‘China should farm more abroad’

China's farm trade deficit will continue to widen to about $40 billion in 2012 following an increase of nearly 50 percent in 2011 to $34.12 billion, according to an estimate by the Chinese Academy of Social Sciences think tank.

“While largely relying on domestic supplies for agriculture products, we should also fully utilise the international market,” Zhu Gang, a researcher with the Rural Research Institute of the Academy, told a news conference.

“We should actively explore overseas resources by combining 'imports' and 'go overseas' to ensure stable supplies of agriculture products,” said Zhu on the sidelines of the news conference, called for the publication of an academy study on rural China.

China's per capita farmland is less than 40 percent of the global average and water resources are at a quarter. It has no comparative advantages in farming, the academy said.

It said some Asian and African countries had vast areas of uncultivated land and investment in farming there by Chinese companies should boost global food supplies, which would also mean stable supplies for China.

About 40 Chinese companies are involved in overseas farming in more than 30 countries, with investment totalling 15.3 billion yuan ($2.43 billion).

Despite good harvests in China over the past eight years, increases in output are not able to keep pace with higher consumption at a time of rapid urbanisation and industrialisation.

China, the world's top rice producer, became a net importer of corn, rice and wheat for the first time in 2011.

“Supplies of agriculture products are tightening, despite years of bumper harvests, growth of demand has shown no sign of a slowdown,” Guo Wei, the head of the rural department of the State Council's research office, told the conference.

“BALANCED SUPPLY DIFFICULT”

Guo said farmers in some areas had given up rice farming and moved to cities to find work.

Strong demand from livestock producers and processors had led to tighter corn supplies even though production of that crop had increased the most of all grains in recent years, said Guo.

The think tank expected China's corn output to surpass that of rice for the first time this year, becoming the largest grain crop. Record corn prices encouraged Chinese farmers to plant the largest ever acreage of the crop this year.

“To keep a balanced supply of agriculture products is becoming more and more difficult given the constrains of worsening land and water resources,” said Xu Xiaoqing, head of the rural department of the Research and Development Center of the State Council.

Xu said rising imports of agriculture products, such as soy, cotton, sugar and edible oils would continue in the long term while overall grains production level fluctuates wildly depending on the weather.

China is the world's top importer of soy and cotton.

China's grain production fell to about 90 percent of its needs in 2011, down from a government target of 95 percent, according to the report.

Despite a record rice and corn harvest last year, prices of grains also hovered at record highs. Overall, the price of agriculture products rose 16.5 percent in 2011 from 2010, of which grain prices rose 9 percent.

The think tank expected the overall prices of agricultural products prices to rise 10 percent in 2012. China's annual inflation rate jumped more than expected in March to 3.6 percent largely driven by high food prices, which rose 7.5 percent. - Reuters