China must lower corn prices to clear stockpile: official

China must lower corn prices to stop the imports of corn substitutes, including barley, sorghum and distillers' grain, a senior agricultural official said on Saturday, as the country is faced with a mounting stockpile of corn.

Chen Xiwen, deputy director of the Central Rural Work Leading Group, said in a forum on rural affairs in Tsinghua University that the country must make efforts to stop the imports of corn substitutes through the lowering of corn prices.

China's combined grain reserve is already standing at a historic high point of about 500 million metric tons, he said. The Central Rural Work Leading Group is China's top rural affairs decision-making agency.

Ren Zhengxiao, head of the State Administration of Grain, said in a work conference on Friday that about 42 percent is corn, and in major corn production areas such as Heilongjiang province, it is as high as 50 percent. The corn stockpile is expected to reach 200 million metric tons by April, the amount the nation consumes in a year, Reuters reported.

China imported about 30 million tons of corn substitutes in 2015, which are not part of the country's import quota for agricultural products.

"The imports of corn substitutes have increased several times in recent years ... and no matter how much the domestic corn production increased, their market share has been edged out," he said.

Chen said the country should also take measures to ensure that the country's corn stockpile will not increase any further, as part of measures to clear the stockpile.

"We must also change the situation in the Northeastern provinces where the State-owned warehouses are absorbing all the corn stockpile," he said.

Chen said the country must have a variety of market entities to compete in the storage of corn in the Northeastern provinces, the country's major corn acreage areas.

Chen said that the country has come to a point when it must reform the current reserve-based crop price support mechanism to adapt to the mounting grain reserve.

"There are no policies that can remain unchanged for more than 10 years. If we do not reform the mechanism, there will be more problems on the way," he said.

Chen added that China could still lower the corn support price this year to reduce the reserve, but measures must be taken to protect farmers' interests so that the country will not suffer a major drop in grain production.