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China raises grain purchasing prices to boost production

(Xinhua)
Updated: 2008-10-21 08:27

China's top economic planning agency on Monday said it would raise the minimum purchasing price for wheat by as much as 15.3 percent starting next year.

The move by the National Development and Reform Commission (NDRC) aims to boost rural income and grain output. The country, with a population of more than 1.3 billion, relies mainly on domestic production for food.

By hiking grain purchasing prices the NDRC hopes to motivate farmers to increase agricultural production.

The government's minimum purchasing price for white wheat next year will be 0.87 yuan (US12.7 cents) per 500 grams, 13 percent higher than prices in 2008. In addition, prices for red and mixed wheat will be 0.83 yuan per 500 grams, up 15.3 percent.

The agency also pledged to further increase subsidies for agricultural production materials, machinery and crop seeds.

It will also increase commercial reserves of fertilizer to help ensure market supply and price stability.

The NDRC would like to expand China's grain production capacity by 50 million tons.

On Oct. 11, China's Ministry of Agriculture predicted an increase in grain output for the fifth consecutive year.

According to estimates from the State Grain Information Center, this year's grain output should reach 511.5 million tons, up 10 million tons from 2007.

The central government allocated 102.86 billion yuan (US$15.1 billion) in agriculture subsidies this year, doubling the money from 2007.

The NDRC also plans to raise the minimum purchasing price for rice next year, although it did not give further details.