Not Seeing Lower Prices Here...Yet

Global financial woes hit China's 800 million farmers: state media
October 29, 2008 - 3:51PM

China's 800 million farmers are being hit by the global financial crisis as commodity prices dive, and next year could be even worse, state media said Wednesday, citing government economists.

Rural China is suffering because soybean prices have fallen by about half on international markets in recent months, while the price of wheat is down by as much as 30 percent, the China Daily reported.

"Farm product prices are already falling in the domestic market," said Song Hongyuan, an economist with the agriculture ministry. "This will hurt farmers' income."

China has made it a top priority to raise income levels in rural areas in order to narrow the yawning wealth gap between the rich cities and the poor countryside.

As part of this effort, the government had targeted nine percent growth in peasant incomes this year, but the objective now seems out of reach, the paper reported.

"We would be happy even if the rate reaches seven percent," said Chen Guoqiang, an economist with the Development Research Centre, a think tank under the Cabinet.

China's farmers will take an even greater beating next year because of the financial crisis , the paper said without elaborating.

The rural population is also being impacted in other ways as the crisis has been especially hard on small enterprises that employ migrant workers from the countryside, according to the paper.

"China's labour-intensive sectors, such as textile, have been hit hard," said Cheng. "And they are the major employers of migrant workers."

This could have longer-term implications for basic policy goals set in Beijing, the paper said.

"The country will have a difficult time meeting its target of doubling farmers' income by 2020," the paper said, citing Song.