February 11, 2008

China's state-owned grain companies reap record US$23 million in 2007

Overall net profits of China's grains enterprises hit a historic RMB167 million (US$23 million) last year, the first in 46 years, Xinhua reported from State Administration of Grains (SAG) data.

In 2006, these companies suffered a RMB2.97-billion (US$413 million) loss.

SAG reported that grain companies in 17 provinces including Jiangsu, Shandong and Henan gained generous profits while those in other areas trimmed on their losses.

The profit surplus was attributed to government interventions and minimum purchasing price schemes, which aimed to protect the interests of both farmers and grain trading companies.

High grain prices also drive up the profit. China's National Development and Reform Commission (NDRC) announced Friday that the minimum purchasing price for wheat and rice in 2008 will be raised slightly.

However, volatile price fluctuations still plague the industry. Limited access to bank loans, rising interest rates and lack of competence also hamper the enterprises to develop further.

NDRC said that 2007 ended with a relatively high level of grain reserves.

Yet, snowstorms started to hit southern China in mid January this year, and are estimated to take a toll on grain output as most winter grain crops were planted in the north.