China's grain supply and demand are basically balanced now but the situation is expected to worsen in the long term, Wen said in a statement published late Wednesday on the website of State Council, or cabinet.

Industrialisation, urbanisation and a growing population are boosting grain demand while "shrinking arable land, water shortage and climate change is an increasing constraint on output," Wen told a cabinet meeting.

"The long-term demand and supply will be balanced but tight and ensuring grain security faces serious challenges," he said.

The meeting approved a mid- and long-term grain security plan that aims to keep the nation's annual grain output above 500 million tonnes by 2010 and increase production to more than 540 million tonnes a year by 2020.

The statement reiterated that China will mainly rely on itself to feed its population of more than 1.3 billion people -- the world's largest -- and will be 95 percent self-sufficient in grain supply.

To meet the goal, China has to protect the government-set "red line" of 120 million hectares (296 million acres) that is deemed necessary to feed the country's people, it said.

That level has already come very close to being reached, with farming land being turned into industrial estates and housing areas.

China will also increase subsidies to farmers and improve its grain reserve system, according to the statement.

According to the World Bank, global food prices have nearly doubled in three years, with experts blaming factors such as rising oil prices and the growing use of biofuels.

Rising food prices have sparked deadly unrest and rising malnutrition around the world, and a number of countries have put limits on grain and other exports to try to feed their own populations.

Chinese president Hu Jintao is expected to attend an extended summit of the Group of Eight (G8) in Japan next week, where the world food crisis is likely to be one of the main topics on the agenda.

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