Chinese Economy and Grain Production



Although it seems like inflation is sky-rocketing in China due to its escalating consumer price index, according to chairman of the leading food enterprise COFCO Ning Gaoning, grain prices will be stabilized because of the country’s “substantial reserves.”  While corn will probably drop, rice and wheat – two of the country’s major grains – will remain in high supply this year.  Indeed last year the country’s grain output increased nearly 3 percent with its rice inventory-to-consumption ratio being around 18 percent higher than anywhere in the world.  

Ning claimed that the escalation in world food prices was due to “global demands and extreme weather in major grain producing areas” along with general inflation and speculation.  He dismissed the claim that the price of agricultural products were behind global inflation since the recent peaks in farm produces occurred way later than those of other industrial products.  Ning also  predicted a high inflation in the next second months with a weakening from July to the end of 2011 but claimed that expectations were weaker this month because of various governmental measures to ensure market supply.  

As well, Ning noted how China still potentially has the capacit to increase the amount of grain it produces due to better rural infrastructure, and more low-yield farmland productivity.  Farmers are being encouraged to increase production and the government has invested significant funds in rural water conservation and farm irrigation projects.