Rising labour and fertiliser prices and uncertain weather will reduce China's grain harvest this year, state radio quoted Minister of Agriculture Han Changfu saying on Monday. A good grain harvest tames China's consumer inflation, which rebounded to 4.5 percent in the year to January, but was still well below a three-year-high of 6.5 percent last July.
China aims to reap 525 million tonnes of grain this year, down from a record harvest of 571 million tonnes in 2011. Han told a meeting with 10 other ministries to ensure grain output that high costs of labour and Fertilizer as well as the possibility of adverse will affect Beijing's efforts to hit the target. Labour costs rose 25 percent and Fertilizer price increased 17 percent in 2011 from a year earlier, he told the meeting. "Labour cost will not decline this year and the Fertilizer price is already on the rise even before the spring planting begins," he said. "China's agricultural production is entering a phase of high cost."
He also warned against more extreme weather this year. "Weather conditions will probably be worse than last year and fighting disasters for a harvest will become this year's main theme," he added. Any challenge to feed its population of 1.3 trillion is a big issue for Beijing, concerned with social stability and a government transition in 2012. Food accounts for a third of China's consumer price index and the leadership has warned against a rebound in inflation, which means China has to tips its toes when relaxing policies to support the slowing economy.
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