China has announced plans to change its corn policy to allow markets to set prices and end its corn stockpiling program. The U.S. Grains Council (USGC) has been monitoring signals that indicated reforms were coming.

“Many policy makers have been arguing that the stockpiling program was an extremely expensive policy,� said USGC Director in China Bryan Lohmar. “It is costing China a lot of money to store the grain; it’s difficult to keep the grain in condition; and China was also losing money by buying corn at a high price when world corn prices were low.�

Lohmar said environmental factors contribute to why China’s policymakers want to move toward market-determined prices for corn.

“Growing corn year after year on the same pieces of land and using a lot of nitrogen fertilizers are some of the environmental concerns Chinese governmental officials were raising prior to the policy change,� Lohmar said. “While China has not announced what is going to replace the price support program, it would not surprise me if there was some conservation-type criteria included in the new policy.�

As farmers head to the fields for planting season back in the United States, Lohmar said there is still a lot of uncertainty about how this policy change will affect exports going to China, but that it will be a positive, long-term step for global grain markets.

“For the short-term, it’s going to be disruptive, and there’s going to be uncertainty,� Lohmar said. “But over the long term, a market-oriented feed industry in China is best for everybody.�

Since 1981, the Council has worked in China to find solutions to help Chinese stakeholders with the challenges of food security through development and trade. These programs continue today, focused on trade servicing, information sharing, livestock development and air quality.

Click here to read more about the Council’s work in China.