestic supply for livestock, China Grain Reserves Corp (中國儲蓄糧管理總公司) president Bao Kexin (包克辛) said.
“We should curb corn processing and not let machines eat the grain,” Bao said in an interview on Sunday in Beijing at the National People’s Congress.
“We should ban exports of meat, poultry and eggs” to other countries, he said.
China, the world’s biggest grain consumer, is striving to increase production of wheat, corn and rice to meet demand as rising incomes improve the diet of its 1.3 billion people. Low yields, drought and urbanization have challenged the country’s capacity to boost output and increased soybean and corn imports.
“If the government cuts industrial use, it’s indeed saying that supply is tightening,” said Ding Ling, analyst at Shanghai JC Intelligence Co (上海匯易咨詢有限公司), by telephone from Shanghai. “It’s a difficult policy to implement because processing is a sizable industry which employs people and pays taxes.”
Sinograin, as China Grain Reserves is also known, handles stockpiling for the government and has its own processing and trading operations, according to the company’s Web site.
China “can maintain its grain self-sufficiency if it cuts off exports of all these other products” and curb corn processing, Bao said. “China doesn’t need to export any more food. It doesn’t need the foreign exchange.”
While water shortages and loss of farmland threaten crops, production has increased enough to sustain stockpiles, according to government officials.
The state grain reserves amount to 40 percent of annual consumption and the country has wheat stockpiles of 90 million tonnes, National Development and Reform Commission Chairman Zhang Ping (張平) said in Beijing on Sunday.
The worst drought in 50 years in parts of the winter-wheat producing areas has boosted speculation that output may decline, helping send prices in Chicago to the highest level since 2008.
“China is not short of wheat, even after this year’s extreme drought,” Bao said. “China is taking measures to deal with the water shortages and land losses to urbanization.”
Grain production, the world’s largest, may increase for an eighth year this year as irrigation is sufficient to ensure wheat output, according to government officials.
China will continue efforts to boost grain output by 45 million tonens, with production targeted to increase this year, according to the development commission. Output rose 2.9 percent to 495.7 million tonnes last year, the report said.
For corn, industrial processors used 41 million tonnes in the year through Sept. 30, or 27 percent of the 149 million tonnes of output, according to the China National Grain & Oils Information Center. Imports were 1.2 million tonnes, the center’s data show.
China will need to find ways to meet its starch and alcohol demand if it curbs output, and that will be most likely through imports, Ding said. Local governments, keen to protect their interests, may oppose this policy, he said.
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