April 26, 2018

27/04/2018: Store-way to Hunan: China’s grain storage problem

by Mike Jeapes, Portfolio Director, Global Grain

China is one of the largest stakeholders in ensuring global food security. Informed speculators are taking positions to benefit; they’re putting it all on red.

China’s solution is to control the global grain supply chain. By subsidising recent upgrades on internal loading and transportation facilities, and with its trading firms acquiring interests in origination markets as well transport and logistics firms, China is reducing the risk in ensuring its population’s food needs are met.

The well-documented population pressures within China, and increasing taste for meat from its growing middle classes, mean that grain for humans and feed for our animal friends (although they might be slightly less friendly at the point they’re about to be eaten) have placed food security at the top of the government’s list of priorities.

China is now turning its attention to the domestic supply chain. One of the country’s main aims to is ensure that internal farming capabilities are on point, and have been improving these by using the most effective incentive known to man; paying more money. Inflated purchase prices for farmers have massively raised recent production rates in Chinese grains. In 2017, Chinese grain output was quoted as reaching the second highest output in history, at 617.9 million tonnes.

But the grain is going off. Open air grains storage is being blamed as approximately one sixth of domestic grain – let’s face it, it's rice – is stored in this way. As such, the government recently announced that they will be removing 95 percent of open grain storage by 2020 to reduce spoilage.

A recent Reuters report stated that this target should be achievable given recent policy changes, as well as citing Beijing’s stated aim to “optimise the grain storage capacity” and “improve the modern grain logistics system and efficiency”. I would like to go one further and state that it’s even more achievable as all they need to do is “build roofs”. I am available for all your highly paid government policy consulting needs.

Alongside this relatively low-tech – and given it was me who thought of it, it’s probably wrong-tech – suggestion, discussion has centred around the AgTech developments that are shaping the grains and oilseeds sector. An investment boom is being discussed for 2018 across all types of agricultural infrastructure, which should bode well for future storage technologies.

Read the full article, HERE.

The Global Miller
This blog is maintained by The Global Miller staff and is supported by the magazine Milling and Grain
which is published by Perendale Publishers Limited.

For additional daily news from milling around the world: global-milling.com

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