October 22, 2008

Beijing pays more for grain reserves aimed to boost income in rural areas


Beijing intends to raise the purchase prices of various grains significantly for national reserves and increase its own investment to boost food productivity in an attempt to narrow the urban-rural income gap.


Such a move sees the government forking out more money to buy grain such as corn, rice and rapeseed from farmers for reserves.


The National Development and Reform Commission revealed that the latest policies follow on the heels of the central government's plan to improve rural living standards, a theme at a top Communist Party meeting this month. The rises in grain price will take effect on January 1, 2009.


According to the commission's website, the minimum price of mixed wheat will increase by 22 fen (25 HK cents) to RMB 1.66 (US$0.24) a kilogram, an increase of 15.3 per cent.


The government also pledged to increase investment in agriculture so that grain production capacity could rise by 50 million tonnes from next year to 2020. Therefore, more money would be spent on irrigation, energy, transport and water for consumption. The Northeast would be developed into a soy production base, the Yangtze River area would concentrate on rapeseed and Xinjiang would be the centre of quality cotton.


Farmers would receive more subsidies to cover rising fertiliser costs and equipment expenses. Those growing wheat, paddy rice, corn and soy would also receive extra subsidies, said the commission.


The government would try to stabilise fertiliser prices by ensuring enough reserves and increasing production during low seasons.


The Communist Party put rural welfare on the top of the agenda during its Central Committee meeting in Beijing because of the widening urban-rural income gap. Party leaders agreed to let farmers transfer their land-use rights to allow the sale of land so as to promote modernised farming.


The government aims to double the per capita disposable income of rural residents by 2020. It also hopes to boost rural consumption by a large margin by 2020 as the mainland's export-driven economy struggles with declines in overseas orders.

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