China has suspended further expansion of its ethanol industry as processing corn for fuel and other industrial uses is being blamed for soaring grain prices.

With grain prices rising almost five percent in Nov., the National Development and Reform Commission (NDRC) has ordered local governments to stop approving new projects that process corn for industrial uses. China is now producing 10 million tons of ethanol which is mixed with 20 percent of the country's gasoline.

China processed more than 23 million tons of corn for industrial use last year, an increase of 84 percent from 2001, while output of corn only grew by 21.9 percent over the same period. Expanding industrial demand, along with increasing need for corn by livestock and the reluctance of corn growers to sell in expectation for higher prices, have contributed to a 6.8 percent rise in the price of corn this year.

China has approved four pilot ethanol projects, with annual output of 1.02 million tons. Ethanol mixed with gasoline is sold in five provinces and 27 cities in China, accounting for 20 percent of the country's total gasoline consumption.

Source:佚名