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China fuels agriculture to cool inflation
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China promised on Wednesday to increase financial support for agricultural production as part of a larger effort to cool an inflation surge blamed on food shortages.

"Reinforcing agriculture has a pivotal role in maintaining sound and fast economic development, curbing inflation and safeguarding stability," the State Council, or the Cabinet, said in a statement.

The Cabinet agreed in an executive meeting chaired by Premier Wen Jiabao that China would "immediately" increase the subsidies for farmers' purchase of production materials and seeds, and raise the government's purchasing prices of grain.

The move was meant to "mobilize the initiative of farmers to plant crops and ensure an adequate supply of agricultural and sideline products," it said.

The announcement added to a string of efforts to end shortages of pork, China's staple meat, and other basic commodities that pushed the inflation rate to a near 12-year high of 8.7 percent in February.

Pork production fell dramatically last summer on breeders' dampened enthusiasm due to rising feed costs in addition to a massive pig cull after the outbreak of blue-ear disease in some regions.

The unusually harsh winter weather also dealt a serious blow to vegetable and rapeseed crops in many areas and killed many pigs and chickens.

The central government's budget earmarked for agriculture, farmers and rural areas reached 562.5 billion yuan ($79.2 billion) this year, 130.7 billion yuan more than in 2007, according to the government work report delivered by Wen earlier this month.

The sum included a subsidy of 48.2 billion yuan for production materials purchase, 4 billion yuan for farm tools and 7.07 billion yuan for seed.

(Xinhua News Agency March 27, 2008)

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