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Costs burden worries farmers
(China Daily)
Updated: 2004-04-06 23:58

As prices of seeds and fertilizers keeps rising, China's already cash-strapped farmers are wondering just how much new fiscal support from the government will help.

Premier Wen Jiabao heard complaints from grain farmers in North China's Hebei Province who fear their benefits are likely to be hurt by irrational rises in the production costs.

Compared with investment during September 2002 to March 2003, statistics indicate price hikes have raised costs of farmers by some 39 billion yuan (US$4.7 billion) over the past seven months.

"The scale of these price rises for fertilizer, pesticides and other production materials has seldom been seen in past years," a Ministry of Agriculture official surnamed Zhang told China Daily.

For instance, prices of carbamide in March rose 13 per cent year-on-year, while phosphate fertilizer went up 20 per cent.

China's grain prices started to increase in October of last year and prices are expected to witness further growth over the next few months, with demand continuing to outstrip supply.

But farmers worry that may not be enough to cover new costs.

Wang Tao, a 60-aged farmer mainly growing rice in Central China's Hunan Province, said production costs will increase by 300 yuan (US$36) for per hectare of rice this year.

"I'm not sure if I can earn anything by planting rice this year, especially when the seeds and fertilizer are so expensive," said Wang.

To increase incomes for China's 900 million farmers, grain output is high on the government's recent agenda. This year, the Chinese Government will earmark 10 billion yuan (US$1.21 billion) from its grain risk fund to directly subsidize grain farmers, to alleviate falling output and slow income growth.

From 1997 to 2003, the per capita income of farmers rose 4 per cent on average, in sharp contrast to an 8 per cent jump in the disposable incomes of urban dwellers.

And China's grain output dropped by 5.8 per cent from 2002, reaching 430.65 million tons last year. The figure is expected to rise to 455 million tons in 2004, a key year for grain production to avert the detrimental reverse of the supply-demand relationship.

Lin Yueqin, a researcher with Chinese Academy of Social Sciences, stressed the basic way of ensuring stable grain output is to protect arable lands.

"All local governments should carry out strict measures to forbid any illegal occupation and damage of farmland, and should restore and expand the acreage for sowing grains," said Lin.

In addition, the National Development and Reform Commission said price protection should be adopted to protect farmers' enthusiasm and increase grain output.

Last week, it set the minimum purchasing price of early-season indica, the most widely cultivated subspecies of rice in China and other Asian regions, at 1.4 yuan (16.8 US cents) per kilogram, up from 1.16 yuan (14 US cents) of government's protected price in 2003. The protected prices of other subspecies of rice will be announced soon.

The central government urged local governments to organize experts to offer farmers technical training and to dispatch officials to publicize the central policies among rural areas, in an effort to revive farmers' motivation for grain production.

The product quality watchdog also joined in the central government's top priority. The State General Administration for Quality Supervision and Inspection and Quarantine Tuesday started a nationwide campaign to end cheating in the selling of fertilizer, seeds and pesticides.

Liu Zhaobin, director of the Regulation Department under the administration, reassured farmers the government would strengthen supervision over the prices of production materials, especially chemical fertilizers.

"Severe penalties will be given for production and sales of related fake or inferior products," Liu said.

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