December 27, 2007

China grain subsidy hikes 66 percent yet output still short of demand

China's grain producers received RMB51.4 billion (US$6.9 billion) in direct subsidies in 2007 to boost yields, up 66 percent on-year, according to the Ministry of Agriculture.

However, the total grain production of more than 500 million tonnes this year did not meet the growing demand.

Wei Chao'an, Vice-minister of agriculture, explained the need for the country to ensure at least 106 million hectares for croplands and cushion sharp falls of grain output caused by natural disasters.

The Chinese government, in lieu of escalating inflation, pledged to draft more measures, including increased farm subsidies, to stabilize production and supply in 2008. 

Significant hikes in grain, pork and cooking oil prices late this year should have raised farm incomes. However, they also lifted the consumer price index (CPI) to an 11-year high of 6.9 percent in November, way above the government's 3 percent target.

During the Central Economic Work Conference, top leaders zeroed in on issues pertaining to national grain security and boosting farmers' income for 2008.

Analysts said that farmers could anticipate for more direct subsidies for grain next year, the government's way of raising their enthusiasm in grain production.