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Chinese Wheat Production Has Declined Significantly
ERS, May 21, 2004
China is the world’s largest wheat-producing country,though production has fallen significantly since peaking in 1997. Most of China’s wheat production comes from the North China Plain. The three provinces that constitute most of this area, Henan,Shandong, and Hebei, collectively account for over 50 percent of China’s wheat output.

China’s 2003 wheat production dropped below the level of production in 2002, continuing a downward trend that began in the mid-1990s. Declining wheat production is primarily due to reductions in area sown to wheat rather than to declining wheat yields. For example, in the period 1997-2002, wheat production fell by 26.2 percent and sown area fell by 20.5 percent Wheat yields, however, fell by only 7.2 percent over the period. This trend stands in contrast to the period before 1997, when sown area stayed at around 30 million hectares and production increased due to rising yields.

Decreasing sown area is typically caused by farmers switching unproductive, low-yielding areas to other crops, which should cause average yields to rise. In China, however, some of the decline in sown area can be attributed to policies that discourage production of low-quality wheat, which is relatively high yielding, so yields have not risen and have even declined slightly.
Farmers in China are clearly switching out of wheat, but much of this activity involves moving productive land from wheat to high-value horticultural crops. Water shortages and other environmental setbacks in major wheat-producing areas may also be playing a role in falling sown area.

According to U.S. Department of Agriculture’s World Agricultural Supply and Demand Estimates (USDAWASDE May 12, 2004), China’s wheat production in marketing year 2003/04 (86 mmt) dropped below the already low level in 2002/03 (90.3 mmt). The USDAWASDE estimate puts China’s wheat production at a level not seen since 1988, when production was 85.4 mmt according to China’s National Bureau of Statistics. Preliminary estimates indicate that wheat production will fall again in the 2004/05 marketing year, with the USDA figure currently at 84 mmt.

Low wheat prices are also causing farmers to move out of wheat and into other crops. According to China’s Rural Statistical Yearbook, wheat has been the least profitable of all the major crops produced in China over the last several years. Profits from wheat production are certainly below those of horticultural crop production, which has greatly expanded in China over the last few years.
MGR Archive 22.5.2004
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