Suburban farms plan to fight food price rises

PUBLISHED : Thursday, 23 December, 2010, 12:00am
UPDATED : Thursday, 23 December, 2010, 12:00am

Beijing will increase farm production bases in key city suburbs over the next five years to offset the rising price of agricultural products, which coupled with a long supply chain have pushed up inflation recently.

At an annual rural work conference that ended in the capital yesterday, policymakers decided to improve food supply capabilities on the outskirts of its four municipalities, provincial capitals and some other big cities.

Five regions - home to 800 grain production counties and 44 locations growing bulk products such as cotton, sugar and hogs - would also see huge investment to push forward a modern agricultural system, state media reported.

Chen Xiwen , head of the State Council's rural policy office, wrote in Caijing Magazine's year-end issue that the growth of cities should be blamed for the recent price rises in some fresh agricultural products.

'As cities expand, a great amount of land in the suburbs is occupied. Agricultural production bases are forced to move farther from key consumer markets,' he wrote.

At the two-day conference, policymakers decided to greatly increase investment in agriculture and rural development, China Central Television reported. The central government spent 828 billion yuan (HK$965 billion) this year - up from an originally budgeted 818 billion yuan.

Despite continuous growth in grain output in the past seven years, Chen warned that the level was difficult to sustain, as productivity has increasingly concentrated in the drier northern provinces.

Last year 13 key grain production provinces, most of which can be found in the north, contributed 77 per cent of the country's total grain output.

The mainland is also facing tight supply of some key commodities, including corn, cotton and sugar. In a statement posted on its website yesterday, the Ministry of Commerce said China would increase imports of sugar and meat, among other daily necessities, next year to replenish national reserves.

The government's general guideline for rural work next year includes improvements in irrigation, food supply, farmers' income and urban-rural integration.

Poor irrigation has been blamed for worsening the severe drought, which slashed agricultural production in parts of the south earlier this year.

Experts said farmers, with their limited farming income, had been reluctant to invest in irrigation, while the government has been focusing solely on grant projects.

'Like the price spike in foods, which occur at the end of the supply chain, the problem in irrigation lies in the terminal tips of the irrigation system - those small ponds and ditches in villages,' said Xie Yang , the deputy director of the rural economic institute under the Development Research Centre of the State Council.

Arable land accounts for just 12.5 per cent of the nation's total area. Compared with remote villages, the outskirts of towns and counties have better irrigation systems, but farmland in these areas is the first to disappear as urbanisation spreads.

A big part of the increased investment next year would go to irrigation facilities in villages, Xie said.

'But how to generate farmers' enthusiasm and guarantee effective use of the money is still a problem.'

The conference expected Chinese farmer's average annual income to grow by 10 per cent to 5,800 yuan this year.

Land allotment

The amount originally budgeted by the central government for agricultural and rural development, in yuan: 818b yuan