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World rice price hikes 'will not hurt supply'

By Qin Jize and Xin Zhiming (China Daily)
Updated: 2008-04-01 07:56

VIENTIANE -- Rising international rice prices are not a cause for major concern in China, Premier Wen Jiabao said Monday.

"Please set your mind at rest because China has abundant supply of rice," Wen said, adding that the country has stockpiled about 40-50 million tons of rice.

He made the remarks on the sidelines of the Greater Mekong River Subregion Summit.

He admitted that the recent 30 per cent jump in international rice prices did have an impact on China's food prices but said the country is largely self-dependent for rice.

Wen pointed out that the volume of rice traded on the world markets is less than a tenth of that in the Chinese market.

He said the central government has taken a series of measures to promote agricultural production such as raising farm subsidies, constructing irrigation works, and popularizing the use of science and technology.

"China is capable of feeding itself with its own rice production," Wen said, adding that the central government will ensure an ample supply of food including rice to compatriots in both Hong Kong and Macao.

Some Hong Kong and Macao residents have reportedly been rushing to buy rice in anticipation of rising prices.

Rising production costs and weather-induced disasters are behind the rising global prices, analysts said. Major rice producers, such as Vietnam, India and Egypt, have imposed curbs on rice exports, exacerbating the situation.

But in January this year, China's rice exports increased 49.7 percent to reach 138,000 tons, compared to the same period last year.

In February, the purchase price for non-glutinous rice rose to 1,700 yuan ($242) per ton on the domestic market, up 10.5 per cent year on year, according to reports quoting the Ministry of Agriculture.

To ensure price stability, the Chinese government last week raised the minimum purchase price of rice and wheat for the second time this year.

It has also increased direct subsidies for farmers.

"Those measures, especially the hike in the minimum purchase price, will boost production," said Xiao Haifeng, a professor at China Agricultural University. "Farmers have got the message from the authorities as changes in prices are always the most effective in influencing supply."

The move to raise the purchase prices would also help ease inflation pressure, analysts have said.

Last year, China imported 471,000 tons of rice, down 35 percent year on year - and given the small amount of imports, the high international prices would not have much impact on the country's overall price situation, analysts said.

The country's rice production was about 186 million tons last year, the fifth year of increases.



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