The national grain watchdog will tighten market supervision to ban the sale of stale grain for human consumption.

The State Grain Administration issued two notices recently on the supervision of sales of old grain, normally used in the production of industrial alcohol.

The amount of stale grain sold to authorized companies will be restricted each time to six months' consumption, and the total amount must not exceed a company's annual requirements.

The move is to prevent companies selling stale grain to consumers as food.

It was reported recently that grain more than three years old was sold as food in markets of some cities such as Tianjin.

In fact, the grain had gone bad and was not fit for human consumption, sources said.

Grain prices have seen a significant increase. According to the National Bureau of Statistics the price of grain products rose 4.7 per cent last month.

In a move to stabilize prices and guarantee market supply, 4.34 million tons of grain have been auctioned since last month, the Xinhua News Agency reported.

China is auctioning its wheat reserves for the sixth time since last month in Zhengzhou, the capital of Central China's Henan Province, said sources with the China Grain Reserves Corporation.

The corporation said it purchased 40.7 million tons from June to September to fill state reserves and to reinforce the country's ability to regulate wheat prices.

A spokesman said about 500 to 600 grain processing firms took part in the auction and supply and demand has generally remained steady.

The government will continue to intervene in the market periodically by selling grain reserves. The demand is expected to increase with the approach of the Chinese Lunar New Year.

Food safety has become a problem this year.

Poisonous substances were found in honey in Central China's Hubei Province, lard in East China's Zhejiang Province, pork and fish in Shanghai, and salted ducks' eggs in North China's Hebei Province.

Experts said that China lacked an effective supervision network covering production, sales, storage and transportation of food.