China moves to stem grain exports

By Charlotte Eyre

- Last updated on GMT

Related tags: Agriculture, China

China's Ministry of Finance yesterday said it will scrap the
13 per cent tax rebate on grain exports to keep the products within
the country, a move that could put more pressure on other markets
around the world.

The 84 categories of grain that will lose the rebate as from next Thusday include wheat, corn, rice and soya beans. The decision was made to try and battle inflation caused by food prices rising rapidly, jumping up 18.2 percent in November from a year earlier. Over the whole of 2007, grain value rose on average 21 per cent, according to statistics from the Australian Bureau of Agricultural and Resource Economics (ABARE). However, the discouragement of Chinese grain exports could have disastrous effects on global markets and push up the prices of grains in other countries, especially in light of the Chinese government encouraging grain exports in recent years. According to english language newspaper China Daily, the Chinese government first lowered tariffs for grains after the country entered into the World Trade Organisation in 2003, making it a large market for major world grain producers. In 2004 alone, China exported a total 40,170 tonnes of wheat, mostly to countries in South East Asia. However, the country's finance office has now decided that preventing massive inflation in the country is more important that keeping up high levels of international trade. The position is understandable, as China has indeed been beset by a myriad of problems with its food supply over recent years, having to deal with the effects of a booming population gobbling up massive amounts of the world's food supply.. The country's grain demand alone will rise to 550m tonnes by 2010, compared to an output of 490m tonnes in 2006, according to the White Book of China's Grain Issues, released by the State Council. In 2006, China's agriculture ministry set in place a five year plan to try and ensure the country's food supply. The plan calls for arable land to be strictly protected, especially in major grain producing areas and state farms, where projects will be put into place to improve seed and soil quality. There will also be a need to improve farming technology to increase yields, the ministry said, and plant more 'super rice​' strains, while standardization in agricultural production will be stepped up to improve food quality and safety, the ministry said. For other agricultural products, the ministry said it expects milk output to rise by 7.95 per cent per year, reaching 42 million tons in 2010, compared with 28.65 million tons last year. Oilseeds will increase to 32 million tons, while sugar-producing plants will reach 120 million tons and meat will rise to 84 million tons.

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