This shortage was said to be aggravated by the problem of triangular debts among enterprises.

In addition, local authorities were illegally using funds for industrial and commercial projects.

Meanwhile, farmers in some areas are again having to deal with excessive financial burdens as local authorities refuse to cut their levies.

Their interests have also been undermined by the rising prices of production materials like chemical fertilisers, the investigation showed.

The inspection team visited Hebei, Henan, Liaoning, Jinan, Zhejiang, Fujian, Sichuan, Guizhou, Shaanxi and Gansu.

After leaders learned of the probe's results, they warned local authorities to seriously implement government orders to strengthen the farming sector.

'The agricultural policy has to be carried out, put into effect and further fulfilled to ensure a sustained and steady development of the farming and rural economy,' they were quoted as saying by the official China News Service yesterday.

Vice-Premier Jiang Chunyun urged local officials to deal with the problems.

Other issues like the promotion of modern technology and the problems of farmers in poverty-stricken areas have still to be dealt with, despite various efforts, said Mr Jiang.

Officials should work harder in the next few months to ensure a good grain harvest this year, he added.

Meanwhile, a senior member of the Government's farming think-tank urged the state to reform agricultural taxation.

Professor Chen Xiwen, director of the Department of Rural Development under the State Council's Development Research Centre, yesterday noted that by increasing taxes on sideline products and rural enterprises, local governments could budget properly and stop asking peasants for extra levies.

Extravagant projects must end, said Professor Chen.

He also called on the state to strictly control the misuse of arable land and bring more barren hills under cultivation to increase grain production in the next five years.

Professor Chen said the country's grain yield has been undermined by the shrinkage of farmland, inadequate irrigation facilities and the failure to use modern technology.

And he added that if the country was to achieve the production target of 500 million tonnes a year by the end of Ninth Five-Year Plan (1996-2000), the Government would have to deal with such problems.

The abuse of arable land is particularly serious in coastal provinces like Guangdong and Zhejiang, where officials have used it for industrial and commercial projects to provide faster returns.

It is estimated that some 400,000 hectares of workable farmland were lost nationwide last year.