November 12, 2003

 

 

Steady Rise in Prices of Grain & Agricultural Products in China Boosts Farmers' Confidence

 

For millions of peasants in China, there has certainly been good reason for eased nerves during the past months as prices of grain and other staple agricultural products have been on a steady rise for the first time in six years in this world's most populous country.

 

In Liu's town, rice can be sold for at least 1,080 yuan (130 US dollars) per ton while the prices for some high-quality varieties have topped 1,400 yuan (about 169 US dollars) per ton, 10 - 20% increase over the past years.

 

Though most of the province's 65 million-plus people are farmers, the number of peasants who live only by growing crops has fallen since 1997 when a relatively saturated market and dropping grain prices cooled down peasants' farming enthusiasm.

 

Many farmers, especially the younger generations, prefer to undertake manual jobs like washing cars, waiting on tables and cleaning houses in the booming cities rather than work the fields back in their hometowns, thus deserting a great number of lands.

 

To stabilize the situation in the countryside, China's central government ordered its major grain producers like Hunan to set higher "protective prices" than those on the market to buy farmers ' surplus grain. The special treatment was not enough, however, to cheer up farmers a year ago when grain prices witnessed a reduction for the sixth year in a row.

 

The mood began to change for farmers in China when experts estimated the global grain stockpiles might continue to dive in 2003.

 

The Chinese Ministry of Agriculture estimated that China's 2003 grain production will fall below 450 million tons, a 10-year record low.

 

Output reduction was also reported in the world's major grain producers of the United States, Canada, Australia and Europe in 2002. And the Food and Agriculture Organization of the United Nations lowered the world grain reserves recently, declaring a historical low.

 

As a result, prices of wheat and corn rose 17.6% and 11.5% respectively on international markets.

 

The shrinkage of grain reserves and production was good news to both local farmers and the Chinese government, which has long been plagued by how to increase income for its some 900 million farmers.

 

In northeast China's Heilongjiang Province, also one of China's major wheat and rice producers, the purchasing price for wheat has reached 1,100 yuan (about 133 US dollars) per ton this month, an increase of 32% year on year.

 

In Jilin Province, the corn price has risen by 15 to 20 yuan (1. 8 to 2.4 US dollars) per ton, while in the provinces of Shandong and Hebei, the corn price has soared by 50 to 70 yuan (6 to 8.3 US dollars) per ton this month.

 

Amid the rising grain prices, millions of Chinese peasants have regained their enthusiasm to grow crops, similar to the zeal once seen in the late 1970s and early 1980s when the household contracted responsibility system had enabled farmers to grow whatever they liked as the country moved from the old planned economy era towards a market economy.

 

Market analysts contend the rising grain prices should come much earlier.

 

"The grain prices had been long underestimated in China for years," said He Jianwen, deputy director of Ningxiang County Grain Bureau, Hunan Province.