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China is capable of maintaining the balance between grain supply and demand in the coming years and the country's food security is under no imminent threat despite four consecutive years of grain output decrease.

Han Jun, director of the Rural Economy Research Department under the State Council Development Research Centre, made these remarks recently.

China's grain output may drop to 440 million tons this year, as China continues to see grain consumption outpacing production.

Since 2000, China's annual grain output has lingered at 455 million tons, while its grain consumption demand during the time reached about 480 million tons annually.

But huge stockpiles of grain still guarantee that the country's grain supply exceeds demand.

From 1995, China had a boom grain harvest for four consecutive years, making the country's accumulative grain surplus reach 500 million tons.

Facing the situation that grain supply outpaced demand and grain prices dropped, farmers conscientiously reduced grain production and the Chinese Government launched its ambitious "Turn Farmland to Forest and Grassland Project'' since 1998.

"Therefore, if China could restore its annual grain output to 475 million tons in the coming years, plus appropriate grain imports, China would achieve the balance between grain supply and demand'' said Han.

To increase grain output, the Chinese Government should guarantee enough land and water resources for grain production. Strict rules should be worked out to forbid industrial construction to occupy too much farmland, said Han.

And farmer's enthusiasm for planting grain should be fuelled. The grain price was comparatively low over recent years, however the production cost increased, which made grain growing less attractive for farmers.

Zhu Changguo, deputy-director of the State Bureau of Grain Reserves said this year's grain production area has been cut by 3 per cent, as farmers have switched to more profitable crops, such as fruit and vegetables.

Therefore, the government should give proper subsidies to grain planters and help them reduce production costs by teaching them advanced planting technologies.

Meanwhile, to deduct and exempt agricultural taxes is another effect means to relieve farmer's burden, said Han.

The country's grain reserve system should be further improved. "The current system is less efficient and is expensive,'' said Han.

Grain is of vital importance to the nation's economy and people's livelihood. "To ensure food security, about 90 per cent of grain supply needs to be independently produced. At the same time, to properly utilize international grain market to regulate the domestic grain supply and demand balance is necessary,'' said Han.

To ensure people have enough food is also an important part of the country's food security strategy. There are still more than 28 million rural population suffering poverty, and some urban poor people as well. How to offer food assistance to low-income family is also an urgent issue for government, Han said.

Han finally urged the establishment of an early warning system for grain shortage.

"The basic information of the country's grain production, circulation, reserve and consumption should be well controlled by government.''

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