China gives more farm subsidies to cool inflation

March 26th, 2008 - 9:35 pm ICT by admin  

Beijing, March 26 (Xinhua) China promised Wednesday to increase financial support to agricultural produce as part of efforts to rein spiralling inflation blamed on food shortages. “Reinforcing agriculture has a pivotal role in maintaining sound and fast economic development, curbing inflation and safeguarding stability,” the State Council, or the cabinet, said in a statement.

The cabinet agreed at a meeting chaired by premier Wen Jiabao that China would “immediately” increase the subsidies for farmers’ on inputs and seeds, and raise the government’s purchasing prices of grain.

The move was meant to “mobilize the initiative of farmers to plant crops and ensure an adequate supply of agricultural and sideline products,” it said.

The announcement added to a string of efforts to end shortages of pork, China’s staple meat, and other basic commodities that pushed the inflation rate to a near 12-year high of 8.7 percent in February.

Pork production fell dramatically last summer on breeders’ dampened enthusiasm due to rising feed costs in addition to a massive pig cull after the outbreak of blue-ear disease in some regions.

The unusually harsh winter weather also dealt a serious blow to vegetable and rapeseed crops in many areas and killed many pigs and chickens.

The central government’s budget earmarked for agriculture, farmers and rural areas reached 562.5 billion yuan ($79.2 billion) this year, 130.7 billion yuan more than in 2007, according to the government work report released by Wen earlier this month.

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