Food stability key to inflation control

PUBLISHED : Saturday, 10 March, 2012, 12:00am
UPDATED : Saturday, 10 March, 2012, 12:00am


The Ministry of Agriculture expects grain output to decline this year and rural incomes to grow more slowly.

Agriculture Minister Han Changfu said yesterday that it would strive to keep grain output above 525 million tonnes and growth in rural incomes above 7.5 per cent. The mainland produced 570 million tonnes of grain last year and rural incomes grew by an average of 11.4 per cent.

Describing grain production as 'not [a task] to be negligent about', Han told a press conference in Beijing that higher production costs, unpredictable weather and uncertain market prices would make it difficult to lift output this year, especially after eight consecutive years of growth.

'Costs in labour, farming materials, machinery and land rent have all been rising. This has directly affected farmers' enthusiasm to grow crops,' Han said, adding that volatile prices for their produce would also discourage farmers from farming.

He said ensuring sufficient grain output was key to keeping inflation low. 'To stabilise consumer prices, ensuring adequate supply is the first thing,' he said. 'To ensure supply, agricultural production should be the top priority.'

In his work report, delivered to the annual National People's Congress session on Monday, Premier Wen Jiabao listed keeping consumer prices stable as an important task for the government this year. The central authorities asked provincial governors to take direct responsibility for grain production to make sure enough effort is put into the issue.

Two hundred major grain-producing counties, responsible for more than one-third of mainland grain output, were give rewards by the State Council in October to encourage production.

Achieving bigger growth in rural incomes would also be a challenge this year, Han warned, with many small and medium-sized enterprises experiencing deteriorating business conditions and being less likely to offer pay rises. The global economic downturn had 'directly affected exports, and most of our export products are produced by migrant workers', he explained.

Rural incomes have grown faster than urban incomes for two years, but the average annual income of rural residents is still low - just 6,977 yuan (HK$8,565) last year,

Han said the mainland was taking proactive measures to boost the cultivation of genetically modified (GM) crops to ensure there was stable food production.

'China is a big producer and consumer of agricultural products. Undoubtedly, we should have a share [in the global market] concerning agricultural hi-tech, including biological technology,' he said. The mainland issued safety certificates to one GM corn species and two GM rice species in 2009, but has banned commercial planting. Responding to safety concerns about GM crops, Han said his ministry would assess the safety and management of GM research.

Chen Mengshan, the ministry's chief economist, said the mainland was considering further opening its market to Taiwanese farm produce and further lowering tariffs.

The mainland axed duties on 16 types of produce, including bananas and oranges, from Taiwan at the start of the year and has lowered duties on two other types from 10 per cent to 5 per cent.