A 287 yuan (US$35) grain subsidy handed out during the weekend and an exemption from the agricultural tax will lift Li Shuhai's net profit by 1,000 yuan (US$121) this year.

That sum of money may be insignificant for most urban residents, but it is a boon for Li, a grain farmer in northeast China's Heilongjiang Province.

He is one of several hundred million Chinese grain growers struggling to make ends meet.

An official with the Ministry of Finance said it is difficult to give an exact figure on the number of recipients as the subsidies are being paid according to the size of their plots.

The Ministry of Agriculture announced Monday it would offer subsidies for selected seeds of rice, soybean, wheat and corn to major grain producers across the country.

For example, a farmer will get 150 yuan (US$18) for each hectare of high oil-bearing soybeans in Heilongjiang Province, according to a news release from the ministry.

"We will grow more grain, better grain in return," Li said after he was paid the subsidy in Gushanzi Village of Jidong County in the province.

The farmer said he is confident his family would earn at least 10,000 yuan (US$1,219) in net profits this year from his two hectares of farmland "if everything goes smoothly."

The Chinese Government allocated 10 billion yuan (US$1.21 billion) in subsidies earlier this year from its grain risk fund to the country's grain farmers in 13 major provincial grain-producing areas to reverse the continuous drop of grain output and sluggish income growth to narrow the widening gap between rich and poor.

Apart from Heilongjiang, the 13 provincial areas include the provinces of Jilin, Liaoning, Hebei, Henan, Jiangsu, Anhui, Hunan, Hubei, Sichuan, Jiangxi, Shandong, and the Inner Mongolia Autonomous Region.

From 1997 to 2003, the per capita income of farmers rose 4 percent annually on average, in sharp contrast to an 8 percent jump in the disposable income of urban dwellers.

Farmers have complained planting grain crops is less lucrative than growing fruit or raising fish or poultry, which experts fear as a potential threat to the country's food safety.

The unprecedented subsidies and soaring grain prices due to concerns over grain shortages in the past few months have boosted the interest of farmers in cereal production.

Zhang Xiaoshan, director of the Rural Development Institute of the Chinese Academy of Social Sciences, said the massive subsidies send a strong message that the State supports grain production.

Wan Baorui, former deputy minister of agriculture, said China used to earmark tens of billions of yuan in subsidies for the state-owned grain distribution and wholesaling sector which, in an indirect way, subsidized grain production.

But grain growers benefited little as they went to the state-owned grain sector, which operated at a loss and had, until recently, a monopoly over grain purchase and the wholesale business, said Wan.

(China Daily April 20, 2004)