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China Plans Nine Percent Cut to Corn Acreage by 2020

As a measure to help shift supply to match demand, China, the second largest corn consuming country in the world, plans to cut its corn acreage by 3.3 million hectares, or nine percent by 2020.

The cut is expected to bring the country’s total corn acreage to 500 million mu (82.3 million acres or 33.3 million hectares) according to agriculture minister Han Changfu.

After years of the state subsidizing its corn farmers, China has been faced with a significant over-supply of corn and vast domestic stockpiles. In an attempt to regain a balance, Beijing has eliminated state support for its farmers, and has begun urging its farmers to plant other crops including soybeans or silage crops.

Challenges to these initiatives remain however. Farmers may be resistant to changing crops, and if prices of alternative crops fall it may prompt farmers to switch back to corn production.

With 240 million tons of corn in storage and an expected harvest of 200 million tons this year, many in the industry believe that in order to see an effective rebalancing of supply and demand, Beijing will need to undertake deeper reforms.

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