December 27, 2005

China's Henan province sees record grain harvest

Grain output in Henan, China's most populous province and one of its major agricultural bases, will exceed 45 million tonnes in 2005 for the first time in history, say official statistics.

According to the province's statistics bureau, grain output in Henan this summer reached 26.1 million tonnes, up 3.5 percent against the same period last year. Winter cereal yields are expected to reach 19.2 million tonnes, up 10.5 percent year-on-year. Henan's grain output accounts for about one tenth of the national total.

The record high grain output has been attributed to rural incentives in the form of agricultural tax exemptions and direct subsidies to farmers. This year, pro-farmer agricultural policies have helped lift RMB2.92 billion (US$365 million) off the tax burden from its farming community.

Direct subsidies were given to farmers for purchases of fine seeds and agricultural machinery, which lent further enthusiasm for grain planting despite years of price and output decline. Subsidies accrued are expected to amount to RMB29.4 billion in 2004.

Similar policies were also implemented in the provinces of Shanxi, Heilongjiang and Jilin. About 400 million peasants in half of China's 31 provinces, autonomous regions and municipalities are expected to benefit from these policies.

According to an earlier forecast by the National Bureau of Statistics, China's rural residents will earn about RMB60 billion more in 2004 than a year ago due to favourable grain prices.