China's agricultural exports are to encounter more overseas technical barriers and trade conflicts next year, which could slow down growth in the sector, the Ministry of Commerce (MOFCOM) warned yesterday.

Japan and the European Union are China's top two agricultural export markets, representing over 30 percent and over 10 percent of China's farm product exports respectively. However, they are due to impose stricter rules on farm product exports next year.

Japan will implement a "positive list" system that not only sets strict maximum agricultural chemical residue limits but also expands inspection criteria. The European Union requests all documents related to imported food products to accompany the products.

The possible stricter environment requirements for farm product trade are expected to heavily affect small Chinese companies, which have limited capabilities to deal with technical barriers and chemical residue inspections as well as the target markets' other tighter restrictions on goods imports said Yu Guangzhou, a vice-commerce minister.

"Exports of poultry products are expected to be the first category to suffer due to the breakout of bird flu in China," said Huang Xin, an official from the ministry's foreign trade department.

The spread of bird flu in China has deprived Chinese poultry exporters access to the European Union, which they only recently gained when the EU lifted the ban on some categories of Chinese foods of animal origin in 2004.

Huang said aquatic and horticultural products were also likely to encounter problems from the to-be-imposed technical restrictions if farmers or food companies fail to control pesticide and chemical residues on goods to maintain them below the levels set by overseas markets.

MOFCOM launched training courses on developing the export of organic farm products among farmers and companies in order to help them prepare for the stricter export environment.

"Organic farm products enjoy great potential in the overseas market, particularly in developed countries," Huang said.

The ministry is planning more training courses for companies and farmers in 2006 helping them to learn the new rules set by the European Union and Japan.

MOFCOM, together with the finance ministry, plans to strengthen the issuance of export credit insurance for agricultural products. In the first nine months of this year exports totalling US$1.1 billion received cover from China Export and Credit Insurance Corporation, 50 percent more than the total of the previous year.

The two ministries are poised to take measures to facilitate the financing of small and medium-sized farm companies.

Meanwhile, MOFCOM continues to provide regular reports to farmers on specifications set by target countries.

"In 2006, we will try to provide more information concerning the import countries to Chinese enterprises," Huang said.

(China Daily November 30, 2005)