China ups rice purchase price; aid to farm incomes

SHANGHAI, China - China plans to raise the minimum state purchasing price for rice, the government's planning agency said Saturday, aiming to boost farm incomes and encourage farmers to grow more grain.

The minimum purchasing price for rice will rise by an average of 16 percent this year, compared with an increase of 13 percent last year, the National Development and Reform Commission said in an announcement on its Web site.

The government has pledged to step up efforts to raise rural incomes, which have lagged behind those in the faster-growing cities.

Such moves have taken on fresh urgency as tens of millions of migrant workers return to their villages for the annual lunar new year holiday without having any jobs to return to thanks to the deepening impact of the global economic crisis.

The price increase is intended to "protect farmers' interests, maintain rational price levels, stimulate farmers' enthusiasm for grain growing and promote the stable development of grain growing," the NDRC statement said.

The statement said prices would rise by between 15.9 percent to 16.9 percent, with the lowest price paid in 2009 being 90 yuan ($13.15) for 50 kilograms (about 23 pounds).

The government earlier announced plans to raise the purchasing price for wheat by up to 15.3 percent this year.

The hike in the rice purchasing price was expected as state media had reported policymakers were preparing for it.

The government also announced that it has set aside 100 million yuan ($14.6 million) to help wheat farmers in areas stricken by drought, the official Xinhua News Agency reported.

The funds will go to farmers in a band of provinces stretching from Shandong, in the east, to Gansu in the northwest, where rainfall is up to 90 percent below average this winter, it said.

The report said the Ministry of Finance had ordered local governments to ensure the money would go only to anti-drought aid, reflecting concerns it might be diverted to other uses.

Meanwhile, China is relaxing controls on fertilizer prices, the NDRC said in a separate announcement. It said prices for both domestically produced fertilizer and imported fertilizer would be determined by the market.

The controls were imposed at a time when prices were surging due to inflation linked to soaring prices for crude oil and other inputs. Those pressures have eased in recent months.

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