The Ministry of Finance has recently readjusted grain export tariff. Corn export tariff is reduced from 5% to zero, rice tariff from 5% to 3%, wheat tariff from 20% to 3% and wheat flour tariff from 25% to 8%. Wheat flour exported to Hong Kong, Macao and Taiwan is continues to be exempted from export tax.
Considering falling grain price in the international market and grain export quota control, the tariff readjustment is not likely to have a big impact on the domestic market.
American wheat and corn are $38/MT and $60/MT cheaper in Asian than wheat and corn wholesale prices in China. So, China’s wheat flour and starch exports are unlikely. Domestic Indica and Japonica wholesale prices are $400/MT and $445/MT respectively, $100 ~ 200/MT cheaper than Southeast Asia prices, suggesting a strong spur to rice exports.
Due to world economic recession and global grain production increase in 2008, international grain price is likely to move lower in 2009. China’s grain price is estimated to go steady in the domestic market.
Subject to the shortage of per capita arable land and water resources, China’s grain price has no advantage in the world. To ensure domestic grain safety, the nation has to use quota system to control exports.
