The central government is working to increase farmers' income by speeding up the agricultural restructuring process, Premier Zhu Rongji said.

Returning more farmland to forest and grassland has proved to be the "most direct and effective" way of boosting farmers' income in the poverty-stricken and ecologically fragile hinterlands, Zhu said during his recent inspection of North China's Shanxi Province.

Farmers' income can hardly grow significantly at a time when the supply of farm product exceed the demand. And now that the country has joined the World Trade Organization, more foreign farm products will be competing in the domestic market, according to Zhu's government report delivered to the National People's Congress last month.

Raising farmers' income has become the biggest concern for the central government because it is vital to ensuring healthy economic growth and social stability, Zhu said.

The government will continue to provide financial aid to farmers who revert their lands into woods in the poor countryside, Zhu said.

The government pays 750 yuan (US$90) in seedling fees and 300 yuan (US$36) in subsidies each year for every hectare of farmland that is reverted, mostly in the barren lands and hills in the country's western and central countryside.

Such an afforestation project, which started two years ago in more than 200 counties in 17 provinces, aims to lift the areas out of poverty and nurse the fragile ecology back to health.

Zhu urged the local governments to deliver the subsidies to farmers involved in the project timely.

Shanxi Province is located along the middle reaches of the Yellow River valley, where more than half the farmlands are infertile slopes. Soil erosion is also a serious problem.