October 23, 2008

China hikes grain price to benefit agricultural stocks

China is to increase the lowest purchasing prices of grains and subsidies for crops sowing from 2009, in attempt to boost the agricultural production and add to peasants' incomes.

The lowest purchasing prices of white wheat, red wheat, and mixed wheat in the nation are expected to be increased by about 13 percent, and 15.3 percent from the next year, according to the National Development and Reform Commission on October 20.

Chen Baomin, an agricultural commodity futures analyst, noted that the latest price hike was much bigger than previous ones, which hit 12 percent for the purchasing price of rice in northeast China from RMB1.64/kg to RMB1.84/kg.

Grains prices in the world market have surged in recent years, while the prices in China still kept low. According to data provided by Yao Jingyuan, a chief economist at the National Bureau of Statistics, grains prices in the nation are merely 1/13 and 1/20 of these in South Korea and Japan, respectively.

With the harvest this year, grains prices in China will continue falling when the agricultural means of product grows and hurt peasants enthusiasm in crops sowing.