BEIJING - CHINA has vowed to keep grain output above 500 million tonnes in 2008 as the world's largest producer and consumer of rice struggles to cope with rising global grain prices, state media said on Thursday.

'We will strive to stabilise full-year grain output at more than 500 million tonnes,' said Agriculture Minister Sun Zhengcai, according to the China Securities Journal.

In 2007, China produced more than 501.5 million tonnes of grain, almost level with the nation's annual consumption of 510 million tonnes, official data showed.

Biofuels, transformed from corn, wheat, soy beans and sugar cane, are accused by experts and international organisations of snatching food out of the mouths of the poor.

'China will never develop biofuels at the cost of grain supplies or arable land,' Mr Sun was quoted by the report as saying.

His remarks came at a time when global rice prices rose to their highest level in 19 years and wheat prices to a 28-year peak, stoking fears that they might affect domestic prices and exacerbate already high inflation.

China's inflation, mainly driven by surging food price, reached 8.0 per cent in the first quarter of the year.

In February, it climbed to 8.7 per cent, the highest in nearly 12 years, before easing slightly to 8.3 per cent in March.

'We must be highly alert to potential imported grain price rises and unusual changes in grain imports and exports,' Mr Sun said, according to the China Securities Journal.

The government scrapped tax rebates for grain exports late last year and levied taxes on grain exports in 2008 aimed at reining in galloping inflation and ensuring stable domestic food supplies.

Mr Sun said the domestic agricultural products market was currently in balance due to output growth in recent years and large reserves, adding 'rises of farm produce prices are ... reasonable and controllable'.

The central government promised at the beginning of the year to spend 562.5 billion yuan (S$110.6 billion) in 2008 to support farmers, 130.7 billion yuan more than in 2007.

In March, it said it would earmark another 25.3 billion yuan to boost grain production in particular.

But analysts said even a stable grain output in China could do little to slow down global price surges as the country, which has to feed 1.3 billion people, was a net grain importer.

Official figures showed the world's most populous country imported 31.4 million tonnes of grains in 2007, 22.5 million tonnes more than what it exported.

The bulk of the total imports, 30.8 million tonnes, were soy beans.

'China is a net importer of those sorts of grains, so I don't think they have a huge impact on (cooling down) international markets,' Alaistair Chan, a Sydney-based analyst with Moody's Economy.com, told reporters.

He added international rice prices would continue to go up because global supply remained limited and some traditional exporters such as Myanmar would have to start importing soon. -- AFP