Will China's total grain output decline in 2016? The Chinese Academy of Sciences makes a forecast

The Chinese Academy of Sciences Forecasting Center released its 2016 China economic forecast in Beijing. The Chinese Academy of Sciences estimates that the national grain sown area in 2016 will be about 112.1 million hectares, a decrease of 1.2 million hectares, or about 18 million mu, compared with 2015. If severe natural disasters do not occur, under average or slightly below-average weather conditions, the total grain output for 2016 may decline.

The report shows that although China's grain production in 2015 suffered natural disasters of varying degrees, especially the sustained high temperatures and drought in summer and autumn in some major autumn grain-producing areas (such as Northeast and North China), through hard work it achieved the first continuous twelve-year increase in output since the founding of New China. The national total grain output reached 1,242.87 billion jin, an increase of 28.82 billion jin over 2014, a rise of 2.4%; the cotton sown area in 2015 was 56.984 million mu, a decrease of 10% compared with 2014, and the national total cotton output was 5.605 million tons, a decrease of 574,000 tons compared with 2014, down 9.3%. It is expected that the total oilseed output in 2015 will be about 35.7 million tons, an increase of about 1.5% over 2014. Looking ahead to 2016, the forecasts are as follows.

1. It is expected that China's grain sown area in 2016 may decrease by a relatively large margin. Preliminary forecasts put the national grain sown area in 2016 at about 112.1 million hectares, a decrease of 1.2 million hectares, or about 18 million mu, compared with 2015. If severe natural disasters do not occur, under average or slightly below-average weather conditions, the total grain output for 2016 may decline. It is expected that summer grain output will remain stable with a slight increase, while autumn grain output may decline by a relatively large margin. It is preliminarily expected that China's grain output will decrease by about 30 billion jin compared with 2015, and the national grain output in 2016 is expected to be about 1,213 billion jin.

2. It is expected that China's cotton sown area in 2016 will continue to decrease, with a reduction of about 15%. Under normal weather conditions, output will also decline further.

3. It is expected that China's oilseed sown area in 2016 will increase slightly, among which the rapeseed sown area will decrease and the peanut sown area will increase. If the weather is normal later on, it is expected that oilseed output will still increase.

The main reasons are as follows:

First, in 2016, China's grain production has favorable conditions, but at the same time also faces the severe test of some unfavorable factors. The favorable conditions are: first, the area of winter and autumn-sown wheat increased in the 2015/2016 season, and winter wheat emerged neatly, laying the foundation for an increase in summer grain output; second, the central government and provincial and municipal governments continued to increase support for agriculture and grain production. However, it also faces some unfavorable factors: grain prices fell sharply; farmers' incomes will decline by a relatively large margin; the problem of “difficulty in selling grain” has reappeared, and these factors will severely hurt grain farmers' enthusiasm for growing grain.

Second, the cotton sown area is expected to continue to decrease, and under normal weather conditions, output will also decline further. The main reasons are: first, cotton prices showed an obvious downward trend throughout 2015, although the decline was somewhat smaller than in 2013 and 2014. In addition, cotton planting costs, especially labor costs, rose relatively quickly, reducing cotton farmers' returns; second, downstream yarn enterprises had weak demand for cotton and could not effectively boost demand for cotton. Third, global cotton supply was loose, economic growth in emerging economies was sluggish, and demand showed no obvious improvement. It is expected that international cotton prices will continue to fluctuate at low levels in the short term.

Third, it is expected that the oilseed sown area in 2016 will increase slightly, and under normal weather conditions oilseed output is expected to increase. The main reasons are as follows: affected by policy adjustments such as the state's cancellation of the rapeseed minimum purchase price policy, the decline in rapeseed prices throughout 2015, and lower planting returns, farmers' enthusiasm for planting rapeseed in autumn and winter was severely dampened; since 2015, peanut prices have risen by a large margin, increasing farmers' enthusiasm for planting peanuts. It is expected that the peanut sown area in 2016 will increase by a certain margin.