Drought threatens China's wheat crop

BEIJING, Feb. 9 (UPI) -- A severe drought in China is threatening the country's wheat crop and could affect global grain prices, the U.N. food agency warned.

The United Nations' Food and Agriculture Organization, in a special alert on China, said the drought is "potentially a serious problem."

The drought, which has been dragging on for four months, has affected 35.1 percent -- 15.8 million acres -- of China's wheat crop, China's Ministry of Agriculture announced this week.

FAO said 2.57 million people and 2.79 million head of livestock faced shortages of drinking water.

Chinese state-run news said that China's key agricultural regions were facing their worst drought in 60 years. On Tuesday, Xinhua news agency warned that Shandong province, one of the country's largest grain producers, was bracing for its worst drought in 200 years. The province has received only 0.47 of an inch of rain since last September.

China's wheat industry accounts for one-sixth of global output. An FAO database shows that in 2009, China produced nearly twice as much of the grain as the United States or Russia and more than five times as much as Australia.

The international wheat market has already suffered blows in the past six months due to extreme weather: Russia's heat wave in August and Australia's recent floods.

As of last summer, China had about 55 million tons of wheat in stockpiles, which amounts to about half the country's annual harvest, Kisan Gunjal, a FAO food emergency officer for Asia alerts told The New York Times.

In the past, China's self-sufficiency in grain has helped to hold food prices from soaring higher during recent surges in prices. But a poor harvest would force China to import more grain, which could increase world prices, experts say.

"China's grain situation is critical to the rest of the world -- if they are forced to go out on the market to procure adequate supplies for their population, it could send huge shock waves through the world's grain markets," said Robert S. Zeigler, the director general of the International Rice Research Institute in Los Banos, Philippines told the Times.

The national average retail price of wheat flour in China increased by more than 8 percent last month compared to the previous two months and was 16 percent higher than last year.

The situation in China could become critical if a spring drought follows the current drought and the temperatures in February fall below normal, the FAO report said.