China View asks how much grain does china really have in reserve?
(emphasis mine) [my comment]
How much grain does China really have in reserve?
www.chinaview.cn 2009-04-14 14:09:29
by Xinhua writers Lin Jianyang, Wang Xiuqiong
BEIJING, April 14 (Xinhua) -- Chinese history is rich with grain adages such as, "To the king, the people are heaven; to thepeople, food is heaven."
That importance has carried through to modern China as Chairman Mao Zedong once said, "with grain in our hands, there is no panic in our hearts."
No one has a better understanding of these words than Hou Zhanying. He has worked for nearly 20 years at the Bureau of Grainin Xinmi County, central Henan Province. Henan produces a quarter of China's wheat and is known as country's breadbasket.
"China relies on itself to feed more than 1.3 billion people. Food supply and security is important under any circumstance," Hou told Xinhua.
With less than seven percent of the world's arable land and more than one fifth of the global population, Hou says Chinese officials need to be extremely careful with the country's food supply and safety.
NATIONWIDE CHECK ON GRAIN RESERVES
It's why he's agreed to take part in a three-month, nationwide government audit of China's grain stocks.
On April 1, more than 100,000 auditors began checking granaries and inventory books.
It's the second time since 2001 Hou has participated in this type of food supply check.
"This time, we were asked to check more thoroughly. We are checking all grain reserves except those stored in personal homes," he said.
As of April 10, county-level grain companies had completed self-inventories. That's the first step of the nationwide audit.
Next, city governments will verify county data, which will then be rechecked by provincial authorities. Nationwide, granaries will then be subjected to random, surprise audits.
"My top priority is to make sure that there is no cheating or fabrication of figures. During the city-level check, I will be assigned to places out of Xinmi," Hou said.
The State Administration of Grain said the audit will mainly target reserves kept by state-owned companies, however, selective checks on grain stocks owned by private companies will also be conducted.
The purpose of the accounting is to "find out the true volume of our grain stocks" for national policy-making, Chinese Vice Premier Li Keqiang said at preparatory meeting on March 25.
ALARM ON FALSE FIGURE OF RESERVES
Last April, Premier Wen Jiabao said China had grain reserves of150 to 200 million tons. That's equal to about 30 to 40 percent of China's annual grain consumption or double the 17-18 percent level regarded by the UN Food and Agriculture Organization (UNFAO) as a safe minimum for global stocks.
One year later, there continues to be questions over whether those figures are accurate as some Chinese leaders and experts believe false volumes were reported by local grain authorities and companies.
According to governmental policies, granaries receive around 75yuan (11 U.S. dollars) per ton of stored grain. Therefore, the more they store, the more money they are eligible for. This has led to the exaggeration of grain volumes.
Yuan Longping, a well-respected agricultural scientist, dubbed the "father of hybrid rice", told the Guangzhou Daily last week that he believed there were some granaries "reporting phony figures of stocks to get subsidies".
"Since it is an open audit, they (granaries) might have been prepared and borrowed grain from others. As a result, inspectors will be cheated."
Yuan suggests secret investigations and more spot checks. He said that's what helped "catch two big fish" last year -- one in Northeast Heilongjiang Province and the other in Anhui.
The Heilongjiang scandal, which was exposed last May, involved one of China's largest granaries, Fujin No. 90. Its managers stole then sold grain that was supposed to be stored there. They lied about stock volumes to get government subsidies. The corruption resulted in public losses of more than 100 million yuan.
The same thing happened in Anhui, where granaries of several state-owned companies were found empty last April.
That's not the only problem with China's reserve food system.
Companies have been reluctant to store grain because its become more costly. They have to purchase grain from farmers based on set government prices. For example, white wheat is fixed at 1,740 yuan per ton this year. Prices to sell that grain in the Chinese market, however, are much lower than that, so companies end up illegally re-selling state-owned stocks to private buyers at higher prices.
The result is that there is no concrete number for just how much grain China really has in national reserves.
Zheng Fengtian, an agricultural scholar with Beijing-based Renmin University of China, said the latest audit reflects concerns within the leadership over the real figure.
"There is a big difference between official statistics and private calculations," Zheng told Xinhua.
RESERVED FOR FOOD SECURITY
Wrong figures pose a big threat to China's strategic policy of grain self-sufficiency and food security.
"Grain is a strategic material. In case of natural disasters, what can you do if you don't have grain? You have to store reserves," Yuan said.
The country set up a grain reserve system in 1990. Reserves are divided on their importance into four categories: central, local, national temporary and commodity.
According to the State Administration of Grain, China's 1.3 billion people use approximately 50 0 million tons of grain annually, or more than 300 kilograms per person. Of that, China produces nearly 95 percent of the grain it consumes.
Lester R. Brown, known for his book "Who Will Feed China?", which was published in 1995, said food security in China is a highly sensitive issue.
During 1959-61 when China was hit by a severe famine, 30 million Chinese starved to death.
"This is why Beijing has worked so hard in recent decades to try and maintain grain self-sufficiency," Brown wrote in a statement emailed to Xinhua.
He warned that aquifer depletion is now a particularly serious threat to grain production in China since about 80 percent of its grain harvest comes from irrigated land.
Yuan, the 79-year-old rice scientist, echoed Brown's view.
"In 1959, a severe drought hit China and badly damaged grain yield," he said. "I saw five bodies of the starved besides farm fields and roadsides. It was really miserable."
Yuan called on the central government to ensure more grain reserves and to make them last for at least 100 days at China's consumption rate. That's 30 days more than the minimum 70 days of consumption set by the UNFAO.
"Currently, we don't know how many days our grain stocks can sustain. That's why we need such a nationwide audit," he said. "The best target will be 180 days given China's population."
The entire national grain audit is supposed to be completed by the end of June. Then a final report will be submitted to the State Council, or cabinet.
Below is my reaction two weeks ago when China ordered its giant grains stock-take.
For those of you who don't remember, Northern China was hit by worst drought in 50 years. So China's wheat reserves or lack thereof is a somewhat pressing issue, especially considering the catastrophic fall in 2009 global food production.
Personally, I believe the combinations of a poor 2009 crop combined with overstated wheat reserves means China will be importing quite a lot of grain in the second half of this year
My reaction: Authorities are obviously very worried about whether China's grain reserves actually exist.
1) China has begun a three-month, nationwide government audit of its grain stocks.
2) On April 1, over 100,000 auditors began checking granaries and inventory books.
"This time, we were asked to check more thoroughly. We are checking all grain reserves except those stored in personal homes,"
3) Last year, there were two major scandals about involving China's grain stocks:
A) The Heilongjiang scandal (exposed May 2008). The managers of Fujin No. 90, one of China's largest granaries, stole/sold grain that was supposed to be stored there, and then lied about stock volumes to get government subsidies. The corruption resulted in public losses of more than 100 million yuan.
B) The Anhui scandal (exposed April 2008). The same corruption occurred, and the granaries of several state-owned companies were found empty.
4) The audit reflects concerns within the leadership over the real figure of grain stocks.
5) During 1959-61 when China was hit by a severe famine, 30 million Chinese starved to death.
"In 1959, a severe drought hit China and badly damaged grain yield. I saw five bodies of the starved besides farm fields and roadsides. It was really miserable."
6) Because of the trauma Chinese experienced 50 years ago, food security is a highly sensitive issue in China.
Conclusion: Unlike in 1959, China today has over 2 trillion dollars in reserve, and, if faced with the threat another famine, China will use its massive foreign reserves to buy up every available grain of wheat from the world market. The prices of food worldwide will soar.