State raises rice prices amid output drop
By Fu Jing (China Daily)
Updated: 2004-03-29 07:50

Amid consecutive drops in grain output and consequent price hikes, the government announced over the weekend it would lift the floor purchase price of rice to stimulate farmers to plant new crops.

The minimum purchase price of early-season indica, the most widely cultivated subspecies of rice in China and other Asian regions, was set at 1.4 yuan (16.8 US cents) per kilogram, up from 1.16 yuan (14 US cents) of government's protected price in 2003.

Together with the Ministry of Agriculture, the National Development and Reform Commission said protected prices of other subspecies of rice will be announced soon.

The commission said the stimulating measures aim to protect farmers' enthusiasm in farming and increasing grain output.

China's grain output dropped by 5.8 per cent from 2002 and reached 430.65 million tons last year. The figure is expected to rise to 455 million tons in 2004, a key year for grain production recovery and to avert a detrimental reverse of the supply-demand relationship.

China's grain prices started to increase last October and prices are expected to experience further growth over the next few months, with demand continuing to outstrip supply.

The impact of the rise is now being felt in consumers' pockets.

The price of a 5 kilogram bag of rice increased from 14 yuan (US$1.68) to 18 yuan (US$2.20) within one week at a convenience store in Beijing's Tiantongyuan residential community last month.

The government hopes the price increase will help lift rural people's incomes, meaning it will not use its massive grain reserves to influence the rate.

Besides price hikes some farmers told China Daily they need to be directly financed to build up infrastructure capacity to boost agricultural production.

Ju Hua, a 58-year-old farmer in Tongjiang County of Sichuan Province, said rice planting areas in his village have been cut in half in the past five years due to continuing droughts.

"Our village badly needs a new reservoir but is short of money," said Ju, whose county is among China's 400-odd poor counties.

According to Ju, the majority of labourers between 20 and 50 in his village have flooded into cities to earn a living for their families.

"Only children and old people are left behind and the situation in the village is really tough because of lower productivity," said Ju.

Ju said his son and daughter-in-law have worked as migrants in Beijing for years. "My wife and I have to take care of a granddaughter and we don't have much energy and time for farming."

The story of Ju's family and village is echoed by thousands of other Chinese farmers and it has been noticed by the government.

Premier Wen Jiabao said earlier this month that farmers are expecting to benefit from the government's massive capital input into rural regions, plus agricultural tax cuts this year.

At a recent State Council meeting, the government reiterated its plans to strengthen China's grain production capacity by urging local governments to conscientiously subsidize producers.

The Office of Financial and Economic Leading Group of the Communist Party of China Central Committee said a record 150 billion yuan (US$18 billion) is expected to be spent on a move to fire up the zeal of farmers for better grain production, to improve rural infrastructure and ensure the country's food security this year.

The figure represents a jump of 30 billion yuan (US$3.6 billion) over last year.

"To rekindle farmers' grain production enthusiasm, we're making sure that farmers benefit from fiscal spending on farming and from sales of farm produce," the commission said.

The commission has already sent supervision delegations to major grain producing provinces to ensure a good supply of fertilizer and other production materials are maintained.

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