High Crop Yields Will Help Tame Inflation

China will continue boosting agricultural production to prevent increasing food prices from driving up the country's inflation rate and putting downward pressure on economic growth.

"The government's economic regulations are faced with pressure from an economic slowdown and rebounding food prices," Agriculture Minister Han Changfu said at a news briefing during the National People's Congress in Beijing on Friday.

China's annual inflation accelerated by 5.4 percent in 2011. In February, though, the figure had eased to a 20-month low of 3.2 percent from a year before, according to the National Bureau of Statistics.

When delivering the government work report on Monday, Premier Wen Jiabao set the country's inflation target at 4 percent for 2012.

"We will increase agricultural production and ensure supply and continue to make controlling excessive rises in food prices a priority in stabilizing prices," Wen said.

The central government plans this year to allocate about 1.2 trillion yuan (US$192 billion) to developing the agricultural industry and the country's rural areas and to improving farmers' livelihoods, Wen said. That number had increased by 186.8 billion yuan from last year.

Chinese farmers have increased grain output for eight years in a row. In 2011, the country's grain output increased by 4.5 percent from a year before to hit a record of 571 million tons, an amount that already meets the government's 2020 output target for grain, according to the statistics bureau.

Uncertain weather and market conditions and rising agricultural input costs are the biggest obstacles that might prevent the country from having another bumper harvest, Han said.

Despite the greater production, a sharp increase in imports of farm products in recent years has left the government feeling uneasy.

The value of China's agricultural trade, the third largest in the world, jumped by 27.6 percent from last year to hit US$156 billion in 2011, according to the Ministry of Agriculture. Farm products imports increased by 30.8 percent from the previous year to reach US$94.9 billion and the value of exports increased by 23 percent to hit US$60.8 billion, the ministry said.

As a result, the country's deficit for agricultural trade increased by 47.4 percent from the year before to reach US$34.1 billion in 2011, official data showed.

To ensure it has a secure food supply, China has long said 90 percent of the grain it uses should be grown within the country. But Ministry of Agriculture data show that China imported 10.7 percent of all the grain it consumed in 2011.

"If the amount keeps increasing, our national grain security will be compromised," said Chen Xiwen, director of the office for the Communist Party of China Central Committee's Leading Group on Rural Work.

Han said the government will develop agricultural technologies and increase farmers' subsidies to boost production and wean the country off its reliance on the international food market.

More than half of the increases in grain output seen in 2011 were achieved through the use of agricultural technology, Han said. "We will accelerate the extension and development of agricultural technologies in the rural area."

Ren Zhenglong, a member of the NPC Agriculture and Rural Affairs Committee from Southwest China's Sichuan province, said agricultural technology can improve both food production and food safety.

"Agricultural technologies have raised wheat production in Sichuan province, while reducing farmers' use of pesticides," he said. "So food safety risks were also reduced."

Minister Han also said the ministry will try to raise farmers' incomes by 7.5 percent from last year.

But some agricultural experts said the government should continue improving its means of subsidizing farmers.

Given the rising costs of agricultural inputs such as labor and chemicals, "the current subsidies for farmers are still not enough," said Yuan Longping, an eminent Chinese agricultural scientist.