SHANGHAI (Interfax-China) -- China's General Administration of Customs has issued instructions to its local bureaus to be vigilant of illegal grain exports, according to a notice posted by the administration on April 30.
The warning comes after a number of illegal grain export cases were uncovered by China Customs in southern China's Hangzhou and Ningbo cities in the past month, following a sharp spike in grain prices on the international market.
In April, Hangzhou Customs foiled four cases of illegal grain exports, confiscating 7 tonnes of rice and 33 tonnes of wheat flour, a Customs officer confirmed with Interfax today. He declined to provide additional comments.
In the same month in Ningbo, there were also four cased uncovered, with 130 tonnes of wheat flour being confiscated. A trading company in Huzhou City, Zhejiang Province, is responsible for labelling 44 tonnes of wheat flour as air conditioner spare parts, according to local newspapers.
The General Administration of Customs in Beijing was not available for comment today.
China has a strict quota system to control grain exports. Only a few state-owned grain firms are authorized to export grains overseas.
Meanwhile, in the face of spiking grain prices and fears over global grain supply shortages, China has tightened its control over grain exports by cancelling the grain export tax rebate in late December and levying a fresh grain export duty ranging from 5% to 25% since the start of this year.
Commentary
Due to domestic subsidies and government control efforts, domestic grain prices are trading at a sharp discount to international counterparts. Rice prices, for example, are about $700 per tonne below the level of international prices. Although reports of grain price arbitrage are rare, they are clearly a growing concern, evidenced by measures to prevent exports via Hong Kong and increased supervision of domestic grain shipments.
Although officials continue to stress the security of domestic grain supplies, they are clearly concerned that even low levels of grain exports, illegal or otherwise, could affect overall domestic supply levels, which has led to measures such as sharp reductions of export quotas and the current crackdown. These are only short-term responses to a serious long-term problem.
Addressing the fundamental problems facing China's agricultural commodities, such as limited arable land and growing demand, would require long-term policies that still may not be able to prevent the country from becoming a net grain importer.
© Interfax-China 2008. For further information regarding Interfax China Commodities Daily Reports, contact David Harman at david.harman@interfax-news.com. Interfax also publishes a comprehensive China Grains & Soft Special Report, contact David Harman for details.
