March 18, 2008

China seen to modify grain pricing policy

Signals for important policy changes concerning grain prices in China have begun to show up, the minister in charge of the National Development and Reform Commission (NDRC) Ma Kai said recently.

Ma Kai explained that the price hike in grain is a rational and rehabilitative increase. He added that when the benefit of grain growing is not high for farmers, certain grain price rises will be reasonable.

This may signal the Chinese government to gradually revoke some restrictive policies on grain and oil prices to realize the targets of ample market supply in the short term and long-term production safety.

Meanwhile, China is actively trying to increase agricultural output, and will grant RMB63.3 billion (US$8.930 billion) in subsidies to grain growing farmers.

China also disclosed plans to purchase 8 million tonnes of corn for state reserve, to prop up corn prices in the domestic market and encourage farmers to plant the crop.