A few days ago, the NDRC, MOF, MOA, Grain Bureau, ADBC, Sinograin jointly issued the “2009 minimum price procurement implementation plan for wheat”. Hebei, Jiangsu, Anhui, Shandong, Henan, Hubei the main wheat producing provinces minimum procurement price for 2009 produced wheat at 3rd-grade prices are white wheat: .87 yuan/500g; red and mixed wheat .83 yuan/kg. The time period for procurement prices is from May 21 to September 30. These prices were announced in October 2008.
The minimum procurement price is paid to farmers directly delivering grain to warehouses. The price is for wheat produced in 2009. The price difference for different grades is .02 yuan. In other provinces besides the 6 identified above, it is up to the provincial governments to decide whether to offer the minimum price procurement.
To prevent "circular grain" problems, the central and local grain reserve designated companies are not allowed to directly or indirectly purchase minimum-price grain that has been auctioned.
"Circular grain" is a practice that came to light last fall when some folks noticed that the Henan grain bureau said they purchased an improbable amount that was 80% of the province's grain production. The usual amount and the target was less than 50%. Warehouses were gaming the system by "auctioning" old grain, then buying it back at the minimum purchase price. This is one of the issues that prompted the big check of grain reserves going on right now.