China's grain sorghum import demand: Measuring the effect of policies on price relationships and future trends

Since 2013, China has shown an explosive growth rate in grain sorghum imports for feed use. This notable import demand for sorghum has attracted great attention of sorghum exporting countries. The USDA reported that China’s rapid growth of sorghum feed consumption may be caused by the rise on its domestic corn prices, which resulted from the implementation of the government corn subsidy policy (“temporary reserve program”). However, the current increasing trend of China’s sorghum import demand could change if the Chinese government reduced or eliminated its corn subsidy in the future. The overall objective of this study was to estimate and project the trend of China’s sorghum import demand under alternative simulated government subsidy policy scenarios. This study presented two essays, which used the market year data from 1991 to 2015 to estimate models and then conducted projections and simulations for the period of 2016 to 2025. The first essay attempted to estimate and forecast China’s domestic producer prices for corn and sorghum by using a price determination model. The second essay developed a sorghum total supply and total demand model to project the potential trend of China’s future sorghum import demand. This study found that both China’s corn and sorghum producer prices would decrease during the next following years (2016-2025) whether the government-owned corn stocks would decline gradually or be disposed immediately. Moreover, results of the study indicated that China’s sorghum import demand would not completely disappear while the government eliminated its corn temporary reserve program and could increase slightly with a continuous increase in swine production.