Govt ups minimum rice price by 10 pct

China's top economic planner said Wednesday that it will raise the State-set minimum prices for rice in 2013, in a bid to boost grain production and ensure food security.

The minimum purchasing price for early indica rice will be increased to 2.64 yuan (43 cents) per kilogram, up 10 percent from the 2012 price, the National Development and Reform Commission said in a statement on its website.

The price for mid-season and late indica rice will be increased 8 percent to 2.7 yuan per kilogram and the price for japonica rice will be set at 3 yuan per kilogram, up about 7 percent from the previous year.

It is China's sixth consecutive yearly minimum price increase on grains including rice and wheat, in accordance with a minimum price scheme that was initiated in 2004.

Under the scheme, the State purchases grain at the State-set price if the market price is below the minimum.

The market for grain is sluggish at the moment, with current prices below State-set minimums for 2013, and the minimum price lift will shore up the market and gradually push market prices higher, said Jiao Shanwei, editor-in-chief of Zhengzhou-based grain portal cngrain.com.

Although such a move will likely increase the cost of living for consumers, it is necessary to encourage farmers to grow grain, Jiao said. "As urbanization speeds up, the area of arable land declines and more farmers leave home to work in cities, so grain yield growth has slowed down. Meanwhile, prices of various raw materials are on the rise, pushing farmers' costs higher."

China's grain output for the 2012 harvest increased 3.2 percent year-on-year to 590 million tons, the ninth consecutive increase in a row, but output growth from the world's largest wheat and rice producer continues to fall short of domestic demand.

Grain imports rose 156.7 percent year-on-year to 14 million tons in 2012, raising concerns about the country's self-sufficiency in grain production.

Despite efficient grain production, grain supply is getting tight and self-sufficiency in grain dropped below 90 percent in 2012, lower than China's long-running target of 95 percent.