International grain prices have been soaring since last year as a result of reduced production in major grain-producing countries, expanding demand for biomass fuel, and declining grain storage capacity around the world.

However, with rice fetching prices of 12 yuan per kilogram in international markets, the domestic price stands at only 3 yuan per kilogram.

"The broad gap in grain prices between international and domestic markets currently makes grain smuggling very attractive in China," a Guangzhou Customs employee told the National Business Daily newspaper.

In the last month alone, Huangpu's Laogang Customs in Guangzhou has uncovered seven grain smuggling cases, preventing more than 280 tons from being shipped out the country.

Customs posts in Shenzhen, Gongbei, Kunming, Nanning and Hangzhou have all detected similar grain smuggling cases since the early part of the year.

Meanwhile, China is still exporting grain through legal channels. According to Customs data the average price of grain exports leaped to over US$ 478 per ton between January and April, up by 52 percent. April's average grain export price has reached a record high of US$ 505.3 per ton, a rise of 63 percent.

"Illegal grain exports will have a negative impact on domestic grain supply and exacerbate on-going grain price rises," staff said.

However Liang Runchao, Head of Huangpu’s Laogang Customs, told the newspaper that China will remain a net importer of grain in the long run. He added that grain smuggling is a passing phase and would gradually disappear as international grain prices start to drop.

For more details, please read the full story in Chinese (http://www.nbd.com.cn/_NewShow.aspx?D_ID=112131).

(China.org.cn by Yan Pei June 20, 2008)