Grain price hike to farmers' best interest

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Last updated at: (Beijing Time) Wednesday, November 12, 2003

Grain price hike to farmers' best interest

Liu Tingqian, a farmer from a small village in central Hunan Province, goes to his town's grain station almost everyday to ask about the grain prices, just like a future trade market agent.

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Liu Tingqian, a farmer from a small village in central Hunan Province, goes to his town's grain station almost everyday to ask about the grain prices, just like a future trade market agent.

"If the grain prices maintain the current level, I will grow more paddies next year," Liu said while unloading a large bag of rice in front of the grain station of Donghutang Town of Ningxiang County.

"The prices have far exceeded my expectation," Liu said, wiping off sweat rolling down his cheeks.

For millions of peasants like Liu in China, there has certainly been good reason for eased nerves during the past months as prices of grain and other staple agricultural products have been on a steady rise for the first time in six years in this world's most populous country.

In Liu's town, rice can be sold for at least 1,080 yuan (130 USdollars) per ton while the prices for some high-quality varieties have topped 1,400 yuan (about 169 US dollars) per ton, 10 percent to 20 percent increase over the past years.

Though most of the province's 65 million-plus people are farmers, the number of peasants like Liu who live only by growing crops has fallen since 1997 when a relatively saturated market and dropping grain prices cooled down peasants' farming enthusiasm.

Many farmers, especially the younger generations, prefer to undertake manual jobs like washing cars, waiting on tables and cleaning houses in the booming cities rather than work the fields back in their hometowns, thus deserting a great number of lands.

To stabilize the situation in the countryside, China's central government ordered its major grain producers like Hunan to set higher "protective prices" than those on the market to buy farmers' surplus grain.

The special treatment was not enough, however, to cheer up farmers a year ago when grain prices witnessed a reduction for the sixth year in a row.

"It was hard to earn a cent as the grain prices dropped while the production costs increased a year ago," recalled 73-year-old farmer Zhong Zhenju, Liu's neighbor. "Few people still had an interest in growing rice then."

"I was sad to see those deserted fields choked with weeds," Zhong said.

The mood began to change for farmers like Zhong when experts estimated the global grain stockpiles might continue to dive in 2003.

The Chinese Ministry of Agriculture estimated that China's 2003 grain production will fall below 450 million tons, a 10-year record low.

Output reduction was also reported in the world's major grain producers of the United States, Canada, Australia and Europe in 2002. And the Food and Agriculture Organization of the United Nations lowered the world grain reserves recently, declaring a historical low.

As a result, prices of wheat and corn rose 17.6 percent and 11.5 percent recpectively on international markets.

The shrinkage of grain reserves and production was good news, not only for million of farmers like Liu and Zhong who had racked their brains seeking to sell their grain for years, but for the Chinese government which has long been plagued by how to increase income for its some 900 million farmers.

In northeast China's Heilongjiang Province, also one of China's major wheat and rice producers, the purchasing price for wheat hasreached 1,100 yuan (about 133 US dollars) per ton this month, an increase of 32 percent year on year.

In Jilin Province, the corn price has risen by 15 to 20 yuan (1.8 to 2.4 US dollars) per ton, while in the provinces of Shandong and Hebei, the corn price has soared by 50 to 70 yuan (6 to 8.3 USdollars) per ton this month.

Amid the rising grain prices, millions of Chinese peasants have regained their enthusiasm to grow crops, similar to the zeal once seen in the late 1970s and early 1980s when the household contracted responsibility system had enabled farmers to grow whatever they liked as the country moved from the old planned economy era towards a market economy.

Zhang Xiasheng, a farmer in Wenmingpu Town of Qiyang county, Hunan, lost no time to buy 65 kilograms of high-quality rice seeds immediately after he harvested his late paddy this fall. He prepared to increase the acreage of his rice fields by 50 percent next year.

Rice grain prices also fueled the once quiet rural grain marketin this central province as grain procurement enterprises began to move out of their awkward predicament during the past years.

"Our rice factory has to gear up the production since orders from Changsha and Xiangtan cities keep pouring in," said Su Fanping, head of the grain station of Huaminglou Town, Ningxiang county.

To buy more unprocessed grain from farmers, procurement teams have been sent out by Su's station to the farmers and bargained from house to house to buy as much grain as possible. In the past, the station only had to wait for the anxious farmers to come and sell their grain.

"Now it is completely a seller's market," said Luo Jimin, whose Tianlong Rice Company in Qiyang county processes and sells an average 80,000 tons of rice every year, and he is considering expanding his rice growing base to 33,333 hectares in 2004 from the current 13,333 hectares.

China's agriculture observers, including famous agronomist Yuan Longping, initiator of the cultivation of Chinese hybrid rice, were jubilant about the rising grain prices.

Yuan said the central government's plan to restructure agriculture was misunderstood by some local governments as meaning to reduce the grain planting acreage.

"This is the major cause of China's falling grain output for six straight years," said Yuan, who is also academician of the Chinese Academy of Engineering.

"To peasants, it is absolutely bullish news for grain prices topick up," he said. "I hope the central government will grasp this opportunity to better protect peasants' enthusiasm in farming."

Market analysts contend the rising grain prices should come much earlier.

"The grain prices had been long underestimated in China for years," said He Jianwen, deputy director of Ningxiang County Grain Bureau, Hunan Province.

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