Chinese farmers are receiving ever stronger assurances from both the market and policy-makers that they can become better off from increasing their grain production.

In addition to grain price hikes since mid-October, farmers are expecting to benefit from the government's massive capital input into rural regions, plus agricultural tax cuts this year as promised at the ongoing session of the National People's Congress.

Now, the State Council has reiterated plans to strengthen China's grain production capacity by urging local governments to conscientiously subsidize grain producers and relay to farmers a message that grain production will be encouraged in a "more direct and effective way."

The message from a recent State Council meeting, carried in major Chinese newspapers Wednesday, did not come in detail.

But a reliable source said a record 150 billion yuan (US$18 billion) is expected to be spent on a move to fire up the zeal of farmers for better grain production, to improve rural infrastructure and ensure the country's food security this year.

The figure represents a jump of 30 billion yuan (US$3.6 billion) over last year, according to sources with the Office of Financial and Economic Leading Group of the Communist Party of China Central Committee.

"That means an average of 166 yuan (US$20) per person among 900 million rural people," Xinhua quoted Office Director Wan Baorui as saying.

Although reduced planting areas have been often cited as a major reason for downturn in Chinese grain output over the past few years, the flagging interest of many farmers in grain production due to undesirable returns is also a contributor, experts said.

China's grain output dropped by 5.8 percent from 2002 to reach 430.65 million tons last year. The figure is expected to rise to 455 million tons in 2004, a key year for recovering grain production and to avert the detrimental reverse of the supply-demand relationship, Minister of Agriculture Du Qinglin said earlier.

"To rekindle farmers' grain production enthusiasm, we're making sure that farmers' benefits from supporting fiscal spending and from sales of farm produce -- whose prices rose substantially last year -- will not be dented by irrational rises in the production costs," said Yang Jian.

The costs refer mainly to farmers' expense in purchasing agricultural production materials, said Yang, director of the Planning Department of the Ministry of Agriculture.

In Anhui Province, a major grain producer, grain prices surged by 20 percent last year. However, the incremental pace failed to match that of fertilizers and diesel oil. Price of carbamide, for example, has grown by nearly 30 percent over the past few months, local agricultural department statistics indicate.

The State Development and Reform Commission has already sent supervision delegations to major grain producing provinces including Heilongjiang in Northeast China and Shandong in East China to ensure a rational fertilizer supply is maintained, a commission official confirmed Wednesday.

(China Daily March 11, 2004)