Farmers in the Guangxi Zhuang autonomous region have begun feeling the pinch of the global financial crisis as commodity prices fall amid oversupply of products.
Guo Shengkun, Party chief of the region, said the falling sugar prices have hurt a large number of farmers who grow sugarcane on Tuesday.
The region is home to about 13 million farmers whose livelihood depends on sugarcane. Its annual sugar output is about 10 million tons, more than half of the country's total.
Speaking at a State Council press conference on the 50th anniversary of the region's establishment, he said the profits of sugarcane farmers and sugar mills have fallen drastically.
Sugarcane farmers face tougher times ahead because the price of sugar has fallen from 4,000 yuan ($584) a ton in the first half of this year to below 3,000 yuan now.
The regional government has taken steps to help the farmers tide over the crisis, Guo said, and along with the central government, it has started buying sugar from them.
The authorities are discussing the possibility of setting up a pricing mechanism that would link sugar to sugarcane and prevent the price from falling below a certain level.
And the regional government is encouraging firms to diversify into other products such as sugarcane-derived ethanol to lessen the impact of falling prices and oversupply.
Guo is still optimistic because the impact of the financial crisis would be relatively limited, he said. "Guangxi is not only rich in agricultural products, but also strong in industrial sectors such as mini-car and machinery production. When it comes to these two sectors, the region actually has a bigger role to play to fight the slowdown."
The machinery industry is expected to get a boost from the increase in investment on the country's infrastructure and the efforts to spur domestic consumption, he said.
Mini-cars made in Guangxi, on the other hand, have held on to their market share of 50 percent, Guo said. And their prices have not changed much.
"We are therefore confident of converting the current crisis into an opportunity." He said.
The region has launched a large number of public welfare projects to benefit urban and rural residents both, Guangxi governor Ma Biao said.
It has invested about 10 billion yuan to develop rural areas by repairing houses, providing safe drinking water and upgrading road networks, and through other means.
And the regional government has granted 200 million yuan worth of subsidies to vulnerable and poor families in rural and urban areas.