China's grain output reached a record high this year due to pro-farming policies, though the harvest falls short of initial estimations.

China's total grain production for this year reached 500 billion kg, with the unit production increasing for the fifth consecutive year. However, the harvest falls short of the initial production forecast of 525 billion kg.

The number of grain deals in 2008 is more than last year, while the quantity of traded grain is lower, according to the National Grain Trade Centre of Hefei in Anhui Province, which is China's largest grain trade centre.

The large production increase is expected to relief the pressure of tight grain supply and is seen to lay a strong foundation for economic development.

Ye Zhenqin, Director of the Ministry of Agriculture, said the tension between China's grain supply and demand remains, and that it is difficult to maintain production increase next year.

In order to ensure the stable development of grain production, the government will offer more subsidies to farmers in 2009. Subsidies for purchasing agricultural machinery will be increased to RMB10 billion (US$1.46 billion) from RMB4 billion (US$585 million), while the maximum wheat purchase price will be raised next year.