October 21, 2008


China intervenes to aid farmers in falling crop prices



China will purchase grains for reserves at prices above current market levels, set up national soy reserves and buy grains, rapeseed and cotton, in order to help shore up incomes of farmers whose commodity prices are falling sharply.


The moves are in line with a pledge by top policy makers this month to increase rural incomes. They also serve to put a floor under softening crop prices, so as to discourage farmers continue to plant crops next year.


China will set up a reserve of domestically produced soy, the National Development and Reform Commission (NDRC) said, helping most soy futures in Dalian Exchange to rise by their daily trading limit and the reserve could purchase about 1.5 million tonnes of soy, corn and rapeseed for reserves, as it did last year.


China will raise the minimum price paid for wheat purchased by the state reserves system in 2009 by 13-15.3 percent and the higher minimum price is in line with current market prices, but provides a guaranteed return to farmers still deciding what to plant.


The state reserve system will increase purchases of rapeseed in important growing areas along the Yangtze Valley, and of cotton in Xinjiang, while also aiding the transport of cotton to central and coastal China, the NDRC said.


It will increase subsidies for rice shipments out of the northeast, and buy late paddy rice from the south for reserves. Farmers growing wheat, paddy rice, corn and soy in the northeast will also enjoy greater subsidies, as part of an overall plan to maintain national grains production at over 500 million tonnes a year.


China plans to continue to supply about 95 percent of the grains it consumes.


Purchase prices for reserves (Yuan)

Crop Purchase Market Prices

Wheat (minimum price for 2009)



Red, mixed wheat



Corn (Northeast)



Soy (Northeast)



Rapeseed (Yangtze Valley)