Friday, March 28, 2008

Grain Price To Rise In China To Combat Inflation

by Elisha Sanders

The National Development and Reform Commission (NDRC) released a statement on Friday in which they outlined their bid to both stem inflation rises and boost grain production in China, and has for the second time this year raised the minimum purchase price for both rice and wheat.

This comes just one day after the national government agreed to increase this year’s rural budget by 25.25 billion yuan ($3.6 billion), a move which is intended to encourage farmers and address the current inflation issues tied to foodstuff supplies being lessened and subsequent price hikes.

The NDRC announced that prices for rice would sit at 77 to 82 yuan per 50 kilograms and the price for wheat sit at 72 to 77 yuan. Prices for rice and wheat had risen to 75 to 79 yuan and 70 to 75 yuan, respectively.

The northeastern province of Liaoning will join Heilongjiang, and Jilin in having minimum prices - a method which was established in 2004 in a bid to boost production in the regions.

The government is taking immediate action to help stem the rise in inflation, as they have frozen the prices of grain, cooking oil, oil products, along with other basic foodstuffs. However the Consumer Price Index saw a 12 year high this week of 8.7%.

The costs associated with farming are on the rise as well, with fertilizer and seed prices move upwards, which has placed even more pressure on prices of farm produce.

Deputy director of the Research Center for Rural Economy, Song Hongyuan, which is under the Ministry of Agriculture, stated that these efforts are going to dramatically aid in addressing both rising inflation and prices, as well as making sure the is enough grain for the country.

Song went on to say that this sends a clear message to farmers that they will make profits if they plant crops, which will serve to stabilise grain prices.

In a national video conference held on Thursday, Chinese premier Wen Jiabao said that the country need to ensure stronger political support for agriculture, which would motivate many farmers to plant more crops.

The director of the office of the central leading group on rural work, Chen Xiwen, has stated that this year’s grain production is going to be very difficult after the winter snowstorms which where the worst in the past fifty years, and the drought during the spring ploughing season.

At the video conference on Thursday, Wen made it very clear to his officials that they all need to be highly cognizant of the necessity of boosting grain production in the country.

An agreement was made by the cabinet in which 15.6 billion of the additionally alloted yuan to agriculture be used to subsidize growers in their need for farming materials such as diesal oil, fertilizer and pesticide. This brings the total amount going to subsidize farmers to 63.8 billion yuan in this year’s budget.

Additionally, 5 billion yuan has been given to subsidize seed purchasing, which brings that subsidy total to 12.07 billion for this budget. This figure can cover 29.5 million hectares of rice and 13.4 million ha of wheat and the same for corn.

 

 

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