China faces the possibility of a 4.8 million ton grain shortage in 2010, almost 9 percent of the country's grain consumption, according to the Study Times, a newspaper affiliated to the Party School of the Central Committee of the Communist Party of China.

If the prediction is accurate, the country will significantly undershoot its grain security target according to which domestic supplies must make up 95 percent of needs.

The supply of domestic grain will be insufficient for the next 15 years, making the country increasingly reliant on imports and putting upward pressure on grain prices, said the report.

It is difficult for China to raise grain output because arable land shrank from 131 million hectares in 1996 to 123 million hectares in 2005 and the trend is hard to reverse.

Grain prices on the domestic market will be affected by fluctuations on the international market as China continues to be a net importer of grain. Trade in grain has grown rapidly since the country entered the World Trade Organization.

Rising grain prices are creating a knock-on effect for other prices. Food, in which grain is a key component, represents a third of China's consumer price index (CPI).

Last year, grain prices grew one percent in January, 3.7 percent in October and 4.7 percent in November when the CPI jumped 1.9 percent, the highest rise of the year.

But it is not all bad news. The report claims that higher grain prices will be tempered by a seven-year record high grain output of 490 billion kilograms in 2006, not to mention the 50 billion kilograms of grain reserves, said the report.

(Xinhua News Agency January 25, 2007)