China's grain circulation enterprises shrugged off losses to reap unprecedented profits last year, the first in the past 46 years.

Overall net profits of the nation's grains enterprises hit a historic 167 million yuan (23.194 million U.S. dollars) last year, Xinhua learned from the State Administration of Grains (SAG) on Sunday. In 2006, those companies suffered a 2.97 billion yuan loss.

Grain companies in 17 provinces including Jiangsu, Shandong and Henan earned handsome profits while those in other areas trimmed their losses, according to SAG.

The first-ever profit surplus was believed to be a result of effective government measures backed by the minimum purchasing price schemes, which aims to protect the interests of both farmers and grain trading companies.

Rising grain prices also drive up the profit. Last year the minimum purchasing price for wheat and rice stood at 69 to 72 yuan and 70 to 75 yuan for every 50 kilograms, respectively.

China's National Development and Reform Commission (NDRC) announced Friday that the minimum purchasing price for wheat and rice in 2008 will be raised slightly

The minimum purchasing price for different types of rice ranges from 75 yuan (about 10.4 U.S. dollars) to 79 yuan per 50 kilograms; while that for wheat ranges between 70 yuan and 75 yuan.

Volatile price fluctuation still plagued the industry despite the profits, according to sources with SAG, while limited access to bank loans, rising interest rates and lack of competence hamper the enterprises' development.

The grain watchdog said the country produced 501.5 million tons of grain in 2007, the fourth consecutive year of increase despite months of severe drought. The year ended with a relatively high level of grain reserves.

Snowstorms that started to hit southern China in mid January, however, have taken a limited toll on grain output as most winter grain crops were planted in the north.

But Agriculture Minister Sun Zhengcai said the output still failed to meet domestic demand for the year.

Official statistics show that over the past decade, Chinese per-capita grain supply decreased from 412 kg in 1996 to 378 kg in2006.

China's consumer price index (CPI) rose 4.8 percent in 2007, with the prices of grains, such as soybean, reaching a record high.

The government also took a series of measures to rein in price increases. These included injecting state grain reserves into the market and promoting sales of grain purchased at minimum prices from farmers.

"The prices of agriculture products should be kept at a reasonable level, which would ensure that farmers get enough profits, and at the same time remain affordable to consumers," said Chen Xiwen, a leading agricultural policy decision maker.

(Xinhua News Agency February 11, 2008)