He told a national conference on grain that the establishment of a free market price system would be speeded up in its major markets.

Such regions include East China's Zhejiang Province, Jiangsu Province, Fujian Province and Shanghai Municipality, South China's Hainan Province and Guangdong Province, and North China's Beijing and Tianjin municipalities.

Wen said it was a "necessary step" towards pushing forward the reform and it is also expected to help speed up the restructuring of agriculture and enhance the competitiveness of Chinese farm products.

Currently, farmers are required to sell their crops only to State-owned grain businesses at a protective price, which is normally higher than the market price.

In addition, the provincial grain reserve system should be improved with each province establishing its own grain inventory to last six months.

The reform should be conducted on the premise of guaranteeing the stability of the market, Wen explained.

Major grain production areas - mainly in Central China - would be given preferential treatment in establishing granaries and getting risk capital.

More funds would be poured in to upgrade agricultural facilities in these regions to improve grain production capacity.

Another step of the reform would be the strengthening of the decision-making power of local governments.

According to Wen, provincial governors would take full charge of grain distribution system reforms in each province, municipality and autonomous region, while the central government would exercises macro-adjustment and control.

Measures of macro-adjustment and control include establishing risk funds for grain production, improving the current grain reserve system and perfecting grain market systems.

The State grain inventory, which stands at about 250 million tons, will be further increased to deal with possible price fluctuations.

According to the vice-premier, the grain distribution system reform has made remarkable progress.

In 1998, with grain supply exceeding demand and the grain price plummeting, China's cabinet launched the reform aiming at protecting the interests of the country's 900 million farmers.

According to Wen, the reform has benefited the rural population as well as State-owned grain purchase and sales enterprises.

The reform has also triggered the country's agricultural restructuring, and has given considerable help to the promotion of economic development and the maintenance of social stability.

(China Daily 08/22/2001)