China's Farm Smuggling Crackdown Uncovers $1.16B In Lost Tax

(Reuters) - China's crackdown on agricultural smuggling has uncovered 487 cases with a tax evasion value of 7.1 billion yuan ($1.16 billion), a rise of 71 percent in the past year, said the central government in a report on its website (www.gov.cn).

The crackdown on smuggling of cheaper farm produce started in March and comes after Beijing raised domestic agricultural prices to protect its rural population.

Beijing's grain purchases and corn stockpile scheme, under which it buys from farmers at inflated prices, can be as much as 40 percent higher than global prices, and has resulted in a rise in the smuggling of grains, meat and cotton.

In the first nine months of the year, authorities seized 2.93 million tons of smuggled corn and rice, 112,000 tons of frozen meat and 106,000 tons of cotton in ports such as Nanning and Kunming which border Vietnam, said the report.

"We will continue to strengthen the crackdown on smuggling of rice and other farm products, particularly at some key border areas and markets...," customs spokesman Zhang Guangzhi was cited as saying in the report.

Last month, China's Vice Premier Wang Yang said Beijing would strengthen controls over grains imports and crackdown on smuggling in a bid to cut oversupply, with record stockpiles creating storage problems for the new harvest.

China's stockpiling policy, with its inflated domestic prices, has made cheaper overseas supplies more attractive for end-users like feed mills, forcing the government to take action to try to curb surging imports.

China does not reveal details of its total grain stockpiles, but analysts estimate the country was sitting on close to 100 million tons of corn stocks - equivalent to about half annual domestic consumption - before the current harvest began.