China's economic planning chief told an annual development and reform meeting at the weekend that decreasing grain prices coupled with growing costs of production mean farmers are unlikely to see a significant rise in income next year.

Ma Kai, director of the National Development and Reform Commission (NDRC), expressed his concern as the government is increasing funds to improve rural people's lives by enhancing rural infrastructure construction.

Grain prices have been dropping since April and prices of wheat, corn and rice from August to October fell 5 percent compared to the same period last year, said Ma. Meanwhile, prices of production materials such as fertilizer and diesel have risen 9.1 percent year on year in the first 10 months.

Vice Minister of Agriculture Yin Chengjie said large-scale culling of poultry due to outbreaks of bird flu and the impact of China's entry to the WTO also posed hurdles for increasing the incomes of the country's 780 million farmers.

According to China Daily today, farmers' income is expected to increase by 5 percent this year, meeting the target set by central government at the beginning of the year.

Last year, farmers' per capita net income reached 2,936 yuan (US$362), up 6.8 percent year on year and the highest increase since 1997.

Ma said the government would continue to seek fast, steady economic growth in 2006 but that more effort will be made to address challenges caused by overheating in some industrial sectors.

Of oversupply in the steel, coke and auto sectors he warned: "If we don't effectively address the problem immediately, a large number of companies will go bankrupt and many people will lose their jobs."

(China Daily December 5, 2005)