October 21, 2008

China Raises Grain Purchase Price

China will increase its minimum purchase price for wheat by up to 15.3 percent from next year as part of its plan to boost grain output and raise rural income.

The decision by the National Development and Reform Commission, the country's main economic planning agency, is expected to encourage farmers to increase output, critical in a country of 1.3 billion that relies mostly on domestic supply for food, Xinhua reported.

Under the new policy, the government's minimum purchasing price for white wheat will go up 13 percent to 87 yuan, or about $0.13 per 500 grams or about 1.1 pounds. The price for red and mixed wheat will go up 15.3 percent to 83 yuan or about $0.12 per 500 grams, the report said.

Purchase price of rice is also expected to go up next year but the agency did not give details.

The NDRC promised additional subsidies for agricultural production materials, machinery and crop seeds and planned to increase reserves of fertilizer to ensure supply and price stability, the report said.

Current estimates say China's grain output this year should be 511.5 million tons, up 10 million tons from last year.