Chen Xiwen

The grain production has maintained a fast growth since 1995. The average annual output of the 5 years reached 497.2 billion kg, which is 11.4% higher than the average figure of the previous 5 years (445.15 billion kg). It has been some time since supply of grain exceeded demand. Various signs indicate that the production of grain at present is at a critical turning point. After China’s entry into WTO, the impact of international grain market over the domestic market will keep increasing. Therefore, a comprehensive and sober understanding of the current situation of grain in China is necessary.

I. Stimulation for the Fast Growth of Grain Production is Decreasing.

There are four major reasons for the fast growth of grain production in the latter half of the 90s. Firstly, it is stimulated by wise policies on agriculture, including the significant raise of government’s purchasing price in 1994 and 1996, which resulted in an accumulated raise by 98.8%, and the policy of purchasing surplus grain of farmers with no limitation on quantity at a favourable price. Secondly, there have been sufficient rain and warm winters in this period. The drought and early frost which usually affect grain output significantly were less grave in these years. Thirdly, the expansion of the planted area for grain, which increased from 1643.2 million mu in 1994 to 1706.8 million mu in 1998, with an increase of 63.6 million mu. Fourthly, the advancement of agricultural science and technology and the increase of agricultural input. Given the current situation, however, these factors have changed. Firstly, affected by the domestic demand and supply relationship and the international market, the price of grain has remained low. Price is no longer stimulating the growth of grain production. Secondly, natural disasters that affect grain output by large areas, such as drought, are obviously more serious than before. Thirdly, the planted area of grain began to decrease in 1999 after increasing for four consecutive years. The area decreased by 9.4 million mu in 1999 and continued to decrease by around 50 million mu in 2000. Meanwhile, the input of farmers into grain production is also decreasing because of the declining economic return. Therefore, apart from the advancement of science and technology which continue to promote the grain production the impact of other favourable factors are on the decrease. The situation of supply exceeding demand that has lasted for some time will probably change as a result of the continuous decrease in output. This change is in conformity with the market rules. Nevertheless, we should pay great attention to the trend and speed of the change.

II. The Grain Stock of the State and Farmers are Quite Abundant.

At times of change in grain production, grain stock of the state and farmers will have significant impact on the balance between grain supply and demand and the fluctuation of grain price for certain periods of time. At present the grain stock of the state and farmers are quite abundant.

(I) Grain Stock of the State

By the end of June this year, the grain stock (grain for trading) still stood at above 250 billion kg, although decreased slightly as compared with the figure at the end of March. Out of the total stock, 41% is wheat, 25% is rice and 31% is corn. There are 16 provinces / autonomous regions where grain stock exceeds 5 billion kg, with the total amount accounting for 85% of the national stock. There are seven provinces and autonomous regions where grain stock exceeds 12.5 billion kg, with the total stock accounting for 58% of the national stock. Stock of wheat is mainly in six provinces, including Henan, Shandong, Hebei, Heilongjiang, Jiangsu and Anhui, which accounts for 58.5% of the national wheat reserve.

Stock of rice is mainly in nine provinces, including Heilongjiang, Jiangxi, Hubei, Hunan, Anhui, Sichuan, Jilin, Jiangsu and Liaoning, which accounts for 75.5% of the national rice reserve. Stock of corn is mainly in six provinces, including Jilin, Heilongjiang, Liaoning, Inter Mongolia, Hebei and Shanxi, which accounts for 84.1% of the national rice reserve.

In 1999, upon checking and ratification by the departments of grain, finance and quality supervision, around 45 billion kg of the grain stock are stale, of which, 20 billion kg had been removed by this June. It is estimated that about 25 billion kg of the stock grain are stale by the end of this June. Although the grains are stale to different degrees, they can still be used as fodder.

(II) Grain Stock of the Farmers

According to a sample survey of 67,000 rural families in 31 provinces, autonomous regions and municipalities throughout China by the Rural Sample Survey General Team of the State Bureau of Statistics, the average grain stock per person in rural families was 605 kg at the end of 1999, a decrease of 57 kg than that of the same period last year. Similar to the grain stock of the state, the geographic distribution of the stock of farmers and the stock for sale is not balanced. The average grain stock per capita is over 1000 kg in the three provinces in the Northeast and in Inner Mongolia and Hebei, of which, it is as high as around 3000 kg in Heilongjiang and over 2000 kg in Jilin. Whilst in Hainan Province, where the average grain stock is the least in China, the figure is less than half of the average of the country. Farmers have little or no stock for sale in about one third of the provinces and autonomous regions in China. Some 60% of the grain stock for sale are in Northeast and Northern China, of which, the grain stock for sale in Heilongjiang, Jilin and Hebei accounts for 40% of the total in China.

In the first half of this year, the average grain output per capita was 116 kg. The sale per capita was 123 kg. The grain for daily consumption was 124 kg per capita. And the grain for feeds per capita was 65 kg. It is estimated that by the end of June the average balance of grain stock of farmers will be 405 kg per capita, a decrease of 200 kg than that at the end of last year. Based on the above figures, it is estimated that the total grain stock of farmers throughout China should be above 350 billion kg.

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