April 12, 2006

China announces new grain subsidies

China would allocate RMB12.5 billion (US$1.6 billion) more in subsidies to grain growers this year, increasing direct subsidies for the nation's grain growers to RMB26.7 billion (US$3.3 billion), the government announced.

The government has provided generous subsidies to farmers in recent years while also abolishing a thousand-year-old land tax for farmers. Direct subsidies to grain farmers began in 2004, after several straight years of declines in grain harvests.

The government is also attempting to boost grain production and making efforts to narrow the rift between rapidly growing cities and the under developed countryside.

The current subsidy was designed to help grain growers cope with higher prices for diesel oil, chemical fertilisers and other production costs.

Subsidies would be granted to the nation's 600 million grain growers, whose incomes averaged RMB3,255 (US$400) last year.