China's record amount of agricultural funding this year will help ensure grain safety and increase farmers' income, but challenges to redress the rural-urban income gap remain, researchers say.

Premier Wen Jiabao said in his government work report to the ongoing annual session of the National People's Congress (NPC) that the central government will spend 562.5 billion yuan (about US$79.2 billion) on agriculture sector this year, nearly doubling the 2004 figure.

"The number is a rather big increment in recent years, demonstrating the strong commitment of the government to fortifying the foundation of agriculture," said Bing Zhigang, finance director of northeastern Liaoning Province and a delegate to the NPC.

The promised investment, which was 130.7 billion yuan more than last year, was aimed to ensure grain safety and at the same time, boost farmers' income, according the report.

Last year, China exported 8.95 million tons of grains, up 16.4 percent from 2006. Wheat exports increased 36.2 percent to reach 2.34 million tons, and corn export grew by 30.1 percent to reach 4.85 million tons.

Ke Bingsheng, a China Agriculture University professor, said the pledge to boost production of grain, edible oil and meat and grain export control would help stabilize domestic prices and prevent fluctuations of global market prices.

Another important goal of the investment is to correct the big income gap between cities and the countryside, he said.

China's No. 1 document, promulgated on January 30 by the central committee of the Communist Party of China (CPC) and the State Council, the country's Cabinet, was centered on combating rural problems that affected a population of 900 million. This was the fifth consecutive year in which the No. 1 central document focused on agriculture.

Under such guidance, an annual financial budget planned a 23.4 percent increase in direct subsidies to farmers, and doubling education, culture and health expenses in the countryside.

Premier Wen said in his report that more channels will be developed to increase rural income. Specific measures include accelerating the development of high-yield, high-quality, high-efficiency agriculture, building modern marketing network for rural areas, and stepping up vocational education and technical training for the rural people.

Han Jun, head of the rural department of the Development Research Center of the State Council, said the promised investment sent a positive message and will continue to have a substantial effect in agriculture.

Farmers in China have already seen an income rise with state input. Yang Chuanren, a farmer in central China's Henan Province, saw his family income doubled from 40,000 yuan in 2006 to 80,000 yuan last year, after he bought a wheat reaping machine on state agri-machinery subsidies.

However, the investment growth was still not much compared to the growth pace of the total government revenues, Han said, adding that the investment in agriculture still needs to grow on a steady basis in the future.

A major chasm exists between the income of rural and urban people. According to National Bureau of Statistics data, per-capita disposable income was 13,786 yuan in urban areas last year, up 12.2 percent in real terms, while per-capita income was 4,140 yuan in rural areas, up a real 9.5 percent.

Although farm produce sold at higher prices last year, with grain prices up 5.7 percent and cooking oil increasing 37.1 percent, farmers complained the benefits were eroded by rising production costs.

"Grains are selling at a better price, but costs in fertilizers, pesticides, gasoline and agri-machinery rose at a faster pace. That nearly offset a large portion of the benefits obtained from canceling agri-tax, subsidies and a bumper harvest," said a Wang Fuchen, a Hebei Province farmer.

"I earned 120 yuan more per mu (0.06 hectares) of wheat from subsidy and price increases, but it cost nearly that much in buying fertilizers, gasoline to pump water and hiring hands to plant and harvest," he said.

"We could only keep the money in our pockets when prices for the production costs are kept down," he said.

(Xinhua News Agency March 8, 2008)