BEIJING - China still faces challenges in grain production, although it is likely to see a rise in summer grain output this year, a senior official said Wednesday.

Prices of producer goods have continued rising, which has squeezed farmers' profit margins and dampened their enthusiasm for production, said Ma Xiaohe, deputy head of the Academy of Macroeconomic Research of the National Development and Reform Commission, China's top economic planning body, at a forum.

Labor costs have also increased recently, indicating the possibility that farmers may abandon grain production to look for other jobs to earn more money, he said.

The loss of arable land due to urbanization and the country's antiquated agricultural infrastructure also threaten grain security.

Ma said the government should increase financial support for agricultural production and take more measures, such as developing a commodity futures market, to ensure grain security.