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The bumper summer harvest looming on the horizon largely lessens domestic anxiety about the fall of grain output in recent years.
More importantly, it provides a timely boost to the country's grain market liberalization.
Surveys by the Ministry of Agriculture indicate an increase in summer grain output for the first time in four years. It is estimated that wheat yield per hectare will be at least 150 kilograms more than last year, raising total wheat output by 2.5 million tons.
Such a forecast assures policy-makers that measures to stimulate grain production have been successful.
It could be argued the country's accelerated urbanization and massive conversion of cultivated land to forestry and pasture over the past few years contributed to the decline in grain output -- from a record high of 512 million tons in 1998 to 435 million tons in 2003.
That decrease alerted authorities to the possibility of a grain supply shortage.
To drive home a sense of urgency, tough measures were implemented to check the disorderly and unauthorized acquisition of farmland. Preferential policies have been worked out to make crop growth more attractive for farmers.
Summer grain accounts for nearly a quarter of China's total grain production. The summer harvest is sufficient to buoy the output expectation of 455 million tons of grain in 2004.
While encouraged by the good news of a bumper crop, farmers need to be assured of a profitable price. It is crucial to translate the improved harvest into a better financial return for China's grain growers.
Inadequate supply has hiked grain prices twice since late last year. As a result, farmers' net per capita income has jumped by 9.2 percent over the same period last year, the highest rise since 1996.
However, past bitter memories remind us that farmers' gains from bumper harvests are particularly vulnerable to falling prices. In this sense, the coming summer harvest spells only mixed news for farmers.
The government certainly has a lot to do to help farmers address the issue.
The difficulties policy-makers must contend with in riding the market trend in a nation of 1.3 billion residents must be taken into consideration, particularly when the nation is undergoing a drastic transition from central planning to a market economy.
Fortunately, the government has finally realized it is better to let the market have the final word.
The new regulations on grain circulation management that the State Council issued on June 3 mark a decisive step toward establishing a unified, open and competitive grain market.
Only when the market signals the real supply-demand information via changing prices can farmers adjust their grain production accordingly to their best interest.
If grain was in short supply, it would be difficult to loosen state enterprises' tight grip on the grain market.
Fortunately, the bountiful summer harvest will provide a welcome opportunity to press ahead with key grain sector reforms.
(China Daily June 9, 2004)
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