Wheat prices in Northeast China's Heilongjiang Province rose by 32 per cent to 1,100 yuan (US$132.5) per ton, according to a Xinhua News report.

Paddy rice prices in East China's Anhui Province reached 1,050 yuan (US$126) per ton, up 80 (US$9.6) to 120 yuan (US$14.5) over the same period last year. And maize prices in Hebei and Shandong provinces also went up by 50 (US$6) to 70 yuan (US$8) per ton, according to the report.

The grain price increases also drove up the prices of edible oil, fodder and other finished products, statistics show.

Li Chenggui, a senior researcher in rural development with the Chinese Academy of Social Sciences, told China Daily yesterday the prices had risen in line with changing supply and demand in domestic and international grain markets.

"The decrease in both agricultural production and the country's grain storage is a major factor in the surge in grain prices," the researcher said.

"The rise in the price of grains on the international market from last year has also contributed," he added.

Li said the jump in grain prices was good news for farmers as well as Chinese agriculture, for it helped to rectify the relationship between producers and consumers of grains and narrow the gap between cities and the countryside.

"The growth of per capita annual income of farmers in the country has been slowed down since 1996 while the income of city dwellers increased rapidly over these years," Li explained.

The growth in grain prices will also boost the prices of other agricultural products, he said.

"It also helps to curb the drop in cropping area in the long run," the researcher said.

China launched a campaign to restructure agriculture at the beginning of 2000, lowering its target for agricultural output.

It is the government's hope that the moves will help agricultural production match market demand. Crop harvests over the years had led to record national stockpiles of grain, cotton and other key products and oversupply in the market, pulling down prices and slowing the growth of farmers' income.

The government abandoned its set prices for grain and farmers were encouraged to diversify into products the market wanted more.

(China Daily October 23, 2003)