China will have to import more grain such as maize and wheat in '04 to replenish depleting stocks and meet rising demand fuelled by heady economic growth, officials and traders said on Sunday.

China has enjoyed grain surpluses over the past few years, but supply and demand will reach a balance this year or next as farmers struggle to achieve targetted five-per cent growth in grain production to 455m tonnes in '04, they said.

“In the past few years, we've been digging into our reserves to plug the grain shortfall caused by an output fall and exports,” said Gao Tiesheng, deputy head of China Market Institute, which conducts research on China ’s economy. Grain output has fallen short of 500m tonnes for the past four years, with '03 production seen at an estimated 10-year low of 435m tonnes, prompting the government to use its reserves to fill the shortage, officials said.

“The government's aim to achieve 455m tonnes of grain output this year isn't easy. Nowadays, some farmers would rather find other jobs than slog in the fields,” said a grain official who declined to be identified.

China 's grain stocks were 250m tonnes in '02, but have since diminished to 150-200m tonnes and are seen heading towards 100m tonnes soon, officials and analysts said at a grains conference in Shanghai.

"We'll definitely see China importing more grains this year because there is no way it can keep relying on its stocks to make up for the shortage,” said an industry source.

"Foreign producers stand a good chance of selling more grains to China this year, especially wheat. They haven't been importing a lot of it and stocks are falling,” he said. The market is expecting China, a net exporter of maize, to start importing it this year and also to purchase more than three million tonnes of wheat, traders at the conference said.

China 's imports of agricultural products have been low, disappointing global markets, even as it pledged to open up the protected farm sector after joining the World Trade Organisation in late ’01. Since WTO entry, China has only used a fraction of its low-duty import quotas, or tariff-rate-quotas (TRQs) for farm products potentially totalling millions of tonnes.

In 2003, firms applied for only 6.7% of wheat TRQs totalling 9.2m tonnes, 0.2% of total corn TRQs of 6.5m tonnes and 7.5% of rice quotas of 4.7m tonnes, the official said. But China would have to turn to global markets soon to feed its 1.3bn people, who are expected to consume 4.9m tonnes of grain this year. That figure is expected to rise by one per cent annually to surpass 500m tonnes in 2006, officials said.

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