Red line proposed for China's grain reserves

Chinese policymaker Zhao Shuanglian has enough reform on his plate already, but still insists a red line be added to national grain reserves as a matter of urgency.

"China has red lines on arable land and water resources, it needs to draw one on national grain reserves too," said Zhao, chairman of China Grain Reserves Corp.(Sinograin), manager of China's central grain and edible oil reserves.

Zhao's remarks on food security came in an interview Thursday with Xinhua after the Ministry of Agriculture announced a record harvest this summer with increased grain output for the 11th straight year. A red line has been drawn to ensure that arable land shall never shrink to less than 120 million hectares, as food security has always been one of the top concerns for China.

Zhao knows that central grain reserves are the best way to keep China's rice bowls in Chinese hands. He wants to begin stockpiling domestic grain and appropriate imports to build national grain reserves which cover about 20 percent of national consumption by 2020.

Wheat, rice and corn will account for 85 percent of the inventory, while the reserves of edible oil and oil seeds can meet the demand of one fourth of consumption, according to Sinograin.

About 80 percent of grain warehouses will be filled by domestic production and the rest will be covered by imports, Zhao said.

Such gigantic grain reserves need the best grain storage technology and smart grain warehouses.

"To handle price fluctuations, it's necessary to raise our security coefficient a little bit," Zhao said.

Founded in 2000 with a registered capital of 16.7 billion yuan (about 2.7 billion U.S. dollars), Sinograin has grown into one of the largest and most wide ranging grain storage and transportation companies.

Now heavily dependent on imports for cooking oil, China is seeking to reduce its exposure to price fluctuations on global markets. The grain self-sufficiency rate stood above 97 percent in 2013 and cereal imports reached only 14 million tonnes, accounting for less than 2.6 percent of cereal output.

Grain output expanded 2.1 percent year on year to over 600 million tonnes last year, the 10th year in a row of increased grain production.

Soybean remains the primary grain import, which rose 8.6 percent year on year to reach 63.4 million tonnes in 2013.