China raises minimum purchase price for grain

China has released the minimum grain purchase prices before spring planting and the minimum price for wheat sees a rise of RMB0.06 (US$0.009) per kilogram this year.

Analysts hold that the government will lower the frequency and cut ranges for grain price floor rise in the following several years, as excessively high grain prices are likely to trigger inflation.

The current price adjustments indicate that the government intends to stimulate farmers' enthusiasm in planting and in the meantime tries to evade inflation risks.

The current market purchase prices for grain stand at RMB2.2/kg (US$0.32), far higher than the minimum prices set by the National Development and Reform Commission, the top economic planner.

Industry insiders note that the government released the minimum grain purchase prices before spring planting to inform farmers that grain prices will rise steadily this year.