For farmer Ma Peilai, life seems no easier despite the abolition of the agricultural tax last year, which weighed down the vast population of Chinese farmers for 26 centuries.

"I'm hoping for a new start but I doubt my family could become rich with my seven mu (0.47 hectares) of land even without tax," said the 50-year-old man living at the Jiangzhuang Village in East China's Shandong Province, a major grain production base. Ma's worries are not unfounded.

They are perfectly echoed by the government work report made by Premier Wen Jiabao to the fourth session of the 10th National People's Congress on Sunday, which confessed, "the difficulties for increasing farmers' incomes are mounting with a surge in price of agricultural production-related materials and a blue grain market."

China began to do away with the agricultural tax in 2003. The 900 million Chinese farmers can save 120 yuan (15 U.S. dollars) each every year.

Ma's seven-strong family had to pay up to 1,700 yuan (212.5 U.S. dollars) a year to the local government in the past, accounting for one third of their total annual income.

"It's good because we can 'join the battle with lighter backpacks' now and finally we don't have to feed some crook taking advantage from us under the pretence of a legal tax," said Ma.

Ma's expectations, however, were soon dashed by the reality.

The price for fertilizer and pesticide had increased by a record 30 percent since 2003, while the average price for wheat had dropped more than 10 percent, according to the latest statistics from the National Statistics Bureau.

Ma said he spent over 200 yuan (25 U.S. dollars) more on fertilization, but earned nearly 600 yuan (75 U.S. dollars) less by selling wheat in 2005.

Countermeasures launched by the government like fixing the prices of fertilizer and pesticide had little effect.

"The benefit brought to farmers by ending the agricultural tax might be offset," said Qin Qingwu, head of the rural economic research center under the Shandong Provincial Academy of Social Science.

Ma's family relies on its land, from which most of their annual income of some 4,000 yuan (500 U.S. dollars) comes from.

Half of the money was used to support the high school education of his daughter, said Ma. "Of course, I know it is not practical to become rich just by growing crops, but I found no other way."

Ma spent more than 2,000 yuan (250 U.S. dollars) to raise pigs with his fellow villagers two years ago, but he lost every cent invested

"We don't know how to raise pigs and no one came to teach us," said Ma, complaining the officials at the town showed little support.

Qin said the termination of the agricultural tax is the start of building a long-lasting mechanism to promote rural development.

"More importantly, the government should help the farmers become more prosperous by developing modern high-tech agriculture and building a complete social welfare system to provide necessary medical care and annuity for farmers," said Qin.

Qin also suggests the surplus rural labor force could find work in the service sector.

Wen said in this government report that the Central Government would give priority for rural development in financing, especially for promoting grain production and raising farmers' income.

The government would also provide subsidies for farmers to buy agricultural machineries and promote agricultural technology application.

"I hope my family can earn more and spend less with the new government policies," said Ma.