March 7, 2016 / 6:42 AM / 3 years ago

China farm sector needs supply-side reform: agriculture minister

BEIJING (Reuters) - China’s agriculture sector needs to undertake supply-side reform, especially in corn production, given bumper harvests and surplus grain stockpiles, Agriculture Minister Han Changfu said on Monday.

A corn harvester reaps corn at a farm in Gaocheng, Hebei province, China, September 30, 2015. REUTERS/Kim Kyung-Hoon

Han told a news conference in Beijing that China will no longer pursue increased grain output over the next five years, after 12 consecutive years of increasing harvests.

Grain surpluses cause problems and put a financial burden on the government, which is obliged to stockpile crops at artificially high prices to support farm incomes, he said, although having too much grain was preferable to shortages.

While output itself would not be raised, China would continue to work on boosting production capacity in the coming years in order to avoid the risk of shortages in case demand were to increase, Han said.

China could not relax when it came to food supplies, he said, with urbanization changing the country’s eating habits and its population set to rise further following the relaxation of the nation’s “one-child policy”.

The government buys large amounts of China’s crops at fixed prices in order to maintain rural incomes, and bumper harvests have put the country’s storage capacity under pressure.

High fixed prices have also opened up a price gap with international markets that has boosted demand for cheap imports despite the domestic plenty.

Raising farmer incomes will still be a priority over the coming five years, Han said, although with grain prices unlikely to rise, China must focus on agricultural industrialization, improving technology and cutting costs.

He said China would continue to target annual rural income growth of 6.5 percent between 2016 and 2020, compared with farmer incomes that grew by an average of 9.6 percent a year over the 2011-2015 period.

China will also strictly implement laws prohibiting the planting of illegal GMO crops and would strictly punish offenders who have violated the law, he said.

The issue of illegal GMO crops was so far restricted to certain regions and was under control, he said. It did not pose safety problems.

The government is also adopting a zero tolerance approach to food safety and will crack down on illegal additives including illegal pesticide use, he said.

Reporting By David Stanway; Editing by Tom Hogue

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