(Adds comment from U.S. Agriculture Secretary, background)
By Niu Shuping
BEIJING, Dec 3 (Reuters) - China's largest soy producing province, Heilongjiang, has confirmed its part in a central government plan to buy more grains and soybeans for reserves.
The scheme is an effort to shore up prices and protect farmers' incomes, thereby avoiding hardship and unrest among the rural population.
Beijing has given approval for the northeastern province to double its purchases, adding an additional 1 million tonnes of soybeans, the Heilongjiang Grain Bureau said in a statement on its Web site (www.hljlsj.gov.cn).
The province will also double purchases of corn to 2.6 million tonnes and boost rice buying from 2.4 to 5 million tonnes, it said.
The increases were in line with trader talk that Beijing plans to double purchases of soybeans to 3 million tonnes and corn to 10 million tonnes.
Traders also said Beijing will buy a total of 10 million tonnes of rice in the whole country to boost domestic prices after a record grain harvest and weak demand caused them to slip.
Local soy crushers have blamed the government's soy stockpiling plan for making local prices unaffordable and driving some buyers towards imports.
The Grain Bureau said the extra purchases aim to "stabilise grain prices, protect farmers and to ensure farmers do not face difficulties in selling their grains".
STORAGE DRIVE
The central government will also invest 1 billion yuan ($145.4 million) to build state facilities for drying grains and storing edible oils and oilseeds, the National Development and Reform Commission said in a separate statement.
The investment, part of a huge government stimulus package to revive the economy, will add new storage capacity for 964,000 tonnes of edible oils and 1.34 million tonnes of oilseeds, it said on its web site.
China has initiated a state stockpiling plan for soybeans and soyoil this year, aiming to build 5 million tonnes of soy and 1.5 million tonnes of soyoil, traders said. The figures include imports of about 2 million tonnes of soybeans.
The government move has angered some crushers in Heilongjiang because farmers are now demanding the high prices they can get from selling to the government, forcing crushers to pay up or turn to imports for a cheaper supply.
The situation has prompted market rumours that the government could act to restrict imports to rebalance the situation, although such a move could prove counterproductive, since China is the world's largest importer, relying on the international market for the bulk of its consumption.
U.S. Secretary of Agriculture Ed Schafer, in Beijing for talks on Wednesday, said the subject was not on the agenda for his talks with Chinese officials and he was unaware of any move by China to consider raising tariffs on soybean imports.
Under the Chinese government plan to invest in agricultural infrastructure, it will build tanks for storing edible oil in the coastal areas in the southeast and south, said the commission. Part of the investment will go to new grain drying facilities in some northeastern provinces, it said.
China's grain harvest is expected to hit a record 525 million tonnes, according to the NDRC. But weak demand from processors and feed mills have led corn prices in some areas to fall below planting costs, triggering worries that dwindling incentives for farmers may threaten next year's grain production.
(Additional reporting by Lucy Hornby)
(Reporting by Niu Shuping; Editing by Ken Wills)