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Supply to Ensure Stable Grain Price

Chinese agricultural experts on Wednesday said the country has sufficient grain reserves to keep food prices stable and foresaw no major fluctuations in the country's grain prices.

"Although global grain prices have continued rising rapidly since 2007, the prices in China have grown steadily and with a small range of fluctuation," Ministry of Agriculture expert Yang Jian was quoted by People's Daily as saying.

Larger grain reserves created by expected output increases and State price controls would secure a stable grain price, Yang said.

China has adopted multiple measures and policies since late last year to stabilized grain prices and boost agricultural production, including curbing gain exports, raising subsidies for farmers and tackling fertilizer price hikes.

China expects a grain output increase for the fifth consecutive year in 2008, with production expected to exceed 510 million tons, the State grain information center said.

Rice production is expected to reach 185.49 million tons, up 1.01 million tons from last year, while wheat output would increase 2.64 million tons to 109.86 million tons, the center said.

While generally optimistic, Yang expressed concerns about the long term.

"Domestic grain prices are bound to rise gradually, as the profit margin for farmers is narrowing because of rising costs," he said.

China's grain price straddled low levels after hitting a historical high in 1995.

It continued rising until 2003 but lagged behind other agricultural products' prices.

Yang said the government must specify and expand farmer subsidy policies, because increasing agricultural production costs often offset subsidies' values.

(China Daily October 9, 2008)

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