China will face a domestic grain supply gap of about 130 million tonnes by the end of 2025, pointing to growing reliance on imports to feed the world’s most populous country, according to a new report from a government think tank.
The forecast, which was released on Monday, comes amid heightened concern about food security in China, which has been ignited by anecdotal reports of grain shortages and calls by President Xi Jinping to cut back on food waste.
China’s domestic supply of three staple grains – wheat, rice and corn – is expected to fall short of demand by 25 million tonnes by the end of 2025, meaning there will be a rising dependence on imports, the Rural Development Institute at the China Academy of Social Sciences (CASS) found.
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While it noted China had established a national grain security system and that overall supply was sufficient at the moment, it said “there are also problems of structural imbalance between supply and demand”.
Darin Friedrichs, a Shanghai-based commodity analyst at StoneX, said one of the government’s top concerns was the ability to feed a population of 1.4 billion, which relied on domestic production and imports.
“But there are no signs yet of a stockpile shortage – summer grain output stood at 142.8 million tonnes this year, up 1.21 million tonnes from a year earlier, official data shows,” he said.
While there are no indications of wheat and rice shortages, there is evidence of insufficient supply in corn.
China is expected to have a corn supply gap of 16.68 million tonnes in the year from October to September 2021, an increase from the July forecast of 13.98 million tonnes, according to a separate report from the Chinese Agricultural Outlook Committee, a unit at the Ministry of Agriculture.
The slower reserve buying is being attributed to farmers being slow sellers. Many are bullish because of recent rise in corn prices, and many are also concerned about Covid-19 globally and want to hold onto stocks
China’s national wheat reserve has bought 42.9 million tonnes of wheat from farmers so far this year, down 9.4 million tonnes compared to last year, said Friedrichs, despite an increase in overall production on 2019.
“The slower reserve buying is being attributed to farmers being slow sellers,” he said. “Many are bullish because of recent rise in corn prices, and many are also concerned about Covid-19 globally and want to hold onto stocks.”
The CASS report suggested China should improve “grain purchasing and storage policies” to secure food supply security, although it did not provide specific policy recommendations.
It said China’s domestic supply shortage would result from the shrinking rural workforce, as residents move from the countryside to cities. About 80 million rural residents are expected to shift to urban areas within the next five years, CASS said.
Adding to the problem was China’s fast-ageing rural population, which will see one in four people in the countryside above the age of 60 by 2025, CASS said.
Furthermore, Chinese farmers “lack enthusiasm in growing grains”, the report found.
China’s imports of grains have started to grow, even as the government reports bumper harvests. It imported a total of 74.51 million tonnes of grain in the first seven months of this year, up 22.7 per cent from a year ago, according to the Chinese customs data.
The report did not touch on China’s agricultural purchasing commitments under the phase one trade deal with the United States, but its conclusions have offered some explanation for China’s frenzied purchase of US farm products in recent months.
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