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Cabinet raises price for rice purchases

The Cabinet yesterday increased the price of paddy purchased by the government, effective starting next year. The NT$2 raise in the price per kilogram of unmilled rice will give rice farmers an additional NT$21,000 per hectare of production per year.

The price of paddy has not been adjusted since 1993, although the cost of producing rice has risen 10 percent since then as prices of fertilizer, oil and other farming materials have risen, Premier Chang Chun-hsiung (張俊雄) told the Cabinet meeting.

This has cut significantly into the revenues of farmers, who are hard-pressed considering that living expenses have also increased substantially over the years, Chang said.

"The plan ensures the livelihood of about 230,000 farming households, as rice is the nation's most important agricultural product," Chang said.

In the 1970s, the government established the Food Stabilization Fund, which purchases a portion of rice farmers' output at a guaranteed price higher than market prices in order to ensure stable rice prices and adequate rice supplies to feed the country.

The government usually purchases approximately 17 percent of the year's harvest of 1.3 million tonnes on average.

However, raising the support price for rice could violate WTO commitments to restrict the level of subsidies to agriculture.

"The amount of [the support] is less than the ceiling for subsidies to rice farmers granted by the WTO," Chang said, adding that the government would negotiate the subsidy level with the WTO to raise the maximum for rice subsidies.

The Cabinet yesterday also passed a draft national development plan for next year, aiming for economic growth of 4.8 percent and per capita GDP of US$18,000. Per capita GDP this year is expected to be US$16,768.

The Cabinet also set a goal of creating 180,000 job opportunities next year and keeping the unemployment rate under 3.8 percent, as well as keeping rises in consumer price indexes at less than 2 percent.

In related developments, Vice Premier Chiou I-jen (邱義仁) said that the opening of financial markets across the Taiwan Strait would be just "a matter of time" once both sides resolve the issue of Taiwan's sovereignty.

Chiou said the government had made "technical" progress on opening Taiwan to Chinese tourists, but added that negotiations had been hindered by "political" motives, as Beijing insisted on using the name "China Taiwan" for Taiwan in bilateral agreements.

"The same problem happened with the issue of opening up cross-strait financial services. When it came to negotiating a financial supervisory mechanism, the Chinese side refused to recognize Taiwan's central bank," Chiou said.

He made the remarks at the Cabinet's year-end press conference in response to reporters' questions.

The government allows restricted financial operations in China, letting domestic banks establish offices with limited services in China, insurers set up subsidiaries there or become shareholders in Chinese enterprises, and securities firms establish branches or subsidiaries there.

Chiou said the government would eventually allow domestic banks to upgrade their offices in China to branches with full services, to establish subsidiaries and to hold shares in Chinese banks, but not until a financial supervisory mechanism has been established through cross-strait talks.

Asked about the government's position on possible inflows of investment by Chinese state-owned funds, Chiou said the government would deal with capital inflow in a beneficial way.

In October, China's Investment Corp named Taiwan as a key investment target.
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