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January 19, 2011

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Relief for farmers in price drop

GREEN-LEAF vegetable farmers in Shanghai will get insurance compensation tomorrow from a special insurance program initiated by the Shanghai government, aimed to protect them from the continuous drop in prices recently, while encouraging them to continue producing, government officials said yesterday.

The insurance only applies to farmers growing bok choy, a Chinese cabbage and the most heavily consumed green vegetable on local dinner tables.

It comes as one of the measures the city government has taken in order to ensure a sufficient vegetable supply in Shanghai, while also keeping prices stable, Mayor Han Zheng stressed at a meeting yesterday with deputies of the city's legislative and advisory bodies. In previous months, the government has taken a package of control measures to curb fast increases in consumer product prices and has expanded green-leaf vegetable farmlands to control prices.

"The expansion of farmland, together with the unusually warm weather in the past two months, has caused the city's output of bok choy to rise substantially, while prices have dropped. The insurance program has since been launched to relieve losses to farmers and also to prevent them from cutting back the supply," Shi Jian, a manager with the state-owned Anxin Agricultural Insurance, the only company dealing with the special insurance product, told Shanghai Daily yesterday.

He said the insurance started being issued on January 4 and more than 90 percent of local bok choy farmlands have now been covered.

The insurance is only sold if the farmers want it and they can decide on the size of they farmland they want covered.

"Farmers need to pay about 10 to 20 percent of the insurance premium themselves, depending on the district, and the rest is paid by the government," Shi said. "Generally, a farmer needs to pay 10 yuan to 20 yuan to get 0.068 hectares insured."

Farmers will get compensation once the average market price of bok choy drops below 0.7 yuan per kilogram, according to the insurance terms, the manager said.

"The market price will be decided on based on the average from the five major local wholesale vegetable markets over a 15-day span," Shi said.

The bok choy insurance is effective only until the end of February because after winter passes, the vegetable market will be more balanced.

"Based on the current price trend over the past 15 days, compensation will take place on January 20, the first settlement day of this insurance program," the manager said.

The wholesale price of bok choy was 0.8 yuan per kilogram last December, down 49.7 percent year-on-year. Bok choy's purchase price from farmers decreased to 0.6 yuan per kilogram at present and may continue to drop. The price was even lower than the production cost, according to the latest statistics issued by the Shanghai Agricultural Commission yesterday.

Agricultural officials said the sharp price decrease was mainly caused by increased output.

"It discourages farmers and many stopped growing green-leaf vegetables," Han said. "If the situation continues, we will have few green-leaf vegetables to eat during the Spring Festival."

Currently, there are more than 33,900 hectares of planted vegetables around Shanghai and about 35 percent are green-leaf vegetables. The daily vegetable supply remained around 7,500 tons and more than half were green-leaf vegetables, official statistics showed.

The government will also direct farmers to establish direct business channels with supermarkets, wet markets and communities, agricultural officials said.

As the city was hit by snow, farmers have been called on to harvest vegetables quickly and to cover the fields with plastic film to keep the vegetables protected.


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