Grain prices remain stable with a slight increase
At the beginning of this year, large areas of China experienced prolonged low temperatures, which adversely affected the growth of early rice in Hunan, Hubei and other places, as well as rice and corn in Northeast China.
After entering summer, some parts of these major grain-producing areas were hit by floods. Autumn grain accounts for 70% of the annual grain output. Amid large fluctuations in international grain prices, will China's autumn grain production decline due to natural disasters, and will this in turn trigger wild price swings?
A good harvest is expected for the whole year
Zhou Wangjun, deputy director of the Price Department of the National Development and Reform Commission, said that this year's summer grain harvest was bumper, with output basically flat from the previous year, and winter wheat achieved a seventh consecutive year of increased output, laying a solid foundation for a bumper grain harvest for the whole year. Although early rice output declined somewhat, it accounts for only about 6% of the annual grain output and less than 20% of the annual rice output, so the overall impact is not significant.
He said that at present, the production situation for autumn grain, which accounts for more than 70% of the annual grain output, is good. If no large-scale natural disasters occur later, a good harvest is expected for the whole year.
Grain supply is fully guaranteed
He believes that, with China's grain harvests having been bumper for six consecutive years and inventories ample, the current ratio of domestic grain inventories to consumption far exceeds the internationally recognized safety line of 17-18%, so the grain market supply is fully guaranteed. Under the state's policy regulation, domestic grain prices will continue to maintain a moderate upward trend and will not experience wild swings. This can both protect the interests of grain-growing farmers and ensure that the living costs of urban residents do not rise too much.
He said that, as rising labor costs push up the cost of growing grain and the gap between the returns from growing grain and those from working away from home further widens, only by moderately raising grain prices can growing grain be profitable and farmers' enthusiasm for growing grain be mobilized.
He believes that since the mid-1990s, China's grain prices had long operated at a low level. In 2006, grain prices were basically flat with 1996, making it difficult for grain-growing farmers to increase their incomes, and grain production stagnated.
In recent years, by implementing the minimum purchase price policy for grain and raising the minimum purchase price level for three consecutive years, applying temporary purchase and storage measures for corn and soybeans, and strengthening regulation of the grain market, the state has kept grain prices in a good trend of steady increase and achieved bumper harvests for six consecutive years.