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Land and Environment : Agribusiness Assoc. of Australia

Agribusiness Perspectives Papers 2001

Paper 47
ISSN 1442-6951

Changing Patterns of Feedgrain Production and Marketing in China [1]

Xian Xin a, Wei-Ming Tian a and Zhang-Yue Zhou b
November 9th, 2001

Authors Contact Details


Increased disposable income has, in the past two decades, led Chinese consumers to demanding more animal products. China's animal husbandry industry has responded to this demand by producing more animal products. Indeed, not only has this increase in animal products been very impressive in recent years, but it has been achieved with little feedgrain imports.

The question as to whether China's domestic resources will be able to continue supplying the animal husbandry industry with the needed feedgrains has attracted much attention from government officials and academics both within and outside China. Many believe that China's future demand for feedgrain will exceed its supply and imports are inevitable.

Among the many factors that affect the quantity of feedgrain that China will import are two important ones: China's own capacity to produce and its feedgrain marketing arrangements. It is thus imperative to examine closely the changing patterns of China's feedgrain production and marketing. This paper fulfils this task by providing some important facts and updating information of the latest developments that are related to China's feedgrain production and marketing.


1. Introduction

China's grain output increased from 305 million tonnes in 1978 to 512 million tonnes in 1998 (SSBa 2000, p. 387). The rapid increase in grain output, coupled with increased demand for animal products, has made it possible for China to produce more animal products. Indeed the increase in the past two decades has been very impressive. Total meat production increased from 19 million tonnes in 1985 to almost 60 million tonnes in 1999, an increase of over 200%. During the same time period, milk production increased by 170% while aquatic products increased by 485%. Among those animal products, the increase in beef, poultry meat, and farmed aquatic products has been the fastest (SSBa, various issues). The rising per capita income enabled the Chinese to consume more animal products and less food grains. Per capita direct consumption of grains has declined in both urban and rural areas (SSB 2000b, pp. 86, 90).

Some believe that population growth, urbanisation and rise in per capita income in China will lead to a continued increase in demand for animal products, which in turn will push up the demand for feedgrains (Huang, Rozelle and Rosegrant 1995; USDA 1998; Xin 2000, pp. 1-4). China's potential in increasing grain output and thus the amount of feedgrain, however, is not optimistic due to industrialisation and urbanisation which result in limited agricultural resources being reallocated to non-farming use (Tian and Chudleigh 1998). Consequently, China may need to import feedgrains in large volume in order to meet the increasing demand for animal products (Cromptonne and Phillips 1993; Crook and Colby 1996; USDA 1998). This then would generate a tremendous impact on the world grain market.

Whether China will import a large amount of feedgrains is yet to be seen and the issue is affected by many factors. Two important factors are China's own capacity to produce feedgrain and China's feedgrain marketing arrangements. It is thus imperative to examine closely the changing patterns of China's feedgrain production and marketing. This paper fulfils this task by providing some important facts and updating the latest developments that are related to China's feedgrain production and marketing.

2. Feedgrain Production

According to the Ministry of Agriculture, in 1997 China used about 30% of grains produced for feed purposes along with other non-grain feed resources, such as bran and husks, oilseed meals, distillers' by-products, tree leaves and grasses, and crop straws. In this paper, ‘feedgrains' refers to coarse grains, which in China consist of corn, sorghum, millet, barley, oats and some other minor cereal crops. It is estimated that some 80% of corn is used for feed purposes (National Grain and Oil Information Centre 2000).

It is noted that, while rice and wheat are treated as fine grains, a certain amount of rice and wheat is used for feed as well. Farmers in southern China feed their livestock with rice of inferior quality, chiefly early-crop indica rice. Early-crop indica rice does not taste good but has higher yields and a longer storage life than late-crop indica rice, wheat or corn. According to a survey by the Research Centre for Rural Economy of the Ministry of Agriculture in 1993, it was common for farmers in Jiangsu, Zhejiang, Jiangxi, Hunan, Hubei, Guangdong, Guangxi and Sichuan to feed livestock with rice. In some areas (for example, Hunan and Jiangxi), rice accounts for about 50% of total feedgrain consumption. In addition, government grain policy in the 1990s unintentionally encouraged farmers in southern China to grow and sell early-crop indica rice to fulfil their rice quota obligation to the government. However, with increased income, consumers have turned away from early-crop indica rice and now demand other better tasting grains. As a consequence, Government grain bureaus end up keeping early-crop indica rice for several years, then selling it at low prices for feed.

Wheat is also sometimes used as feed. Wheat products are traditionally the staple diet in northern China, with farmers often retaining enough stock from their harvests for their own consumption. They tend to deliver lower quality wheat to the government to fulfil quota, with the result that lower quality wheat may accumulate in the government's storage. It is reported that there are about 7.5 million tonnes of inferior quality wheat in stock, accounting for nearly one-third of China's 26 million tonnes of wheat stocks (USDA 2000, p. 9). As the quality of such wheat deteriorates further over time, it is likely to end up as feed. In addition, some major wheat-producing provinces, such as Shandong, regularly allocate about 20 percent of their wheat harvest for feed.

Nationwide, it is estimated that, annually, about 25% of rice (30 million tonnes) and 5% of wheat (5 million tonnes) were used as feedgrain in China in the 1990s and the proportions are projected to rise (Feng and Liu 1999). In this regard, feedgrain also includes rice and wheat as a part.

The rest of this paper, however, focuses on the picture of coarse grains, and particularly corn. China's coarse grain production is concentrated in northern China, the main production areas for corn, sorghum and millets. The climatic conditions in the southeast and southern China are not very favourable for corn production and barley is often planted as a major winter crop in these regions.

Coarse grain production has increased in the past decade in response to the increased demand for feedgrains (see Table 1). Total output of coarse grains reached 148 million tonnes in 1998, accounting for 32 percent of China's total cereal output. It dropped slightly in 1999.

Table 1. Coarse Grain Production in China



Coarse Grain







(m ha)


(m t)



(m ha)


(m t)



(m ha)


(m t)



(m ha)


(m t)



(m ha)


(m t)



(m ha)


(m t)






















































































































* Ratio of sown area to output.
Source: SSBa, 2000, pp. 115, 128.

Out of coarse grains, corn is the major crop, holding share of over 91 percent by 1999 (see Table 1). China's corn output reached some 130 million tonnes in the late 1990s, making China the world's second largest corn producer. Two major reasons are likely responsible for China's rapid corn production expansion:
(1) corn can be relatively cheaply produced with a relatively high yield; and
(2) corn is the preferred cereal for feeding animals.

Corn production is most widely spread across China, covering almost all seasons and all regions. Spring corn is mainly grown in northeast China and in mountainous, high altitude arid climate zones in northwest China. Summer corn is mainly produced in Huang-Huai-Hai Plain in Central China, and autumn corn is produced in southern coastal provinces and inland mountainous areas, such as Zhejiang, Jiangxi, Guangxi and Sichuan. Winter corn can be found in Yunnan, Guangxi, and Hainan. Despite the wide spread of corn production in China, major corn-producing provinces include only Jilin, Shandong, Heilongjiang, Hebei, Liaoning, Henan, Inner Mongolia and Sichuan, which together contribute to over 70 percent of the national output. Geographically, these major producing regions are located from the northeast to the southwest, known as China's “Corn Belt” (see Figure 1). Along the Belt, the Northeast Plain has the highest competitive advantages in corn production, followed by the Northern China Plain.

Figure 1. Corn Output in China, 1999

Figure 1

Source: SSBa 2000, p. 132.

In the 1980s and 1990s, the Corn Belt produced over 70 percent of China's corn (Table 2). In most years since the mid 1980s, the three northeast provinces (Jilin, Liaoning, and Heilongjiang) produced more than 30 percent of the national corn output, with the highest being 41 percent in 1992 (see Table 2). Year 2000 was an exception when the total sown area in the three northeast provinces dropped by 17%. Drought, depressed corn prices due to over-supply in the past few years and the subsequent shift of sown area to other crops may be responsible for this exceptional drop in area sown to corn.

Table 2. Changes in Corn Production

Year Area Sown (m ha) Output (m t)
Total Corn Belt North-east* Total Corn Belt Northeast*
Output National Share (%) Output National Share (%)
1985 17.7 12.0 4.9 63.8 45.4 71.2 18.1 28.4
1986 19.1 13.2 5.5 70.9 51.7 72.9 24.5 34.6
1987 20.2 14.0 6.1 79.2 59.1 74.6 28.2 35.6
1988 19.7 13.6 5.8 77.4 59.7 77.1 29.0 37.5
1989 20.4 14.0 5.9 78.9 57.2 72.5 24.1 30.5
1990 21.4 14.9 6.5 96.8 75.1 77.6 37.9 39.2
1991 21.6 15.0 6.7 98.8 76.7 77.6 38.5 39.0
1992 21.0 14.6 6.6 95.3 73.4 77.0 39.1 41.0
1993 20.7 14.2 6.0 102.7 75.5 73.5 37.1 36.1
1994 21.2 14.5 6.4 99.3 74.6 75.1 37.2 37.5
1995 22.8 15.9 7.3 112.0 83.5 74.6 40.3 36.0
1996 24.5 17.1 7.8 127.5 94.5 74.1 49.2 38.6
1997 23.8 16.1 7.9 104.3 72.8 69.8 37.7 36.1
1998 25.2 16.9 6.5 133.0 95.5 71.8 42.5 32.0
1999 25.9 17.3 6.7 128.1 91.1 71.1 39.1 30.5

* Northeast refers to Liaoning, Jilin and Heilongjiang provinces.
** National Grain and Oil Information Centre, 2000.

Sources: Tian 1999; SSBb, 2000, pp. 120, 132.

The cost of corn production varies significantly among different provinces (Figure 2). Generally speaking, the production costs in northern China are much lower than those in southern China. Data show that in 1998 the production cost in the three northeast provinces (Jilin, Liaoning and Heilongjiang) was below 0.6 Chinese renminbi yuan (¥) per kilogram, while in Sichuan it was more than 1.2 ¥/kg and highest in Guangxi, at 1.4 ¥/kg (State Planning Commission 1999, pp. 95-96) (see Figure 2).

Figure 2. Corn Production Cost in China, 1998

Figure 2

Source: State Planning Commission 1999, pp. 95-96.


The improvement in coarse grain yield contributed to the growth of feedgrain output in China in the past two decades. Figure 3 shows that corn yield increased from a little over 3 tonnes/ha in the early 1980s to over 5 tonnes/ha in the late 1990s. In 1998, the yield reached 5.3 tonnes/ha. It dropped to a little under 5 tonnes/ha in 1999 due to unfavourable weather conditions in several provinces.

Figure 3. Corn Yield in China

Figure 3

Source: MOA 2000, p. 117.


The adoption of new technologies in corn production, such as using hybrid varieties, coating the land with a plastic membrane, increasing dense-leaf corn, and increased use of modern inputs, is the major source of improvement in corn yield. Dense-leaf corn is characterised by densely planting with 60-70 thousand units per hectare, which is 30-50 percent greater than the planting density of ordinary corn. The area planted to dense-leaf corn accounted for 28 percent in 1997. Moreover, according to official statistics, the yield of hybrid corn was 23 percent higher than that of conventional varieties in 1998, while it was 39 percent higher in 1999. In China, a very large share of total corn area, 88 percent, was planted to hybrid corn in 1999. At the same time, the plastic film-covered area has also increased from 31500 hectares in 1985 to about l.2 million hectares in the late 1990s. Plastic film covering extends the growth period, which is critical to the increase in yield in some areas.

3. Feedgrain Marketing

3.1 Domestic Marketing

As noted earlier, China's corn production is concentrated in the north, while corn consumption is concentrated in southeast, east, southwest regions and the cities of Beijing, Tianjin, and Shanghai. In recent years, provinces with a corn surplus include Jilin, Heilongjiang, Liaoning, Hebei and Inner Mongolia. It is estimated that Jilin, Heilongjiang, Liaoning and East Inner Mongolia provided 60-70% of commercial corn. Hunan, Guangdong, Sichuan, Chongqing, Jiangsu, Hubei, Fujian, Guangxi and Zhejiang are the major provinces with a corn deficit. These provinces are located in central and southern China and are major pork producers. Pork has been the major animal product consumed by the Chinese in the past, though this practice has been changing recently. These provinces use more feedgrains than they can produce locally.

Pork production in some southern provinces has been declining and animal production is gradually shifting to northern parts of the country. Sichuan, the single largest pig-producing province, produced over 17 percent of China's pork in 1991, but the share had dropped to 13 percent in 1999. The seven provinces along the middle and lower sections of Yangtze River used to produce nearly 60 percent of China's pork 10 years ago. This percentage had fallen to 53 percent in 1999.

The relocation of livestock production from the south to the north sector is a gradual process and has only marginally altered the existing livestock production and feedgrain consumption patterns. A large share of pork output is still from Sichuan, Hunan, Hubei, Guangdong, Jiangsu and Jiangxi, although production in Shandong, Hebei and Liaoning has been on the increase in recent years. Generally speaking, the fifteen provinces north of the Yangtze River produce more than 77 percent of China's corn. The 15 provinces south of the Yangtze River produce only 23 percent of China's corn, yet they use over 50 percent of China's total corn production. It seems that “Bei Liang Nan Yun” – transporting grains from the north to the south – has become a reality in China in the past decade (prior to the 1990s, “Nan Liang Bei Yun” – transporting grains from the south to the north – was the basic pattern of inter-region grain shipment). Some claim that the distance that corn was shipped from the north to the south could be as much as 3000 kilometres or more (Liu 2000).

Long-distance shipment of coarse grains is expensive and resource demanding. This places significant strains on China's under-developed and already stretched transporting infrastructural facilities. However, China restricts corn import. As a result, southern provinces must rely on domestic supply by either promoting local production at high costs or purchasing from northern provinces and bearing the high transport cost, or slowing down animal production.

Due to the cost of shipment coupled with import restriction, the corn price gap between major corn-surplus and corn-deficit regions is very large. The prices on the rural markets of two major corn-surplus provinces, Jilin and Shandong, and two corn-deficit provinces, Sichuan and Guangdong are shown in Figure 4. The prices in Jilin and Shandong are much lower than those in Sichuan and Guangdong in almost all the months between January 1987 and December 1997.

In northern and northeast China, corn constitutes a large share of total grain stocks. The corn stocks of three northeast provinces take up an 80 percent share of national corn stocks. In the past few years, more corn dryers have been constructed at grain stations, grain depots, and major railway terminals. Much of China's northeast corn can be stored in temporary wicker-walled, thatched-roof bins because autumn and winter weather is cold and dry.

Figure 4: Monthly Free Market Corn Price in Rural Area – Selected Provinces

Figure 4

Source: Research Centre of Rural Economy, Ministry of Agriculture, Price Database

From the early 1950s to the early 1980s, feedgrain marketing was monopolised by state grain enterprises. The marketing system has changed slowly since 1983 and other entities have been permitted to market feedgrains subject to certain limitations. The non-state grain enterprises include private peddlers and industry firms, which process feedgrain for feed and starch.

3.2 Import and Export

Import and export of feedgrains is managed under the state trading system. China was a net exporter of feedgrains in most years during the past two decades. However, the trade volume varied greatly in response to changes on the domestic market. Figure 5 shows the changes in China's corn import and export. It can be seen that in most years, except 1995, China exported corn. In response to sharp rises in grain prices in late 1994, the government prohibited, in 1995, the export of corn and released state reserves at wholesale markets to cope with the rising prices. In the meantime, the government also organised urgent imports of corn and wheat. With consecutive bumper harvests in subsequent years, China again started to export corn after 1997.

Figure 5. China's Corn Import and Export

Figure 5

Source: MOA 2000, p. 117.


It should be noted, however, that China's export of corn since 1997 has been under a new policy condition. In 1996 the Chinese government raised grain contract prices to encourage grain production and in 1997 it installed a scheme of guaranteed purchase at state-set floor prices to prevent any undue decline of the market prices. This policy altered the price relationships in the Chinese market. That is, after 1996 the state price began to exceed the world price and since 1997, both the state procurement price and market price in China have been higher than the world price of corn. In 1998 the government introduced another new grain policy package. This policy package includes three major measures: to purchase at floor prices all grains that the producers want to sell (chang kai shou gou), to sell purchased grains at prices covering all operation costs (shun jia xlao shou) and to ensure an enclosed circulation of working funds within the designated state bank (feng bi yun xing). In order to implement this new policy, the government had to resort to import restrictions and subsidise export to prevent corn price from declining.

Contrary to expectations, the declining of grain prices failed to stimulate the demand for feedgrains. China's livestock market, particularly the pork market, had become sluggish in the past years due to the weaker market demand nation wide. During 1998-99, pork price declined by nearly 35 percent. As a result, many larger-scale feedlots fell into financial difficulties and, consequently the demand for commercial feed products and feedgrains was adversely affected. This enabled China to have “more” corn for export.

China's major corn export destinations are its neighbouring countries and regions. In the early 1990s, China exported corn to Japan, Hong Kong, Russia, and some other Southeast Asian countries (Table 3). Since 1995, China's corn export to Japan, Hong Kong and Russia has decreased dramatically and by 1999, only a very small portion was exported to Japan and none to Hong Kong and Russia. Instead, China's corn export to South Korea, North Korea and Malaysia increased rapidly. Import of corn in China in the 1990s was mainly from the USA, accounting for some 70 percent. Altogether, in the 1990s, China's net corn export reached 51 million tonnes, with Malaysia and South Korea taking a share of over 60 percent, Indonesia over 15 percent and North Korea, Vietnam and Japan together taking a share of 15 percent.

Table 3. Corn Import and Export by Destinations

Import Export Export by Destination (%)
Year (m t) (m t) South Korea North Korea Malaysia Indonesia Hong Kong Japan Russia Other
1981 0.68 0.14
1982 1.57 0.07
1983 2.11 0.06
1984 0.06 0.95 39.13 31.73 0.00 29.14
1985 0.09 6.34 17.56 41.31 26.94 14.19
1986 0.59 5.64 17.86 45.86 28.01 8.27
1987 1.54 3.92 - 1.85 0.00 0.00 8.40 42.58 42.59 4.58
1988 0.11 3.91 - 3.51 0.53 0.10 6.25 42.03 44.76 2.82
1989 0.07 3.50 - 3.53 2.45 - 16.37 36.93 33.31 7.41
1990 0.37 3.40 0.00 5.21 0.48 0.00 23.12 28.68 33.44 9.07
1991 0.00 7.78 25.70 2.21 1.78 0.47 29.16 23.13 12.36 5.19
1992 - 10.34 29.19 4.95 5.25 0.14 25.00 20.02 7.41 8.04
1993 - 11.10 0.19 8.96 8.76 2.38 5.61 19.82 12.35 41.93
1994 - 8.74 0.08 6.93 13.06 7.23 5.08 18.67 7.23 41.72
1995 5.18 0.11 21.41 9.92 30.33 22.41 0.96 8.40 6.57 0.00
1996 0.44 0.16 34.98 51.37 3.89 0.00 0.01 9.73 0.00 0.02
1997 - 6.61 53.58 9.69 18.93 10.28 0.00 2.20 0.63 4.69
1998 0.25 4.69 54.53 4.17 25.47 0.89 0.00 4.67 0.05 10.22
1999 0.07 4.30 29.09 3.77 33.55 13.39 0.00 2.47 0.00 17.73

Sources: MOA (2000, p. 117) for import and export data, for export to different destinations.

Provinces exporting corn onto the international market are those major producing areas. Jilin accounted for more than 50 percent of total export in 1999 (Table 4). Jilin, Liaoning, Inner Mongolia and Heilongjiang together accounted for more than 98 percent of total corn export in 1999. Anhui and Henan took a share of 99.8 percent in the national total corn import in 1999 but the total amount of import was small.

Table 4. China's Corn Import and Export by Province in 1999

Province Import (t) Share (%) Province Export (t) Share (%)
Anhui 49999 71.24 Jilin 2229027 51.78
Henan 20012 28.51 Liaoning 834122 19.38
Guangdong 120 0.17 Inner Mongolia 740832 17.21
Liaoning 52 0.07 Heilongjiang 418179 9.71
Shanxi 37310 0.87
Beijing 25595 0.59
Hebei 19685 0.46
Yunnan 220 0.00
Guangdong 17 0.00
Total 70183 100 Total 4304987 100

Source: SSBa 2000, pp. 229-230.

4. Prospects

China's potential to increase feedgrain supply is a very important issue. It is argued that the grain yields can be raised significantly with technological improvements (MOA 1999; Lin, Shen and Zhou 1996, pp136-43). The fact that China's cultivated land is underreported also allows more room for China to raise yield (Wu and Wang 1997) [2]. To assess the potential, Tian and Wan (2000) used a frontier production function to measure regional technical efficiency based on the production cost data during 1983-96. They found that technical inefficiency does exist in corn production. However, all the major producing regions are relatively efficient except Sichuan, a southwest inland province. Other inefficient producers include Zhejiang, Hubei, Hunan, Guangxi, Guizhou and Yunnan; all are south of the Yangtze River. Their results suggest that there is potential to increase corn yield in the few major corn-producing regions in northern China.

In order to increase supply of feedgrain, particularly in southern China, the Chinese government has proposed a wide range of measures (Chen, Zhu and Li 1996; MOA 1999). For instance, conversion of paddy land to corn production has been actively encouraged in some southern provinces. Feed rice production bases are planned for Hunan, Jiangsu, Hubei and Sichuan, and feed sugarcane production bases for Guangdong, Guangxi and Fujian. The reclaiming of some wasteland is included as another measure to further increase grain production (MOA 1999). All the above measures suggest that the Chinese government is attempting to use its domestic resources to ensure basic supply of feedgrains. Whether such an approach is economically viable in the long-term, or even practical, particularly after China's joining the WTO, is yet to be seen.

The Chinese government is expected to exercise strict controls to reduce the use of cultivated land for non-agricultural purposes. Efforts will also be devoted to improving agricultural infrastructure for the purpose of raising land productivity. China is also expected to maintain appropriate growth of coarse grain production in the next decade, particularly if world prices begin to rise.

China and the USA reached an agreement on agricultural market accession in November 1999. Based on information released from the US Trade Representative Office (1999), China has committed to opening up its domestic agricultural markets. With respect to corn, China commits to setting an initial import quota of 4.5 million tonnes on accession, and will increase this to 7.2 million tonnes by 2004. The agreement includes a provision that the private sector will initially receive 25 percent of this quota, rising to 40 percent by 2004, with all unused quota by state trading companies (STC) being reallocated in later months of a year. China agrees to accept USDA certifications for meat safety for US export. China has also committed not to provide any export subsidies for agricultural products, which is a relevant binding factor for corn.

The agreed import quota for corn has been larger than the actual volume traded in recent years. It is, however, significantly smaller than future imports as predicted by many studies, such as Garnaut and Ma (1992), Crook and Colby (1996), Findlay (1998); USDA (1998), Tian (1999), and Tang and Zheng (2000, p. 209). China's domestic price is now much higher than the world price and there exist huge surpluses. Implementation of the commitments will, therefore, have significant impact on domestic markets. It is likely that southern provinces may shift to using imported feedgrains, instead of purchasing from the major producers in northern China. This change will result in decline of corn prices in northern regions, especially in the northeast provinces, where the economies have already experienced difficulty. More importantly, with quota reallocation clause, the Chinese government will lose its major instrument to intervene in trade. Under such an arrangement, it will be to the advantage of both the STCs and private traders to import at full quota as long as the domestic market price is sufficiently higher than the world price. An immediate effect is that domestic price will fall, thus perhaps worsening the State Grain Companies' financial position. In addition, the government has to take measures to guide adjustment of production and to dispose of accumulated stocks. In the longer term, this arrangement may prevent the government from using state pricing as an instrument to support producer incomes.

Future development of the feedgrain market is also partially determined by whether imported animal products can take a significant share in the Chinese market. According to policy simulations (Tian 1999), China will remain a net exporter of meat products, but imports tend to increase along with exports when tariffs on meat products are reduced. Thus, exporting countries may have an opportunity to sell their animal products to the Chinese market. However, while imported animal products are expected to take a growing share in coastal urban markets where high-income consumers are located, potential for their deep penetration into China's inland markets, particularly rural markets, is likely to be very limited. This is because
(1) high distribution costs of imported animal products may reduce the demand for such imported products; and
(2) the household production systems are able to provide the markets with cheap (though perhaps inferior quality) animal products – Chinese consumers have a strong preference for generic animal products produced under the household production systems.

5. Summary and Concluding Comments

Direct grain consumption has been on the decline in recent years in China. Consumers' tastes and preferences are changing, and there is increased demand for more animal products. This demand, in turn, results in a growing demand for feedgrains. Feedgrain production has increased rapidly in the past two decades. With the availability and extension of new technologies, corn yield has been improved significantly, especially in Northern China. The high cost incurred in transportation from the north to the south makes the price gap very large, but corn import has been under rigid restrictions. With cheaper feedgrains available, animal production has begun to move to northern China.

Over the past decade China has been a net corn exporter, with export destinations primarily in neighbouring countries. Corn price in China is much higher than that in the world market. If restrictions on corn import were to be relaxed, China would be likely to reduce corn export but increase corn import as feedgrains. Otherwise, China has to take measures to increase domestic feedgrain production.

The future development of China's feedgrain market depends critically on when and how the issue of China's accession to the WTO will be resolved. Upon accession, China will be bound by the WTO's rules and disciplines. China will have to reduce trade barriers and to phase out export subsidies. As a result, exporting feedgrains to China may become easier.


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[1] This paper is part of the GRDC-funded project, ‘China's Regional Feedgrain Markets: Development and Prospects'. GRDC's support is gratefully acknowledged. The authors wish to thank Dr La-Ping Wu and Dr Chun-Hui Zhang of China Agricultural University for their data collection assistance and useful comments on the earlier drafts. We also wish to thank Marjorie Wilson for editorial assistance.

[2] In early November 1999, the Chinese government officially admitted that the total arable land was 130 million hectares (1.951 billion mu) (Li and Zou 1999). According to this new figure, China's per capita arable land is 0.105 hectare. Earlier, the officially acknowledged arable land area was about 1.5 billion mu or 100 million hectares.

Authors Contact Details

a College of Economics and Management
China Agricultural University
Beijing 100094, China

b Asian Agribusiness Research Centre
The University of Sydney
Orange NSW 2800 Australia

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