Agriculture ministry forecasts record harvest this year

Ninth bumper harvest in a row will help ease inflation and stabilise global prices amid shortages in Europe and the US, experts say

PUBLISHED : Thursday, 25 October, 2012, 12:00am
UPDATED : Thursday, 25 October, 2012, 4:26am

Food production in China will rise for a ninth consecutive year, according to the Ministry of Agriculture, amid global food price uncertainties due to falling cereal production in the US and parts of Europe.

The ministry said on Tuesday that total food output this year would reach a new high after eight years of consecutive growth, with more than 80 per cent of autumn crops having been harvested so far.

Increased subsidies to farmers, better disease control and disaster relief contributed to a bumper autumn harvest, which makes up of 70 per cent of the whole year's food production, the ministry stated on its website.

China's annual statistics for food production includes a summer harvest, which saw a 2.8 per cent increase to nearly 130 million tonnes this summer, and an autumn harvest, whose figures are usually released in early December.

Though typhoons and floods affected the harvest in parts of the country, droughts, which are most damaging to crops, lasted shorter and their influence was smaller than usual, the ministry said.

Official statistics suggest that food production has been rising steadily, from 469 million tonnes in 2004 to 571 million tonnes last year. It was unusual for food production to increase nine years in a row, experts said.

According to Li Guoxiang, a researcher at the Chinese Academy of Social Sciences' Rural Development Institute, the typical cycle for food production in China was three years of rising yields, followed by three years of falling yields, then a stable harvest the year after that.

Favourable prospects for food production in China will help stabilise global prices driven by decreased yields in parts of Europe and the US because of severe droughts earlier this year, analysts said.

Ma Wenfeng, an analyst at Beijing Orient Agribusiness Consultants, said, "though China does not export much grain to the world market, a bumper harvest means less possibility for it to import from elsewhere of the world, which will help cool off global prices."

"As the largest food consumer, once China needs to import, it needs a great deal. And this will exert a big influence to the global market," Ma said.

Li said without increased food output, prices in the Chinese market are likely to surge amid expectations for a reduced global food production.

"In this sense, growth in food production helps to control inflation," he added.

Earlier this month, the UN's Food and Agriculture Organisation lowered its forecast for world cereal production this year to 2,286 million tonnes from its September forecast as corn and wheat production in central and southeastern Europe and the US were severely reduced because of prolonged dry conditions. The latest forecast would be 2.6 per cent down from the previous year's record production.

Beijing has put agriculture at the top of its agenda in recent years as it vows to produce 95 per cent of China's food to avoid reliance on the international market. Last year, the central government spent more than 1 trillion yuan (HK$1.23 trillion) on agriculture and rural issues.