Regulation and Policy 

Grain Purchase Prices Lowered (September 1, 1999) 

Procurement prices for wheat and early indica rice have been significantly reduced in China, as a major step to phase out shoddy or unmarketable grain strains.   

Henan and Shandong provinces in east and central China have slashed wheat purchase prices by 16.4 percent from 1997 levels to 1.27 RMB (0.15 US dollars) per kilogram this year.  Inferior strains of early indica rice in south China have been marketed at prices below production cost, according to statistics from the State Development Planning Commission. 

Market analysts said that some low-quality grain varieties, which do not sell well, fill storage facilities, but farmers in many regions are still churning them out. 

To guide farmers towards optimizing their crop-growing mixes and to produce more high-quality crops, China will remove some of the inferior grain strains from the long-standing "State protective price list" in 2000. 

Grains affected include spring wheat in northeast China, wheat from areas south of the Yangtze River, and indica rice in south China. 

Beginning from this year, the State will purchase grain varieties at lower protective prices. "Protective prices for wheat and indica rice in most areas are about 62 RMB and 50 RMB per 50 kilograms," said Wang Zhaoyang, an official of the SDPC's farm produce division. 

The price gap between different qualities of grain strains increased, according to Wang.  

China planted 7.6 million hectares of early rice this year, with an area dedicated to high-quality strains increasing by 530,000 hectares to 2.8 million hectares. Acreage used for higher grade wheat varieties increased to 2.7 million hectares this year, and the country's summer grain output rose by 4.7 percent over last year's to 118.49 million tons.