China will subsidize major agriculture areas with 5.5 billion yuan (US$665 million) in 2005 to encourage farmers to increase grain production, Chinese Vice Finance Minister Zhu Zhigang said late Wednesday.

Counties that produced 200,000 tons and sold 5,000 tons of grain per year between 1998 to 2002 are eligible for the subsidies, Zhu said, adding that some counties that yield less grain but sustain a region's food supply will also be eligible.

Zhu said nearly 800 major agriculture counties grow 60 percent of China's gain. These counties gain little profits from farming and have serious financial problems, he said.

He warned that the subsidies should not be used by local officials to buy cars, to build offices or training centers or to spend on "useless projects solely aimed at showing off government achievements."

The subsidies, he said, should be used "to lift farmers' financial burdens and to boost their enthusiasm in farming."

He also said the ministry would deliver the money to county level governments, leaving no chances for officials to appropriate these funds.

In late January, the Chinese central authorities issued a document designed to strengthen work in rural areas and raise overall agricultural production capacity.

The document said China will "further implement the relevant policies reducing or abolishing agricultural taxes, granting subsidies for certain crops and financing farmers for the use of good seed strains and farming machinery."

Steps to increase farmers' incomes

Though 2004 saw a sharp rise in farmers' incomes, the income gap between rural urban residents continued to widen. Chinese officials consider this a major obstacle to what they call the "building of a harmonious society."

Following a 6.8 percent of growth in farmers income and a 9 percent of growth in grain production in 2004, the government has continued its efforts to shrink the gap between rural and urban areas in the new year.

At the beginning of 2005, the Central Committee of the Communist Party of China and the central government jointly released the year's "No. 1 Document", which worked out 27 detailed substantial measures to ensure financial, administrative and technological support to agricultural sector.

"Though China's agriculture has seen a favorable turn in grain production and an increase of farmer's income during the past year, it remains a weak link in the national economy as a whole," said the document.

According to the document, China will reduce or abolish agricultural taxes, grant subsidies for crops and finance farmers for the use of good seed strains and farming machinery. The country will also "set up channels of providing financing support for agriculture and establish a mechanism for steady input for agriculture and, while doing a good job with big and medium-sized water conservancy projects, keep increasing the input for small irrigation facilities."

"Through all of these policies, Chinese farmers could enjoy income increase in the long run," said Chen Xiwen, deputy director of the Office of the Central Financial Work Leading Group.

From 1997-2003, per capita income for Chinese farmers increased annually by 4 percent, while that of urban people grew 8 percent. The widening income gap between rural and urban resident caused lagging rural consuming and further inefficiency of urban industries. To make it worse, the income gap affected social stability to some extents, warned experts.

To change the trend, the central government began to put agricultural back top on agenda in 2004, releasing a series of supportive policies to farmers, including direct subsidy for grain production, tax exemption and reduction, subsidy for buying fine seeds and farm tools. Statistics show that with these policies, farmers have gained a direct benefit of 45.1 billion yuan.

Figures from the National Bureau of Statistics show that in 2004, the per capita annual income for Chinese farmers was 2,936 yuan, up 6.8 percent over previous year, a record growth rate since 1997. The grain output reached 469.5 billion kilograms, up 9percent over the previous year.

Yu Bingde, farmer in Yudian Village of Jinzai County of east China's Anhui Province, is one of the beneficiaries of the policies. In 2004, Yu's family paid agriculture tax of 32.5 yuan, subtracting 6.1 yuan of grain direct subsidy, 18.8 yuan of fine seeds subsidy and 6.2 yuan disaster relief, the economic burden for Yu's family is only 1.2 yuan for the whole year.

Expecting a "busy and fruitful" year, Yu leased five hectares of mountain land this year and planned to build "a better life through hard work."

Like Yu, farmers in the traditional agricultural province are enthusiastic in leasing more farmland and produce more farming products. More than 15,000 hectares of farmland which had been left unplowed for many years in the province has been leased.

(Xinhua News Agency March 3, 2005)