China to expand corn areas to tackle possible shortfall

BEIJING, Nov 4 - China will focus on raising corn output in grain production in the coming decade by paying higher prices to farmers while limiting expansion in the corn processing industry, the country's top planning body said on Wednesday.

Rising demand for animal protein coupled with limited farm land and water supply has challenged the country's ability to produce enough corn, the feed grain for animals.

China is already the world's largest importer of soybean, the oilseed to produce edible oil and soymeal, the animal feed protein. Analysts expect China will soon begin shifting to imports as Chinese consume more meat in line with rapid economic development and improved living standards.

But Beijing said it has to rely on its own corn production as world trading volumes of grains can only meet about half of the country's demand, and global ethanol expansion has raised uncertainties in supply.

To tackle a possible supply shortfall, Beijing will encourage major corn areas to expand planting areas while paying higher prices to farmers to try to maintain self-sufficiency, said the National Development and Reform Commission.

"Given restrictive factors such as climate, water and farmland resources, while we aim to increase our grain production in the coming 12 years, we will still face imbalance among different varieties."

"Wheat and rice production will be larger than demand while there will be a shortfall in corn and soybean supply," said its spokesman commenting on the country's master plan on increasing grain production for years until 2020.

The government will encourage more feed mills to use wheat while appropriately limiting the expansion of corn processors, it said.

China set its annul grain production target at 550 million tonnes by 2020, which is 50 million tonnes more than current levels of production.

The target is calculated based on consumption seen at 572.5 million tonnes by 2020 while the country aims for 95 percent self sufficiency in grains supply, according to the master plan.

To achieve the target, the country needs to maintain its farmland at 120 million hectares, of which 105 million hectares is for growing grains, said the commission.

The country's farmland has been shrinking over past years, with the lowest level in years at 99 million hectares in 2003, following urbanisation and industry development.

Besides better irrigation facilities, high-yield seeds and more technology which will be used to raise grain production, the government has chosen some key grain growing areas, including the largest corn province of Jilin, which will be encouraged with incentives to produce more for the market, it said.