March 31, 2008

China raises minimum grain purchase prices to counter inflation 

China raised its minimum purchase prices for rice and wheat for the second time in 2008 to promote grain production and curb inflation, the National Development and Reform Commission (NDRC) said Friday.

The increases were announced one day after the government pledged an increase of RMB25.25 billion (US$3.6 billion) to this year's rural budget, a measure to boost farm production.

NDRC said the minimum purchase prices for wheat would be RMB72-77 (US$10.27 to US$10.98), while rice would range from RMB77-82 (US$10.98 to US$11.69) per 50 kilogrammes.

The NDRC further said that the minimum price system would be expanded to cover the northeastern province of Liaoning, which would become the third province,  after Heilongjiang and Jilin, to have minimum prices.

China began setting minimum purchase prices in 2004 to encourage production.