China's Grain Industry
China's grain industry is the largest in the world. Annual grain production has increased annually for the last decade and now exceeds 500 million tonnes.
China's grain production, storage and distribution systems remain dominated by government control which maintains strict controls on the purchase, storage, imports and exports of grains. Recent concerns over food security has prompted the government to impose a ban on all Chinese grain exports.
In the past, the industry has been described as the "Black Hole" of China into which it has been estimated that as much as $2bn per month has been lost through poor management, bad investment decisions and corruption ("Against the Grain" Economist Jan 28th 1999). Hard data relating to grain stocks and strategic reserves remain State secrets, however it is generally estimated that government stocks are usually in the region of 100 million tonnes, some of which may be held for periods in excess of five years.
Much of China's grain is stored in unmechanized warehouses based on decades-old Russian designs, However through the 1990s and the early years of the 21st century significant government funding was invested in three massive modernization programs that substantially increased the nation's silo storage capacity. This process was initiated by the World Bank which in 1992 gave authorization for its "Grain Marketing and Development Project" (GDMP) through which an investment of $1.0 billion was shared equally by the Bank and the Chinese government. At the time this was (and it probably remains) the largest project ever undertaken by the World Bank. The project (completed in 2002) involved the construction of some 4 million tonnes of high quality silo storage at over 60 depots in the Northeastern provinces of Heilongjiang, Jilin and Liaoning and the Autonomous Region of Inner Mongolia and several hundred thousand tonnes of new silo storage in Central and Southern China. In addition, it included the construction of the 400,000 tonne Phase One of the Beiliang grain export terminal outside Dalian at the southern tip of Liaoning.
Starting in the late 1990s China invested an additional $2½ billion of domestic funds on the construction of some 25 million tonnes of new storage, about 25% of which was silo storage, after which a further 20 million tonnes of "strategic" warehouse storage was constructed in a third project that was completed in 2004. Since then there has been very little further investment in grain storage in China.
GTS has been actively involved with in China's grain sector since 1996, and it maintained a representative office in Beijing from 1997. It was involved in several components of the GDMP project through which it has gained widespread contacts within the Chinese government postharvest grain sector at both central and provincial levels.