ALARM ON FALSE FIGURE OF RESERVES

    Last April, Premier Wen Jiabao said China had grain reserves of150 to 200 million tons. That's equal to about 30 to 40 percent of China's annual grain consumption or double the 17-18 percent level regarded by the UN Food and Agriculture Organization (UNFAO) as a safe minimum for global stocks.

    One year later, there continues to be questions over whether those figures are accurate as some Chinese leaders and experts believe false volumes were reported by local grain authorities and companies.

    According to governmental policies, granaries receive around 75yuan (11 U.S. dollars) per ton of stored grain. Therefore, the more they store, the more money they are eligible for. This has led to the exaggeration of grain volumes.

    Yuan Longping, a well-respected agricultural scientist, dubbed the "father of hybrid rice", told the Guangzhou Daily last week that he believed there were some granaries "reporting phony figures of stocks to get subsidies".

    "Since it is an open audit, they (granaries) might have been prepared and borrowed grain from others. As a result, inspectors will be cheated."

    Yuan suggests secret investigations and more spot checks. He said that's what helped "catch two big fish" last year -- one in Northeast Heilongjiang Province and the other in Anhui.

    The Heilongjiang scandal, which was exposed last May, involved one of China's largest granaries, Fujin No. 90. Its managers stole then sold grain that was supposed to be stored there. They lied about stock volumes to get government subsidies. The corruption resulted in public losses of more than 100 million yuan.

    The same thing happened in Anhui, where granaries of several state-owned companies were found empty last April.

    That's not the only problem with China's reserve food system.

    Companies have been reluctant to store grain because its become more costly. They have to purchase grain from farmers based on set government prices. For example, white wheat is fixed at 1,740 yuan per ton this year. Prices to sell that grain in the Chinese market, however, are much lower than that, so companies end up illegally re-selling state-owned stocks to private buyers at higher prices.

    The result is that there is no concrete number for just how much grain China really has in national reserves.

    Zheng Fengtian, an agricultural scholar with Beijing-based Renmin University of China, said the latest audit reflects concerns within the leadership over the real figure.

    "There is a big difference between official statistics and private calculations," Zheng told Xinhua.