COTTON imports by China may increase on an expanding supply deficit as the country struggles to boost output, the National Development and Reform Commission said.

"Although there's some scope to raise China's cotton output, the gap between China's cotton supply and demand will exist for a long time and may expand," Liu Xiaonan, vice director of the economy and trade division, said at a forum in Dalian, in northeast China's Liaoning Province, yesterday.

Cotton surged to a record in March.

Acreage in China may be capped after rebounding this year by more than 6.6 percent as high costs and shortages of labor and land limit expansion, according to a survey of traders and analysts. Imports surged 86 percent last year to 2.8 million tons, Customs data show.

"Our reliance on cotton imports, the percentage of imports in total consumption, may increase in the future," Liu said.

Crop area may increase 6.6 percent to 5.47 million hectares this year as a state purchasing program and surging prices boosted planting, the China National Cotton Exchange said last week. Planting dropped to 4.85 million hectares last year, according to the National Bureau of Statistics. That followed a 10 percent decline to 5.09 million hectares in 2009, according to the Ministry of Agriculture.

"Given that the cotton farmers do not have enough incentives to plant the fiber, we suggest the government to support the sector through more subsidies on quality seeds, infrastructure and machine tools," said Fang Yan, vice director of the commission's rural economy division.

Acreage may rise by more than 6.6 percent this year after a 66 percent jump in the prices in the past year, according to the median estimate of five people surveyed by Bloomberg News. One said cotton acreage may rise more than 8 percent this year.

Still, high production costs compared with other crops mean farmers will struggle to expand planting, said Ke Bingsheng, president of the China Agricultural University.

"China's grains and cotton will compete for acreage," said Ke. "Given the fact that it is almost impossible to increase arable land in China, it is more favorable for China to import cotton than grains. Cotton demand is more elastic than grains."

Three times more land is needed to produce one ton of cotton than grain, said Ke, who was speaking at the Dalian industry forum.