The Second Session of the 11th National People's Congress (NPC) opens at the Great Hall of the People in Beijing, capital of China, on March 5, 2009. [Xinhua]

Chinese Premier Wen Jiabao pledged on Thursday to increase spending on agriculture by over 20 percent, hike minimum grain purchase prices, and expand the country's grain production.

Addressing nearly 3,000 lawmakers at the Second Session of the 11th National People's Congress (NPC), Wen said in his government work report that central government spending on agriculture, farmers and the rural areas would total 716.1 billion yuan (US$104.6 billion) in 2009, a year-on-year increase of 120.6 billion yuan.

The money would be used in expanding direct agricultural subsidies to farmers by 20 billion yuan to a total of 120 billion yuan, popularizing agricultural science and technologies, and improving infrastructure facilities such as roads and water conservancy projects, and upgrading low and medium-yield farmland.

Greater priority would be given to major grain-producing counties in implementing the policies and measures supporting grain production, Wen said. More financial rewards would be provided to major projects for industrializing grain production.

The country would also "significantly" raise minimum purchase prices of wheat and rice by 0.22 yuan and 0.26 yuan per kilogram respectively, and keep the prices of agricultural products stable at a reasonable level to encourage farmers to grow more, Wen said.

"We will effectively keep the area planted in grain crops stable, focus on increasing the yield per unit area and optimizing the variety mix, and increase the country's grain production capacity by 50 million tons," the premier told the legislators.

China, with a population of 1.3 billion, is faced with severe challenges in safeguarding grain security due to rising living standards, decreasing arable land, water shortages and climate change.

Slowdown in economic growth rate due to the impact of the global financial crisis has become a major problem affecting the overall situation, Wen said in his report.

"It has become more difficult to maintain steady agricultural development and keep rural incomes growing", he admitted.

Calling agriculture the "foundation of the economy", Wen said the government would do everything in its power to keep the total amount of arable land above the red line of 120 million hectares.

The premier pledged to ensure the existing land system remain stable and unchanged for a long time to come, and better protect the land use of farmers, including migrant workers who are away from their home villages.

Lai Xiuhua, chief of Hutian Village in the southern province of Guangdong, said she was glad to know the planned agricultural spending increase.

More than 1,000 rice farmers lived in Lai's village, and their income in 2008 averaged around 4,000 yuan, said Lai, who was here to attend the annual session of NPC.

"The majority of our income did not come from grain production, but from the government's direct subsidies for grain farmers," she said, "The three minimum grain purchase price hikes by the government last year also helped."

"So it's really good to know that the government will increase the direct agricultural subsidies, and raise the minimum grain purchase prices again this year," she said.

Steady growth of rural incomes was also one of the major targets Premier Wen set for this year's national economic and social development.

Rural per capita net income reached 4,761 yuan last year, up by 8 percent in real terms, compared with the urban per capita annual disposable income of 15,781 yuan.

The premier pledged in the government work report that the country would increase farmers' incomes in a variety of ways.

The country would vigorously develop modern agriculture with distinctive local features, support the processing and marketing of agricultural products, develop service and manufacturing industries in rural areas and accelerate the development of small towns, Wen said.

He also pledged to intensify efforts to alleviate poverty in the countryside, adding that a new poverty line would be adopted and all low-income rural residents would be covered by the poverty relief policy with grants increased to 1,196 yuan per person on average.

The policy, which would cover more than 40 million people, marked a new stage in China's efforts to reduce poverty through development, he said.

"Under the current economic situation, the increase of farmers' incomes is essential to China's policy to expand domestic demand," said Zhang Ning, director of the agriculture office of the Sichuan provincial party committee.

"The rural population would become a market with the biggest potential for consumption only when they have more access to disposable currency," he said.

Of China's total 1.3 billion population, more than 900 million are farmers.

Steady growth of rural incomes would also help bridge disparities in development between urban and rural areas, thus contribute to the social harmony, he said.

(Xinhua News Agency March 5, 2009)