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Expert: Grain Production Causing Storage Problems

The over-production of grain is having averse effects on the market.

By Zhang Qingchen Updated May.18

Food security has been a problem in China for millennia. Today, the food supply is abundant and the reserves secure, but Ma Xiaohe, former director of the Academy of Macroeconomic Research at the National Development and Reform Commission, says this is creating new problems. Over-production is causing reserves to build to excess levels, with potentially calamitous results.

One problem is that fiscal pressure is rising. The country has spent huge amounts on the agricultural construction and provided many subsidies for farmers, as well as purchasing grain at high prices to stimulate a sluggish market. Enormous amounts are also being spent on storage facilities.  Production costs have risen without producing higher yields per unit. 

The over-use of land and water resources affects the ecology, and in order to keep up grain production in successive years, farmers have been making excessive use of chemical fertilizers and pesticides. Groundwater is also being polluted or overdrawn.

Finally, Ma says, supply and demand has become distorted by the government's overly heavy hand in constantly increasing purchasing prices, keeping the market from playing its proper role in adjusting prices.