"They are producing biofuel on a small scale and on a trial basis," he said, adding the ministry has also approved projects to develop fine seeds of other non-grain strains to feed biofuel production.

Wang Xiaobing, an official with the ministry's crops cultivation department, said developing biofuel is a global trend; it helps expand the space for agricultural development.

"In China, the first thing is to provide food for its 1.3 billion people, and after that, we will support biofuel production."

Poor harvests in key producing countries and a fast-growing demand for biofuel production have driven up global grain prices, the Food and Agriculture Organization said in its latest Food Outlook report.

Both Yang and Wang confirmed China's grain output is expected to exceed 490 million tons this year, the third consecutive bumper harvest. Last year, the output was 484 million tons.

"The central government has continued its robust support for the agricultural sector this year, which has helped farmers focus on grain production," Wang said.

Despite being continuously encroached upon by development in many regions, the country's grain-producing farmland has been expanded by 1.06 million hectares to 105.3 million hectares this year, thanks to efforts to reclaim idle farmland and increase multiple cropping, he said.

Yang said he hoped the recent price surges in the food market do not send wrong signals to local government officials, who may think farmers would automatically increase grain production area.

"Compared with cash crops, the returns from grain production are low," Yang said. "Therefore, we should never relax our efforts to focus on grain production by ensuring there is enough acreage and improving per-unit output."

Arable land shrunk by 8 million hectares between 1999 and 2005, and the ministry predicted that through 2010, the total grain-producing land area will decrease by 0.18 per cent annually.

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