China's grain subsidies up 66% amid output shortage

Updated: 2007-12-27 06:54

BEIJING -- Chinese grain producers got 51.4 billion yuan ($6.9 billion) in direct subsidies in 2007, up 66 percent from a year earlier, the Ministry of Agriculture said on Wednesday.

China produced more than 500 million tons of grain in 2007, the fourth consecutive year of growth, but production still fell short of demand.

Vice-minister of agriculture Wei Chao'an told a meeting on Wednesday that the country should keep croplands no less than 106 million hectares, prevent sharp drops of grain output caused by natural disasters.

In response to escalating inflation, the government pledged to draw up measures, including more farm subsidies, to ensure a stable production and supply of produce in 2008.

The message was delivered at the annual central rural work conference that concluded here on Sunday. The conference outlined the top priorities for rural work in 2008 and a certain period thereafter.

Preventing shortages of major food items and extreme price fluctuations would be a top priority of the government, a document released after the conference said.

Surges in prices of grain, pork and cooking oil late this year should have raised farm incomes. However, they also lifted the consumer price index (CPI) to an 11-year high of 6.9 percent in November, well above the government's 3 percent target.

The high inflation rate has become a major government concern. It had been decided at the high-profile Central Economic Work Conference that prevention of "current price increases from becoming evident inflation" would be a primary goal of macroeconomic control in 2008.

The tricky situation prompted top leaders to instruct the government to focus on national grain security and the continuation of boosting farmers' income next year.

Analysts said that farmers could expect more direct subsidies for grain next year. which would raise their enthusiasm for cultivating grain.

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