China Declares Drought Emergency, With Particular Focus On Wheat Crop Impacts - Reuters

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LIDONG VILLAGE, China (Reuters) - China has declared an emergency over a drought which could damage the important wheat crop, threatening further hardship for farmers amid slumping economic growth. The dry winter gripping parts of central and northern China has sent Zhengzhou wheat futures up 5 percent this week but physical prices have not moved, with most investors confident the country's reserves and last year's big harvest can offset any fall in wheat production this spring.

The drought could hurt farmers in Henan, Anhui and Shandong, where many have lost factory and construction jobs after China's growth faltered in late 2008. "This winter there was no snow, no rain. That's not good for the wheat," said Zhao Mifen. Zhao and her husband farm one-fifth of a hectare in the flat plains near Xingtai, in southern Hebei Province, and supplement their income making construction materials.

The national Office of State Flood Control and Drought Relief this week declared a "level 2" emergency, warning of a "severe drought rarely seen in history," the People's Daily reported. The absence of rain or snow since November has affected 9.5 million ha of farmland -- 37,000 square miles, or 43 percent of the winter wheat sources, the China Daily reported.

In the hardest-hit areas, in Henan and Anhui, output of winter wheat, which is harvested in May, could be reduced by one-fifth, agricultural analyst Ma Wenfeng told the China Daily. Overall, output from major wheat-growing areas could be cut by 2 to 5 percent, Ma estimated.

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