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ODI Shockwatch - China: are changes afoot for cereals?

Research reports

Written by Steve Wiggins, Sharada Keats

Research reports

Since the economic reforms that began in 1978, China has seen rapid economic growth, backed up by similarly remarkable growth of farm output. This has coincided with exceptional progress in reducing poverty and malnutrition.

China’s policy-makers have long been concerned that the supply of staple foods be sufficient to meet domestic needs and that there be enough kept in reserve to cover for any unforeseen harvest failures. China has been reluctant to import cereals off the world market, since the risks of not being able to procure or having to pay a very high price are too great.

For some time, those analysing world cereals markets have been able to remove China from their considerations. China has not been expected to enter the market either for imported grain or to offload its large stocks on the world market. Within China, it has been expected that domestic prices would not necessarily vary closely with world prices.

But in 2011, two things seemed to contradict this understanding of China’s grain policies:

  • Prices of some types of rice have risen by 30% since mid-2010; and,
  • China plans to import 2M tonnes of maize from the world market during the July 2011 to June 2012 marketing year, mainly feedgrain for livestock. Some believe that this could rise to 5M tonnes.

This review looks at these questions in detail.

Steve Wiggins and Sharada Keats