China Announces 2014-2015 Maize Stockpiling Scheme

China Launches Price Support for Maize, Runs Out of Storage Space

China has revived its annual maize stock-piling programme for 2014-2015, now in its seventh consecutive year. The government will continue to purchase corn from farmers until at least April 2015, the State Administration for Grain said last week.

The move comes after analysts noted an apparent shift away from stockpiling earlier this year, with the introduction of a new policy for cotton.

Annual stockpiling programme for corn

Beijing will offer farmers 2220-2260 yuan (US$362-368) per tonne for farmers in its northeast provinces - the same price offered by last year’s scheme – in an effort to support domestic prices and lift rural incomes.

China Grain Reserves Corp, also known as Sinograin, along with two other state-owned enterprises will join the stockpiling scheme.

Government officials have said that China is facing shortages in grain storage following abundant harvests over the last decade.

“There is serious shortage of storage space particularly in the northeast, where a large volume of grain has been stored in the open air,” said Gen Shuhai, an official at the National Development and Reform Commission (NDRC).

According to the State Administration for Grain, Beijing will also offer subsidies for constructing temporary grain storage facilities.

A shift away from stockpiling?

Policymakers and analysts will likely be keeping a keen eye on China’s agricultural purchases, particularly given the indications earlier this year that Beijing seemed to be moving away from stockpiling programmes.

Such schemes were notably absent from China’s “No. 1 Central Document” at the beginning of 2014, which is the annual official document that outlines the country’s agricultural policy.

The Chinese government had decided to pilot a target price programme for cotton in place of stockholding. Nevertheless, rural development policy remains a complex political issue in China, home to almost 700 million farmers.

Beijing’s push for state-owned enterprises to join the corn stockpiling schemes and subsidisation of storage facilities may be seen as running opposite to this trend.