Grain output in Henan, China's most populous province and one of its major agricultural bases, will exceed 45 million tons in 2005 for the first time in history, official statistics show.

According to a report by the province's statistics bureau, the Henan grain output this summer reached 26.1 million tons, an increase of 3.5 percent over the same period last year, while the cereal yield this winter is expected to reach 19.2 million tons, up 10.5 percent year on year.

The report attributes the record high grain turnout in the province to incentives given to peasants in the form of agricultural tax exemption and direct subsidies.

Henan's grain output accounts for about one tenth of China's total. This year, Henan made peasants exempt from all agricultural taxes, cutting about 2.92 billion yuan (about 365 million U.S. dollars) from the tax burden of its 70 million peasants.

The province also directly subsidized its farmers' purchases of fine seeds and agricultural machinery, thus further fueling their enthusiasm to plant more grain, said the report.

To restore farmers' enthusiasm for growing grain after years of decline in price and output, the Chinese government has implemented a series of policies to support agriculture and bolster the rural economy, including direct subsidies to peasants to grow grain, and buy fine seeds and agricultural machinery.

The agricultural tax-free policy was implemented in half of China's 31 provinces, autonomous regions and municipalities, including Henan, Shanxi, Heilongjiang and Jilin. About 400 million peasants nationwide are expected to benefit from the exemption.

According to a forecast earlier this year by the National Bureau of Statistics, China's rural residents will earn about 60 billion yuan (about 7.2 billion U.S. dollars) more in 2004 than a year ago due to grain price hikes.

Direct subsidies, tax reductions and tax exemption will add another 29.4 billion yuan (about 3.5 billion U.S. dollars) to farmers' pockets in 2004, making for possibly the fastest growth in peasant income since 1997, according to the bureau.

Source: Xinhua