Reform of grain procurement system

The grain
procurement system under which state-run agencies buy farmers' harvests at guaranteed
prices is being overhauled and replaced. Under the old system, grain pro-curement
agencies bought grain from farm-ers at subsidised prices.. They were funded by loans
from the state-run Agricultural Devel-opment Bank, which only had to he repaid when the
grain was sold.
Intended to help farmers and defended by former premier Zhu Rongji in
his final speech to the National People's Congress in March, the system has been
criticised by experts for imposing a huge financial burden on the government and
generating a large grain surplus, while not really helping farm-ers. A recent report in
Economic Daily said the central government had provided pro-curement agencies in Anhui
province with about Yn4hn each year, of which only Yn4OOm actually reached the
farmers.
Under the new system, farmers will decide what crops to plant based on
market demand, hut receive subsidies from the gov-ernment if the market sinks.
Procurement agencies will no longer received funds from central government and be
forced to compete with private grain merchants. A pilot scheme has been operating in
Laian county, Anhui province, and found to be a success. As a result, the central
government has decided to extend the scheme to the rest of the province and then to the
whole country.