BEIJING, July 16, 2008-- Chinese government will spend 12.7billion yuan (1.85 billion U.S. dollars) on upgrading lower-yield farmland this year, the State Office for Comprehensive Agricultural Development said on Wednesday.

The money, which is 10.27 percent more than last year, will transform 1.77 million hectares of lower-yield farmland into high-yield. As a result, three billion kilograms will be added to China's total annual grain production capacity.

Around 7.69 billion yuan, or more than 60 percent of the funds, will go to the 13 major grain producing regions of Heibei, Henan, Heilongjiang, Jilin, Liaoning, Hubei, Hunan, Jiangsu, Jiangxi, Shandong, Sichuan and Anhui provinces and the Inner Mongolia Autonomous Region.

Lower-yield farmland is farmland that has an output less than 20 percent of the regional average, calculated on a three-year base.

The measures to upgrade lower-yield farmland varies from different places and the major means includes:

-- to improve the irrigation system and road system

-- to transform mountainous farmland into terraces, making it easier for the machines to work;

-- improve the soil quality by increasing organic matter content in the soil;

-- to improve farming efficiency by training the farmers.

Altogether 35 water-efficient projects for the medium-scale irrigated regions will be initiated this year with an investment of 301 million yuan, said the office.

The rush in modern China to turn traditional farming areas into industrial zones or residential areas for expanding cities has caused continuous shrinkage of China's farmland in recent years. So the nation has drawn a critical line of 120 million hectares as the official minimum of arable land to feed the world's largest population. But statistics reported the amount of arable land fell to 121.73 million hectares last year.

From 1988 to 2007, China invested 320.3 billion yuan in comprehensive development of agriculture, including 99.2 billion yuan by the central government and 76.8 billion by local governments. Of the total, 34.3 billion yuan was bank loans, and 110 billion yuan was raised by farmers and other sectors.

This year, the country could see the fifth consecutive bumper harvest of summer grain, the first such run of harvests since 1949,the Ministry of Agriculture has said.

Summer crops, which usually account for about 23 percent of the total annual grain output, would surpass the 115.34 billion kilograms produced in 2007, the ministry said.

China yielded approximately 500 billion kilograms of grain last year.