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Farming Trade Deficit Hits Record

The Ministry of Agriculture is forecasting an unprecedented US$5.5 billion deficit in agricultural trade this year, according to Ke Bingsheng, director of the ministry's Research Center for Rural Economy.


"The country has become a net importer of agricultural products three years after joining the World Trade Organization," said Ke in a Thursday interview with China Daily.


The deficit results in part from wider market access to foreign commodities as the country fulfills its WTO commitments to reduce tariffs on agricultural goods and implements tariff-rate quotas, Ke stated.


The hefty subsidies offered on agricultural products in some Western nations are also a contributor, said Ke, as the practice distorts world market prices.


However, mounting non-tariff barriers remain the biggest source of frustration to China's animal products exporters. Such technical barriers were a strong influence behind the US$636 million deficit the country recorded in animal products trade last year.


This year, exports of these products totaled US$2.8 billion through November, compared with imports of US$3.7 billion, a deficit of US$855 million, according to the General Administration of Customs.


Another factor contributing to the red ink in China's agricultural trade is the strained domestic supply and demand relationship, which has led to price hikes.


But Ke said the high import figures should not cause panic.


Even if China uses up its committed tariff-rate quotas in corn, rice and wheat imports, they will contribute less than 4 percent of the country's total consumption, meaning China's self-sufficiency in grain still exceeds 96 percent.


The country's grain output will well surpass the targeted 455 million tons this year, Minister of Agriculture Du Qinglin on Wednesday in Beijing.


But Chinese farmers are feeling the pinch brought on by the influx of foreign products.


For example, by the end of December China will have imported 2 million tons of cotton, more than double its committed tariff-rate quotas.


Although such huge imports benefit the textile industry in the near term, it will adversely affect the incomes of cotton-growers and ultimately undermine the development of China's cotton sector, Ke said.


Edible oils, soybeans and other oil-bearing imports are likely to account for 40 percent of the country's total farm produce imports this year, meaning growers of these products are being hit hard.


On a brighter note, farmers in coastal provinces such as Shandong, Guangdong and Zhejiang are beneficiaries of expanded fruit and vegetable trade. The Ministry of Agriculture predicts the country as a whole will register a surplus of US$4.5 billion in these products for the year.


Ke admits that the agricultural trade deficit is likely to continue in the coming years, with supply-demand trends and domestic policies having a stronger impact than WTO agreements.


Ni Hongxing, deputy director of the ministry's Agriculture Trade Promotion Center, said it is still too early to conclude that the China will continue running a deficit. His section, he said, is brainstorming the issue and trying to pinpoint its development.


(China Daily, December 31, 2004)

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