China to spend $1b on drought alleviation

Beijing on Wednesday outlined plans to plow more than US$1.18 billion into drought alleviation measures amid growing concern that prolonged dry weather in northern China will damage the harvest of key crops like wheat, the Wall Street Journal reported. The State Council issued a 10-point bulletin outlining a mixture of direct subsidies for irrigation and planting, equipment purchase funds and drought alleviation projects. The government will also raise the symbolic minimum purchase price for rice by nearly 40%. China is one of the world’s largest wheat producers, but it may be forced to import wheat if the drought does not end soon, pushing up global prices. Some agricultural areas in China have been dry since October 1, and there has been no snow cover to protect plantings from frost. About 35% of China’s plantable area for winter wheat has been affected by the drought. Wheat futures on the Zhengzhou Futures Exchange rose by the limit of 7% to US$465.50 per ton. Soft winter red wheat for March delivery gained 4.5% in Chicago.