Grain imports bolster food supplies

China's grain imports surged strongly last year to more than 95 million metric tons, as the country took advantage of low international prices to meet rising national demand for food, according to a work report from the State Administration of Grain on Thursday.

The country imported 70 million metric tons of soybeans and 25 million metric tons of grains including wheat, corn, cassava and distillers' grain, a 22 percent year-on-year rise, the SAG forecast, based on customs statistics.

Ren Zhengxiao, the SAG director, said that as the average prices of China's three staple grains－corn, rice and wheat－remained 600 yuan ($96) per ton higher than foreign cereals, it was reasonable the country buys more from global markets to ensure sufficient domestic stocks and prevent unexpected supply risks.

"Even though the import quotas of the three staple grains have been adequately managed over the past year, quota-free categories such as broomcorn, barley, cassava and distillers' grains have risen fast," said Ren.

Ren said the imports, however, had squeezed the market share of domestic corn as well as causing excess supply in the domestic market.

The work report also stressed that more rice smuggling cases emerged in China last year, putting extra pressure on the government to increase storage capacity for grains as well as forcing it to pay higher floor storage costs to farmers to help stabilize their incomes, a system it introduced in 2006 to protect farmers from price volatility.

Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing, said China needs another round of decisive economic measures to put its agricultural growth back on a firmer footing, instead of relying on stockpiling, floor purchase prices and government subsidies to regulate prices.

The nation's minimum grain purchase prices have remained above world levels for the past three years, prompting more imports of products such as soybeans, corn and cotton from the United States, Argentina and India in 2014.

Ding said about one-fifth of China's stored grain reserves rot or fall into a condition considered as poor, with more than 17 million tons of grain being wasted every year.

China's grain output expanded 0.9 percent last year to 607 million tons, the 11th annual increase in a row.

Ren said the SAG's main task this year is to build more modern storage facilities that can hold up to 50 million metric tons in its main grain-production provinces or regions, as well as encouraging more private capital investment into building the facilities, through the public-private partnership model.

Eager to ensure food security, the central government and the private sector invested a combined 22.15 billion yuan last year into grain storage, logistics, and emergency response systems and facilities that can respond quickly to earthquakes, typhoons or other types of extreme weather conditions which could affect grain supply.