China Raises Rice Prices to Boost Grain Output

BEIJING, Jan.24 (Xinhua) -- China's top economic planner said Saturday it would raise the minimum state purchasing prices for rice in major rice-producing areas by as much as 16.9 percent this year.

The move was aimed at protecting farmers' interests, keeping grain prices stable and boosting grain output as grain growers had experienced higher costs since last year, according to the National Development and Reform Commission (NDRC).

The state purchasing prices for japonica rice will rise 15.9 percent to 1900 yuan (280 U.S. dollars) per ton this year, according to the NDRC.

In addition, prices for early and late indica rice will be 16.9percent and 16.5 percent higher respectively to 1800 yuan and 1840yuan per ton.

It was the biggest increase in grain purchasing prices since 2004, said Ding Jie, an official with the NDRC's price department.

In 2004, China started the practice of buying grains from farmers at a state-set minimum price when market prices drop below the protective price level in order to encourage grain production.

Saturday's announcement came before Chinese farmers kick off the spring planting season, as the government tried to prevent the grain growers' enthusiasm from being eroded by higher costs of fertilizers and other production materials.

Statistics from the Ministry of Agriculture show December fertilizer prices, except urea, rose more than 20 percent from a year earlier. Diesel for farm use was 5.8 percent higher year-on-year.

The NDRC already hiked the minimum purchasing price for wheat by as much as 15.3 percent starting this year. It raised the purchasing prices for wheat and rice twice last year.

With a population of more than 1.3 billion, China relies mainly on domestic production for food and targets grain output of more than 540 million tons by 2020.

China's grain output rose 5.4 percent year-on-year to a record 528.5 million tons in 2008, official data show.

State-owned enterprises purchased 170 million tons of grains from farmers in 2008, said Nie Zhenbang, director of the State Administration of Grain, earlier this month.

That move, together with higher purchasing prices, resulted in a revenue increase of more than 50 billion yuan (7.4 billion U.S. dollars) for the whole country's farmers, said Nie.