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Grain costs stable despite dry fields

By Tan Yingzi (China Daily)
Updated: 2009-02-13 08:12

China's grain prices will remain stable, even as the worst drought in half a century parches the country's major breadbasket, the vice-minister of agriculture said yesterday.

The combined efforts of the government and farmers slashed the area of drought-afflicted farmland among eight provinces by nearly a quarter from Feb 7 to Feb 11, Ministry of Agriculture figures showed.

Related readings:  Official: grain security sound despite drought  Jilin details plans to up grain output  China adds 292 million tons to grain reserve in 2008  Major grain-yielding province to up output by a quarter

But the drought persists in nearly 40 percent of wheat fields in the most affected provinces, including Hebei, Shanxi, Anhui, Jiangsu, Henan, Shandong, Shaanxi and Gansu.

"There has been no major fluctuation in grain prices despite the severity of the drought," vice-minister of agriculture Wei Chao'an told a press conference.

The ministry's monitoring of 160 national price-network stations found average grain prices increased by 0.44 percent over January to reach 1.72 yuan ($0.25) per kg. Wheat and corn prices have remained stable, while the cost of rice has increased by 0.91 percent during the period.

"Considering the Spring Festival holiday's influence, China's grain prices held steady overall, and the price inflation is lower than the same period of last year," Wei said.

China's grain supply and reserve remains sufficient, thanks to good harvests over the past five years, he added.

"We believe the current drought will not lead to a rapid increase in grain prices or affect our country's food safety," the vice-minister said.

But drought relief work has largely increased farmers' production costs.

Greater investment had to be made for water, fertilizer, electricity and farming machinery, he said.

In addition to the central government's 400 million yuan subsidy to counter the drought, it has expedited issuance of an 86.7 billion yuan subsidy for agricultural materials and grain production.

Local governments will receive the subsidy from the central government a month earlier than scheduled in order to alleviate drought woes.

In addition, the subsidy fund for farmers' purchases of farming machinery has increased to 10 billion yuan from last year's 4 billion yuan.

As of Wednesday, the eight most parched provinces also poured 2.57 billion yuan into drought relief, the ministry said.

"I have spoken with some farmers during my trip to Hebei province, and they have shown great enthusiasm for fighting the drought," Wei said.

"There is still great potential for a good summer harvest if we boost efforts to overcome the drought and minimize losses."