Sunday, 6 November 2011

Beijing pressed to open up on grain stockpiles

Just how much of the mainland’s harvests sits in government depots has long been a secret. But as food prices rise, many say now is the time for transparency


Guanyu 道 said...

Beijing pressed to open up on grain stockpiles

Just how much of the mainland’s harvests sits in government depots has long been a secret. But as food prices rise, many say now is the time for transparency

Mandy Zuo in Heilongjiang
06 November 2011

The last month has been the busiest time of year for Li Yingwen and his fellow grain farmers.

The tasks include testing combine harvesters, looking for labourers, supervising the reaping and spreading out the grain in the sun. Soon, Li will find himself dealing with rice traders from across the country.

Li’s family grows about seven hectares of rice on farmland he rents from the state-owned Lianjiangkou Farm, which leases 180 square kilometres of land to farmers in Heilongjiang province, a major grain-production base.

Thanks to good weather, he expects a bigger-than-usual harvest of more than 80 tonnes this year, up from less than 60 tonnes last year.

Li keeps only a small portion of the grain in reserve for his family’s needs, with more than 95 per cent sold to rice traders. After several rounds of trading, the bulk of his harvest will finally get to food markets in neighbourhoods, or end up at the government’s grain-storage depots.

The central leadership decides how much grain should be bought from the market and stored in state-run grain depots each season, and the State Council entrusts the state-owned China Grain Reserves Corporation (CGRC) to oversee the nation’s grain reserves.

The amount kept in reserve has traditionally stayed a state secret. But more and more researchers are calling for transparency in the holdings, and the issue has aroused more attention amid soaring food prices.

According to the United Nations’ Food and Agriculture Organisation (FAO), global food prices peaked in February, and in September were still 22 per cent higher than a year before.

In Beijing in September, World Bank President Robert Zoellick called for more information to be released on stockpiles and production to reduce volatility in the food market.

“This has involved some work with China as well, because traditionally China didn’t reveal as much information about its stocks and production,” he said. But he said China had agreed to do so as part of a new agriculture-management information system operated by the FAO.

Beijing releases grain-production data twice a year after harvests in summer and autumn, but typically does not reveal the size of its grain reserves. The last time it announced the size of reserves was in April 2008, when Premier Wen Jiabao said 150 million to 200 million tonnes of grain was held in reserve, more than double the global average.

Professor Lu Feng, from the China Centre for Economic Research at Peking University, said it was not necessary to keep secret the stockpile’s size. “It’s exerting a bad influence during peaceful times, because the market becomes worried once the price fluctuates. This way of management should be changed.”

Requests for comment from the State Administration of Grain were refused on the grounds that it was a state secret. Ding Shengjun, a researcher with the administration’s Grain Economy Research Centre, also declined to comment, saying: “This issue is too sensitive.”

An employee with the centre’s publicity department, who declined to be named, said grain reserves had generally remained stable in recent years, except those of corn, of which a big portion released from depots this year because “supply-demand now is kind of tight”.

Guanyu 道 said...

Besides storehouses under the CGRC, local governments also have their own depots meant for difficult times or disasters. However, most of those depots were no longer being used to stockpile grain for the government, according to Dr Li Guoxiang, who specialises in rural development at the Chinese Academy of Social Sciences. “On the one hand, [the depots] became less necessary after the central reserve system, the CGRC, was established in 2000, as it has the ability to transfer grain among regions according to their demand,” Li said. “On the other, some local governments just don’t have the money to manage them well.”

Meanwhile, farmers are keeping less grain on hand as prices rise. Fang Yan , deputy director of the National Development and Reform Commission’s Rural Department, said in April that about 60 per cent of grain was now being sold by farmers as a commodity, compared with about 30 to 35 per cent in the past.

“This means a change in demand - there are fewer growers and more consumers. Farmers have smaller stockpiles, and more are turning to buy it from nearby regions,” she said.

Because of that rising demand, farmers such as Li are stockpiling less rice that in past years. “We usually set aside four to five mu [about 3,000 square metres] of farmland to grow rice as our own food, which is enough for just one year,” he said.