High grain prices highlight the need for reform

Updated: 2013-02-04 21:18


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The grain self-sufficiency ratio of China is below 90 percent for the first time since 1949. China imported more than 77 million tons of grain last year.

Trade protectionism in international grain markets and the shrinking farmland area at home are having an impact in Chinese food safety issues, said an article in the China Business News. Excerpts:

The surging grain prices at home reflect the supply-and-demand tensions in the domestic grain market. For example, rice prices at home are 20 to 30 percent higher than in the international market. With the increase of grain imports and grain harvests, the rise of grain prices at home is caused by the import quota system, trade monopolies and monopolies in the domestic grain-circulation channels There are also some speculators active in this field, profiting from grain trades.

On the other hand, large areas of farmland were expropriated by local governments for real estate developments to boost urbanization and many former rural workers are now migrant workers, leading to a remarkable decrease of the agricultural population. These phenomena also contribute to a potential shortage of grain production and the high grain prices.

The fast urbanization and industrialization of some areas also take considerable financial resources away from agricultural firms. Without sufficient financial support, China's agricultural technology and production are both being affected. Inflation is another reason behind the high grain prices.

Meanwhile, the appalling waste of food in restaurants also contributes to the high demand for food at a national level.

China must accelerate the modernization of its agriculture, reform the rural land expropriation system, as well as grain circulation and pricing control systems to increase grain-production efficiency, trade costs and prevent local governments from excessively exploiting agricultural resources in the urbanization process.