Agricultural firms see share price rise

By Wang Xinyuan Source:Global Times Published: 2013-3-21 23:03:01

Agricultural companies saw a rise in share prices Thursday after China launched measures to boost grain production and livestock husbandry by increasing subsidies for farmers, land contractors and farmers' cooperatives.

Shares in Jiangsu-based pesticide producer Nantong Jiangshan Agrochemical & Chemicals rose by 5.6 percent Thursday from the previous trading day. Veterinary drugs and feedstuff additive producer Zhejiang Qianjiang Biochemical Co also saw a rise in its share price of 5.05 percent.

Xinjiang Korla Pear, a fruit processing company, and seed companies including Anhui-based Hefei Fengle Seed, Gansu Dunhuang Seed, and Haikou Agriculture & Industry & Trade all saw their share prices moving upward by between 1.49 and 2.21 percent Thursday, outperforming the benchmark Shanghai Composite Index, which rose by 0.3 percent.

The Ministry of Agriculture announced 38 new measures Wednesday, including 15.1 billion yuan ($2.43 billion) in direct subsidies for farmers and 107.1 billion yuan worth of agricultural funds for fertilizers, pesticides, diesel and high quality seeds.

The ministry also announced incentive funds to reward those with the highest grain output.

In a separate policy issued on January 31, the central government encouraged specialized large-scale farming in the forms of family farming, land contractors, and farmer cooperatives that pool their resources in crop production.

The new measures will boost farmers' income, as well as benefiting related businesses such as seed, fertilizer and pesticide producers, Guo Jianying, an agricultural analyst with Guantong Futures Brokerage, told the Global Times Thursday.

Total agricultural subsidies are expected to reach 200 billion yuan in 2013, a 25 percent increase from 160 billion yuan in 2012, the National Business Daily reported Thursday citing an industry insider.

"The increased subsides will partially offset the rising costs of labor and production materials in farming, and therefore can help slow down inflation," Weng Ming, a researcher at the Rural Development Institute under the Chinese Academy of Social Sciences, told the Global Times Thursday.

China saw record high grain output for a ninth consecutive year in 2012 with total production of 589 million tons, 18 million more than in 2011.

However, the country is also facing the challenge of a falling number of farmers, rising grain demand and shrinking arable land due to increasing industrialization and environmental degradation, which has prompted the central government to raise incentives and try to boost productivity in the agriculture sector.

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