GUANGZHOU: Grain supplies from the mainland to Hong Kong via the Shenzhen port have seen a fast growth during the first quarter of this year, according to official statistics from the Shenzhen Customs released yesterday.

Supplies of soybean, corn, rice, wheat and flour made from these grains to Hong Kong reached 18,200 tons in the first three months, an increase of 14.6 percent compared to the same period last year.

As international prices for major grains have increased recently, imports in the first quarter totaled more than $8 million, up 57.1 percent over the previous period.

Shenzhen is the largest port through which grain and flour are exported to Hong Kong from the mainland.

"As a growing number of countries have introduced strict regulations on grain exports to meet domestic demand, Hong Kong will depend more on supplies from the mainland," said Wang Tianwei, a publicity official with the Shenzhen Customs.

To ensure stable supplies to Hong Kong and Macao, the mainland has introduced a preferential policy on grain exports to both special administrative regions.

According to the policy, duties on grain exports to Hong Kong are exempted.

Following the introduction of the duty exemption, prices of grains exported to Hong Kong have seen a steady slowdown in the first quarter, with the average price reaching $434 per ton in March, down by 20.3 percent from January.

Meanwhile, the Ministry of Commerce issued a notice early this week to ensure steady grain supplies to Hong Kong and warned of penalties for those who divert their grain shipments to other markets via the special administrative region.

According to the notice, wheat, corn, rice and flour made from these grains can only be sold to Hong Kong and violators will risk having their export licenses suspended.

Meanwhile, such licenses will only be issued to mainland suppliers who have signed agreements with designated Hong Kong counterparts.

A city-wide panic buying was reported in Hong Kong recently after the price of rice from Thailand, one of Hong Kong's major suppliers of rice, shot up by about 30 percent in last month. And rice hoarding has also been reported in neighboring Guangdong province.

The notice added that Hong Kong importers have to keep clear inventory and sales records that track food imports from the mainland.

(HK Edition 04/17/2008 page1)