China, the world’s top wheat producer, has cut its minimum purchase price for the grain for 2018 to help whittle its mammoth stockpiles and adjust to the market, the first such move since the policy was launched over a decade ago.
The government has cut the 2018 price to 2,300 yuan (US$346) per ton, down 2.5 percent from this year, the National Development and Reform Commission said on its website on Friday.
The new price takes into account “grain production costs, market supply and demand, domestic and foreign market prices and industry development”, the state planner said.
The government buys wheat from farmers at the minimum price when the market price drops below that level. But the policy has led to growing state stocks of the grain, even as China continues to import some types of wheat.
The government has abandoned similar programs for cotton and corn in recent years in a bid to align output better with global prices and demand. State wheat stockpiles account for about half the world’s inventory.
Shanghai JC Intelligence Co Ltd estimates there are 74 million tonnes of wheat in state reserves. That compares to the nation’s annual consumption of about 100 million tonnes.
As early as February, a key policy document had warned that the minimum purchase pric...
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