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China to boost egg production as prices rise

BEIJING, April 18 (Reuters) - China has outlined steps to increase egg production in the face of rising food prices that planners fear could trigger unrest.

Demand for eggs, poultry and meat is rising as 30 years of economic reforms and increased incomes have raised the amount of protein that most Chinese eat.

But despite a move towards industrial farms, small farmers still account for much of China's supply. High feed costs and the threat of losing their flocks to disease or culling campaigns have pushed some out of poultry breeding.

Consumer inflation is running high, driven largely by a spike in food prices, which has pushed a government fearful of social unrest to pump up agricultural subsidies, including on laying hens and promoting new breeds.

It is also preparing compulsory compensation to farmers whose flocks are culled in the fight against bird flu, the central government said on its website (www.gov.cn) on Friday.

It would support reconstruction efforts in southern China, where unusually harsh winter storms killed over 67 million poultry, and encourage large-scale farming, it said.

Egg prices were 16 percent higher in the first quarter this year than in the same period of 2007 and chicken prices 17 percent higher, according to the National Bureau of Statistics, buoyed by strong grains prices that make feed more expensive for farmers.

Corn prices rose by 9 percent last quarter compared with the first quarter of 2007, and soybean prices rose 37 percent.

Encouraging egg and poultry breeding, especially by industrial farms, could further increase China's demand for grains. (Reporting by Lucy Hornby; Editing by Nick Macfie)

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