Governments at all levels need to continuously promote agricultural reform and rural economic structural adjustment, Wen said at a State Council working conference on agriculture and grain in Beijing.

Thanks to bumper harvests over the past few years, China has abundant reserves of grain.

Although grain production has reduced in the past two or three years, the country has maintained abundant grain reserves and a stable food market.

However, food security is always a big issue especially as people's level of consumption is improving and the population is increasing, Wen said.

More subsidies will be earmarked to help ease lives of farmers in the major grain production areas and encourage grain production, Wen said.

Local governments should take every measure to increase farmer's incomes, including accelerating the rural tax reform process and strengthening local infrastructure construction, he said.

An expected tight supply in the grain market will continue to push up grain prices moderately over the next few years, but no large price fluctuations are expected, agricultural officials and researchers said.

Driven up by the grain price increase, the first time in six years, the prices for flour, edible oil, meat, eggs and fodder have all seen a rise since October 1 in key grain-consuming areas, according to market data.

Due to serious spring droughts and autumn floods as well as decreasing crop-growing acreage, the total grain output of this year is estimated to see a drop for the fifth consecutive year.

Official statistics suggest that there has been an annual shortfall of about 25-35 million tons of grain since 2000.

(China Daily October 29, 2003)