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Grain Prices Surge for First Time in 6 Years

China has, for the first time in the past six years, seen its grain prices soaring on the whole this year, which signified a vital change in domestic food supplies and demands.

Official statistics show that recent prices for paddy rice in east China's Anhui Province reached 1,050 yuan per ton, up 80 to 120 yuan over the same period last year. The purchase price for wheat in northeast China's Heilongjiang Province rose by 32 percent to 1,100 yuan per ton. The maize price in Hebei and Shandong provinces also went up by 50 to 70 yuan per ton.

The rise in grain prices also drove up the prices of edible oil, forage and other finished products, statistics show.

The soaring prices, indicating an end to the long-term grain oversupply, have brought gloomy farmers a bright prospect for grain sales, says experts, who believe the downslide in grain production has resulted in price rebounding.

The price fluctuation and reverse in the supply-and-demand relationship are believed an inevitable consequence of China's grain production conditions in recent years. China launched a campaign of readjusting agricultural structures at the beginning of 2000, lowering its target for agricultural output.

The government hoped that it would enable agricultural production to meet market demand, as crop harvests over the years had brought the country's store of grain, cotton and other key products to record highs and led to an oversupply in the market, pulling down prices and slow growth of farmers' income.

Government-protected prices for grain purchasing were abandoned and farmers were encouraged to expand products that are well received on the market.

Experts point out that rural economic reform does not mean China should loosen up on grain production. It is calculated that China's population will increase from the current 1.3 billion to 1.6 billion by 2030, which will enhance grain demand to great extent.

Under such circumstances, the Chinese government remains sober on this point and calls on localities to preserve grain production capacity to prepare for emergencies.

The decline in grain production and soaring wheat prices in the United States, Canada and Australia last year also had impact on China's grain market, experts say.

They propose that local governments grab the opportunity of price rises to improve relevant policies which seek to facilitate the balance of food supply and demand, strengthen farmland protection, and increase investment in the industrialization and modernization of grain production.

China has already taken specific moves, planning to create 2.74 million hectares of farmland by 2010 through developing lands scattered around villages and reclamation of abandoned mining and construction sites, according to China's Land and Resources Ministry.

(Xinhua News Agency October 23, 2003)

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