A bumper harvest and rising food prices should, in theory, help narrow the income gap between the urban and rural population. Yet, a 7-percent increase in farmers' net income this year will not be enough to stop that gap from widening.
Policymakers who are fixated on high inflation should devote more efforts to speed up income growth for farmers.
The agricultural authorities announced recently that China would produce more than 500 billion kg of grain in 2007, the fourth consecutive year of yield growth. Meanwhile, food prices have soared 18.2 percent, driving the nation's consumer price index to an 11 year-high of 6.9 percent in November.
Under such circumstances, it is natural to expect a handsome rise in farmers' income. But the agricultural authorities' forecast put farmers' annual per-capita net income growth at only 7 percent.
Such an increase, in itself, continues the momentum of income growth for farmers. Net income among the rural population rose by more than 6 percent in each of the past three years, a record since 1985.
Nevertheless, it falls further behind income growth for urban residents as the later keeps picking up steam. After seeing an increase of 10.4 percent in real terms after adjusting for inflation last year, urban per capita disposable income surged 13.2 percent in the first three quarters this year.
The gap in the income growth rates has led a yawning wealth disparity between urban and rural population. The income of urban residents in 2006 was 3.28 times that of rural ones, up from 3.22 in 2005 and 3. 21 in 2004. It is a pity that in such a year of bumper harvests and price gains for farm produce, the urban-rural income gap has not been narrowed.
The bitter fact highlights the complexity and urgency of the task to raise farmers' income.
At the annual central rural work conference, the authorities made it a major task to facilitate a sustained income growth for farmers next year.
However, given the priority the government has attached to fighting serious inflation, policymakers will have to weigh very carefully the benefit of higher grain prices for farmers against the necessity to rein in overall price hikes.
To raise farmers' real net income, on one hand, the government may need to provide more fiscal support to better cushion poor urban families against higher food prices. On the other hand, it should also take measures to prevent production costs for farming from rising too fast.
(China Daily December 26, 2007)