February 5, 2008

China to maintain minimum purchase price of grain in 2008

China will further implement the minimum purchase price of grain in major grain production areas, and may raise the minimum purchase price level, the State Grain Administration (SGA) said.

An official with SGA explained that in order to promote steady increase of grain production in the country, starting from 2004, China has adopted the minimum purchase price for major grain products in major areas.

The country first implemented the minimum purchase price for rice in some key rice production areas in south China in 2005. The following year, the minimum purchase price was used for wheat in some wheat production regions.

The minimum purchase price has achieved effective result in stimulating grain production by increasing peasants income, while protecting the interest of grain growing farmers.

Last year, when the new wheat was put on the market, the price had dropped to a level lower than the minimum.

In response, the government started the minimum purchase price in six wheat growing regions of Hebei, Jiangsu, Anhui, Shandong, Henan and Hubei provinces.

Around 28.95 million tonnes of wheat with the minimum price in the six provinces was purchased by the government. The move helped increase the market price.