The central government will continue to raise the minimum purchasing price of grain in order to increase farmers' incomes this year, according to a source close to policy makers, the China Business News reported on January 16.

In the midst of the economic downturn, farmers have been hit harder than urban residents. Although farmers have seen their incomes increase over the last five years, the growth rate still lags far behind their urban counterparts.

The Ministry of Agriculture said in a latest report that average urban income was 3.36 times as much as average rural income in 2008, with the annual income disparity widening to over 10,000 yuan (US$ 1,470), the biggest divide ever recorded. Adjusted for inflation, income for rural residents grew by 9.5 percent in 2007, the fastest pace since 1985. That still fell short of the 12.2 percent increase in urban incomes, meaning that the urban-rural income gap continued to widen.

The report acknowledged that it will be more difficult to maintain the pace of growth in rural incomes this year because the market price of grain is set at a lower level. Agricultural produce is the farmers' lifeline, so prices are their major concern.

"At the peak of the market, garlic grown in Henan Province was selling at 1 yuan (US$ 0.15) per half-kilogram, but currently the price is only 0.1 yuan," the source said. "Grains, vegetables, fruits, all of these are very cheap."

On the other hand, the news from the jobs market is bad. There are fewer opportunities available for farmers who want to seek a living in the cities. The financial crisis has led to the closure of many factories in the coastal regions, forcing laborers to scramble for other jobs or return home to the countryside.

Yao Jingyuan, chief economist of the National Bureau of Statistics (NBS), said that about 6.5 percent of migrant workers - 7 to 8 million people - have headed home, according to a NBS survey based on data gathered from five major labor-exporting provinces. Moreover, the situation will be worse from after the Spring Festival until May and June this year.

Those problems arising from the slowdown have stirred anxiety in the country's top leadership. At a conference at the end of last year, the central government announced that it was poised to take measures to improve the sales price of grain and increase reserves of staple farm products in order to reverse the trend. The source revealed that the government will raise the price to a much higher level than expected.

Fearing that the price increase will put extra pressure on the life of city-dwellers, the government will consider granting subsidies to low-income urban residents.

To create more jobs for the farmers, the Ministry of Agriculture plans to promote the food-processing industry, encourage the development of township enterprises, and invest more in irrigation and infrastructure to further improve the rural economy.

In addition, the government is mulling over a draft that encourages the industrial east coast of China to shift gears by moving factories into the smaller towns of central and western China, as a move to develop economic activity through which farmers can find work without leaving home.

(China.org.cn by He Shan, January 16, 2009)