August 26, 2011

The Chinese Ministry of Finance (MOF) said Thursday (Aug 25) that it has added RMB4.4 billion (US$688 million) in subsidies to the Grain Risk Fund to boost the country's grain security.

With the additional subsidies, the capital of the Grain Risk Fund has reached RMB38.2 billion (US$5.97 billion), including RMB27.7 billion (US$4.33 billion), or 72.5%, earmarked for the 13 major grain-producing regions. All of the money for the 13 regions has been appropriated by the central government.

The MOF said it believes the funding will ensure necessary spending by local governments to subsidise grain production and the establishment of cereal and cooking oil reserves.

"The funding will increase local governments' abilities to encourage farmers to grow more, stabilising the market and guaranteeing the grain and oil supplies," said MOF.

Established in 1994, the Grain Risk Fund is used to hand direct subsidies to grain growers as well as general subsidies for purchasing agricultural supplies and machinery.

Last year, China's grain output increased 2.9% on-year to 546.41 million tonnes. But the country's summer grain output fell 0.3% on-year to 123.1 million tonnes.

Meanwhile, this year, China's summer grain output rose 2.5% on-year to 126.27 tonnes due to expanded harvesting areas and higher yields, according to the National Bureau of Statistics.