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ADBC to loan US$6.93b to ensure wheat purchasing

(Xinhua)
Updated: 2007-06-04 08:47

Agricultural Development Bank of China (ADBC) will loan 53 billion yuan (US$6.93 billion) to six provinces to ensure the minimum purchasing price for wheat, the bank said?in Beijing?Sunday.

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The minimum purchasing price for main crops, started in 2006, is designed to provide a reasonable price level for protection of farmers' interests.

The loans cover six provinces of Hebei, Jiangsu, Anhui, Shandong, Henan and Hubei, which are China's major wheat-producing regions. When the market price is lower than the minimum price, entrusted enterprises will purchase wheat at the minimum price, the ADBC said.

The lowest price for white wheat is fixed at 72 yuan per 50 kilograms, and 69 yuan for red wheat, the country's top economic plannerNational Development and Reform Commissionsaid earlier.

China's wheat production will nudge up a little this year as its planting area has increased slightly, according to the bank.

However, China National Grain and Oils Information Center predicted in its monthly update in May that the country's wheat output will go down by 2.53 percentyear on yearto 101.8 million tons even if the weather turns favorable in the drought-hit areas.

Given the government's massive grain reserve, analysts said the drop will not result in a grain shortfall or drastic price hikes.

Summer crops normally make up 20 percent of China's annual grain output which has grown for three straight years since 2003 to 497.46 million tons last year, up 2.8 percent or 13.44 million tons from 2005.