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Chinese farmers prepare for spring farming amid rising costs

Xinhua, March 20, 2011

In spite of the fact that snow still covers his farmland, Jiang Chen has been busy stocking fertilizers and seeds to prepare for the coming spring farming season.

"I am almost ready for the sowing," said Jiang, a 64-year-old peasant who farms five hectares of cropland in Liujia Township in Yushu City, northeast China's Jilin Province. "But the costs are rising so I still want to look for better seeds providing a higher yield this year."

As the Chinese government continued policies to assure a good grain harvest this year, millions of farmers like Jiang in China's major grain-producing regions such as Jilin, Heilongjiang, Shandong and Henan provinces are now gearing up to finalize preparations for the coming sowing season.

The central government's incentives in 2011 include increases in minimum rice purchase prices by 9.7 percent to 21.9 percent from last year, as well as 24.9 billion yuan (about 3.77 billion U.S. dollars) in subsidies to the national grain risk fund for farmers.

"Though farmers are richer now than before, our economic strength remains relatively weak as compared with urban residents," Jiang said.

He noted that he was considering investing less this year because the cost of agricultural production has increased year after year.

The average urea price from manufacturers and retailers rose about 10 percent from last year to about 1,980 yuan and 2,100 yuan per tonne at a grain and oil wholesale market near Yuquan Road in Beijing, where many farmers from neighboring Hebei, Henan and Shandong provinces buy agricultural fertilizers and additives.

Urea is the primary fertilizer used by Chinese grain growers, though many of the farmers said that they would reduce the use the compound in their fields due to rising prices and the impact on wheat caused by the widespread drought in north China this winter.

Wang Quan, the president of China National Agricultural Means of Production Group Corp., the country's largest supplier of agricultural materials, predicted that the use of urea during the spring farming season would be between 20 million tonnes to 25 million tonnes, which is about two fifths of the year's total.

Wang said that the urea price is around 400 U.S. dollars per tonne in global markets, or 15.7 percent higher than the domestic price.

"I think it takes time for Chinese farmers to accept the price hikes gradually," he added.

Analysts say that the different perceptions on urea prices between manufacturers and farmers may have affected China's crops because the reduced use of fertilizers usually mean less grain output in the country since many farmers depend more on fertilizers, rather than technology to boost production.

China's grain output rose 2.9 percent last year to 546.41 million tonnes, marking the seventh consecutive year of growth. The country aims to keep its 2011 grain production over 500 million tonnes, according to an executive meeting of the State Council, or the Cabinet, Thursday.

Chinese Premier Wen Jiabao said last month that rising costs of grain production, the lingering drought in north China's major wheat-growing regions and the weakening of agricultural production in some areas would directly affect China's summer grain output.

Facing challenges such as higher costs for growing grain, Jiang believed that he could generate higher income from his crops this year with the support of the agricultural sector by the government.

"If the grain prices also rise this year, I can still earn a net income of 10,000 yuan for every hectare of farmland," Jiang said.

"I hope to keep my farmland from being seized for industrial or residential development," he added.