Bumpre Grain Harvest Foreseen in China

WASHINGTON - Sep 21/99 - STAT -- Economists working for the USDA believe China will harvest another bumper grain crop in

1999/2000, with production of wheat, corn, rough rice, miscellaneous grains, edible beans, and tubers exceeding 500 million MT for the third time in four years.

Total grain area is estimated down slightly, with reductions in corn and wheat area offsetting a slight increase in rice area. Despite a drought in parts of the North China Plain and excessive rainfall in central China, near-record yields are expected for rice and wheat, and corn yields are expected to be above average.

Successive bumper crops in the 1990's have answered critics who wondered if China would be able to produce enough grain to feed itself, but the achievement has come at a high cost to the Chinese government.

To encourage farmers to expand grain production in the mid-1990's, China raised the procurement price for quota grain (which the farmer is obligated to sell to the Government) and promised to purchase, at a lower price, whatever surplus grain the farmers wanted to sell.

Among the results of this policy were huge stocks of high-priced government-owned grain (including large amounts of poor quality wheat and early rice), high storage costs, larger post-harvest losses due to inadequate storage facilities, and a heavy burden of debt. China adjusted its grain policy in 1998 and 1999 to address some of these issues.

In order to reduce excess stocks and cut costs, China lowered, or in some cases eliminated, both procurement prices and guaranteed purchase amounts. The Government also decided to place greater emphasis on improving the quality of grain output rather than increasing quantity.

It has sharply lowered the purchase price for inferior types of wheat and early (indica) rice, while offering premium prices for higher-quality varieties of grain. These reforms could result in slightly lower production in 2000/2001, as farmers react to lower grain profits by using fewer inputs and reducing area. However, there are few alternative crops in many regions where surplus grain is grown, and the cost of switching to other crops can be high.

China’s total wheat output for 1999/2000 is estimated at 115.0 million MT, up 5.0 million from last year, but down 8.3 million from the record set in 1997/98. Earlier this year, the Chinese government announced that 1999 summer grain output (85 to 88% winter wheat) reached 118.5 million MT, the second largest crop on record.

Dry weather at planting led to a small reduction in winter wheat area, and a serious drought affected much of the crop on the North China Plain throughout the winter and spring. However, a combination of efficient crop management, supplemental irrigation, timely late-season rainfall and excellent harvest weather enabled farmers to achieve near-record winter wheat yields.

Production of spring wheat (10 to 11% of the total crop) is expected to drop by about 8% in 1999/2000 due to lower estimated area.

The weather was generally favorable in the Northeast, although dryness may have affected yields in Inner Mongolia and northwest China. Heavy rainfall in mid-August (harvest period) likely caused minor yield and quality reductions in Heilongjiang. The Government is actively discouraging the production of spring wheat (used mainly as a feed grain) and area is likely to continue to drop.

China is expected to harvest 125.0 million MT of corn in 1999/2000, the third-largest crop in history. Area is estimated down slightly to 25.1 million hectares, as area reductions in some of the corn-surplus provinces in northern China were partially offset by increased area in the south and west.

Yield is estimated at 4.98 tons per hectare, down about 5% from last year’s record yield.

The weather was very favorable this year in the Northeast, where 38 - 40% of the crop is grown, although parts of Jilin and Liaoning were drier than normal and yields may have been affected.

On the North China Plain (36 - 38%), summer rainfall was the lowest since 1982 and soil moisture levels, which were already depressed at the beginning of the summer, dropped to the lowest level in several years.

The rainfall pattern in July 1999 was similar to 1997, when a serious drought caused a major reduction in corn yields. However, temperatures were milder in 1999 and the impact on corn yield was less severe than in 1997.

Cloudiness and below-normal temperatures may have delayed corn development in southern China, a minor corn-producing region, and excessive rainfall in June and August caused some localized flood losses in the provinces bordering the Yangtze River.

China’s 1999/2000 rice crop is estimated at 197.1 million tons, up 4.3 million from last year’s flood-impacted crop, but down 3.6 million from the record set in 1997/98.

Total rice area is estimated up slightly from last year, with increased single and late rice area offsetting a reported 2% drop in early rice area. About half of China’s rice production is single rice (which includes northern rice); the other half is divided roughly equally between early rice and late rice.

Planted area for high-value northern rice (japonica) has increased sharply in recently years, while early rice area has been declining in response to lower prices. Early rice (indica) stocks are reportedly very high, and the Government has begun increasing the procurement prices for better varieties of middle and late rice in order to discourage early rice production.

The weather was generally favorable for the 1999/2000 early rice crop, and production is estimated higher than last year despite lower area. Excessive rainfall and local flooding in the lower Yangtze River Valley may have delayed the transplanting and development of single and late rice, but any crop losses this year were minor compared to 1998/99, when China experienced the worst flooding in decades.

Heavy rain during the single rice harvest may have had an impact on yield and quality. Southern China has been cooler and cloudier than normal this summer, but seasonable rainfall has provided adequate moisture for the late rice crop and typhoon damage has been minimal. Late rice yields are expected to be very good.