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April 25, 2011

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Help for growers after farm prices plummet

Vegetable farmers are to get more help from the Shanghai government to help them cope with falling prices.

TV reports showing growers in Jinshan District destroying unharvested cabbages by driving over them in their tractors shocked viewers over the weekend.

Vegetable prices dropped 9.8 percent on average in China last week. And over the past three weeks they have fallen by 16.2 percent, according to statistics from the Ministry of Commerce.

The city government plans to extend the insurance period for vegetable growers to 77 days from 59 days this summer, officials said yesterday.

And more types of produce would be added to the scheme which, at present, only covers green leaf vegetables.

Most of the insurance premiums for the scheme, which provides protection for farmers when prices fall too far, will be covered by the government.

The farmers in Jinshan said they had no choice but to destroy the produce to make way for the new planting season. To harvest and transport cabbages to market would only bring them greater losses because of the unusually low prices they would be getting.

The problem led to the suicide of one farmer earlier this month. Han Jin, 39, from Ji'nan, capital of Shandong Province, hanged himself on April 16.

Relatives said low prices were to blame. The more cabbages Han sold, the more money he would lose, they said.

Deeply in debt

He was getting less than 0.2 yuan per kilogram for his cabbages while they cost more than 1 yuan per kilo to grow. Han, a father of two girls, was deeply in debt, his wife said.

Some farmers in Ji'nan also blamed vegetable dealers for worsening the situation. They said vegetables were sold at prices many times higher than what dealers offered them. Farmers said they did not have much say in the prices.

"Vegetables cannot remain fresh for long. They are worthless when left behind by the dealers' trucks," said farmer Han Daokun.

Distribution is key to the problem. Each link in distribution will increase the price by 10 to 15 percent. And there are many links, said Ling Donghua, research fellow at the Shandong Academy of Social Sciences.

In response to substantial price rises of vegetables last year, farmers across the country increased the amount they planted. This resulted in a serious oversupply which was one of the main factors explaining the fall in prices in the wholesale market, industry insiders said.

Wei Yongbin, 50, leader of a vegetable company in Shanghai, said farmers were being offered 0.1 yuan per kilogram for cabbages which cost 0.4 yuan to harvest, not including transport and other expenses.

He also chose to destroy 133 hectares of produce to curb losses. It's estimated that millions of kilograms of cabbages have been dug into the ground in Jinshan District in the past few days.

A Ministry of Commerce team is investigating the fall in cabbage prices.


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