Since Oct. of 2008, North China and the region between the Yellow River and Huai River have been plagued by a drought, for precipitation has been 80 ~ 95% less than a normal year.
BOABC predicts that winter wheat production may drop to 100.1 million MT in 2009/2010, a slip of 5.6 million MT or 5.4% on the year-on-year basis. But the market balance is not likely to be much affected. Year-end wheat inventory is estimated to be 52 million MT and the safety index may drop 1.8% on the year-on-year basis.
BOABC presumes that the government may take the following measures to ensure wheat production and protect farmers’ interests: First, increasing cash subsidy to farmers for drought-relief. Second, raising wheat procurement price by 10 ~ 15% (for instance, procurement price of Third Grade wheat raised to RMB1.92/kg). Third, giving cash subsidy to farmers who have a food shortage.
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