Nov. 9 (Bloomberg) -- China’s corn harvest, the world’s second-largest, plunged by a more-than-expected 13 percent to a four-year low because of droughts in the main crop-growing regions, a survey of farmers showed.

Production dropped to 144.374 million metric tons (5.684 billion bushels) from 165.9 million tons last year, based on interviews completed during the harvest in September and October by Geneva-based SGS SA for Bloomberg. The estimate is below the 155 million tons the U.S. Department of Agriculture predicted on Oct. 9 and the 163 million forecast on Oct. 14 by the China National Grain and Oils Information Center.

Crop yields dropped 16 percent, erasing the benefit of a 4 percent increase in planted acreage, said SGS, which had six teams of agronomists travel 15,000 kilometers (9,320 miles) across seven provinces for the survey. Drought ravaged 19.8 million acres of farmland, mostly in the provinces of Liaoning, Inner Mongolia, Hebei and Jilin, cutting water supplies for 7 million people and 3.8 million head of livestock, according to the Ministry of Water Resources Sept. 2.

“It was a regionalized drought in parts of the main northeastern growing region,” said David Smoldt, a vice president for FCStone Group Inc., a commodity brokerage and consultant in West Des Moines, Iowa. A smaller crop will lead to a drop in inventories before next year’s harvest, he said.

SGS interviewed 300 farmers face to face in the main growing regions of central and northeast China. Fifty-four percent of those surveyed reported bad weather in 2009, compared with 3 percent last year. Yields in Jilin province, which in the past has been China’s top-growing region, will fall 42 percent, the survey data show.

Inventory Drop

Heilongjiang province, where plantings increased because of higher prices, is the nation’s top producer, with 14 percent of national production, followed by Shandong, Jilin and Hebei, all with between 11 percent and 12 percent, the research showed. The final crop estimate was derived from survey results and official government forecasts for the rest of China.

The drought may mean a bigger drop in inventories than forecast by the USDA, which last month estimated a decline of 8.4 percent to 48.6 million tons from 53.1 million tons last year, which were the highest since 2003, according to Mike Callahan, the senior director of international operations at the U.S. Grains Council, a trade group partially funded by the government. The U.S. is the largest corn grower and exporter.

No Imports Yet

China maintains government-owned stockpiles of corn, used to feed livestock and to make food ingredients and biofuels. Its domestic crop and use of inventories have kept China self- sufficient in corn supplies, with imports at less than 1 percent of output for 13 years, USDA data show. Last year, China reaped 21 percent of global output and the U.S. produced 39 percent.

Callahan, who estimates Chinese output at about 150 million tons, said reserves will fall to 40 million to 45 million tons, not enough to spark a jump in imports. Inventories need to drop as low as 20 million tons before the government, which subsidizes corn farmers, would be pressured to open its markets to buy more from overseas, he said.

“All the grain they’re sitting on, I don’t see where a smaller crop will have much impact,” Callahan said in a Nov. 6 telephone interview from Washington.

U.S. corn exports priced at $4.13 a bushel in New Orleans on Nov. 6 were cheaper than the $6.43 price at ocean ports in Dalian, even with shipping costs and a 13 percent import tariff, said Dan Basse, president of AgResource Co. in Chicago. Corn futures have fallen 8.8 percent this year to $3.7125 a bushel on the Chicago Board of Trade.

Small Farms

The government restricts access to foreign supplies, which may limit the impact of the drought on global prices, Basse said. In a country where most farmers cultivate only a few acres of land, the government wants to ensure the growers remain in business, he said.

“China needs $6 corn to keep farmers from moving to town,” Basse said. “The big story for China is keeping domestic farmers happy so they don’t move off the farm.”

Of the farmers surveyed, 64 percent said they were unhappy with corn prices in 2008, 22 percent said they were satisfied and 14 percent did not reply. More than 65 percent of the farmers expect prices of more than $220 a metric ton in 2009, compared with 20 percent a year ago, according to the survey.

The SGS survey also asked farmers about their farm size and type of ownership, their equipment purchases, their input costs and their use of pesticides.

Equipment Purchases

Of the 41 percent of farmers who had bought equipment in the past three years, 62 percent had bought a tractor and 49 percent a sprayer. Only 2 percent of all farms were more than 8 hectares (19.8 acres), while 55 percent were less than 1 hectare. On pesticide use, 54 percent of farmers surveyed said they did not follow recommended doses.

The survey’s margin of error was 5.66 percent, with a sample size determined to obtain a 95 percent confidence level, according to SGS. The surveyors used their own results to estimate crops in central and northeast growing areas and data from China’s National Grain and Oils Information Center for southern regions.

Ed