Why are China's grain output, imports and stockpiles all rising at the same time?

On the one hand, China's grain output has achieved "eleven consecutive years of growth", while on the other hand, the volume of China's grain imports keeps climbing; in addition, grain stockpiles have also reached a recent high——China's grain is presenting the strange phenomenon of a simultaneous increase in output, imports and stockpiles, the "three simultaneous increases".

At the "2015 China Rural Development High-Level Forum" held at this time, Chen Xiwen, deputy head of the Central Rural Work Leading Group, said that in recent years China's agricultural development has achieved remarkable results, but the "three simultaneous increases" phenomenon is becoming increasingly severe, and if this phenomenon is allowed to develop, it will have an adverse impact on the healthy development of China's agricultural industry, farmers' employment and the growth of farmers' incomes.

In recent years, China's annual grain output has remained stable at more than 1.2 trillion jin, but import volume has grown rapidly; last year the country's grain imports exceeded 100 million tonnes for the first time, while grain stockpiles kept growing, with corn and other grain varieties seriously overstocked and stockpile pressure becoming prominent.

"The widening price gap between domestic and international grain is an important cause of the 'three simultaneous increases'." According to Chen Xiwen, since 2012, domestic grain prices have gradually risen above the international market, and by the first half of this year, prices of staple grains such as rice, wheat and corn all exceeded international market prices by 50%. In June, China's late indica rice was 51% higher than the duty-paid price of Thai rice, while wheat and corn were on average 56% and 65% higher than international market prices respectively.

Chen Xiwen believes that the rise in domestic production costs and minimum purchase prices, the fall in international grain prices, the appreciation of the RMB exchange rate, and the fall in freight rates caused by the collapse in global energy prices are the four main drivers of the widening domestic-international price gap.

Data show that since 2011, China's minimum purchase price for early indica rice has risen by more than 32%, while rice prices on the current international market have fallen 40.4% compared with 2011; at the same time, due to the collapse in oil prices, global grain freight rates have fallen by an average of more than 50% over the past four years.

The "2015 China Rural Development High-Level Forum" was hosted by the Rural Economy Research Center of the Ministry of Agriculture. The theme of this year's forum was "China's Rural Development and Reform Facing the '13th Five-Year Plan'", and it has so far been successfully held six times, generating considerable social response.