BEIJING, CHINA — China will end its state corn stockpiling program this year, replacing it with other subsidies, amid surging reserves in the world’s second-biggest grower, the official Xinhua News Agency reported.

The government will encourage state and private firms to buy corn at market prices and offer credit support to farmers, Xinhua reported on March 28, citing a press briefing by the National Development and Reform Commission. It will also promote changes in crop cultivation and move to reduce existing stockpiles, the news agency said. The changes will affect the 2016-17 season.

China said in January it was assessing changes to its corn purchasing and reserve program to make it more market based. The government began subsidizing output in 2008, acquiring grain at above-market prices to protect farm incomes. That increased domestic production by more than 35% and China now grows and consumes more than any nation except the U.S., Bloomberg reported.

“Farmers are wondering what they should plant for this spring, how much they would be subsidized and whether the subsidies are able to cover the losses from falling corn prices,” said Yan Zhang, an analyst at Shanghai JC Intelligence Co.

Corn for September delivery on the Dalian Commodity Exchange added 0.4% to close at 1,575 yuan ($242) per tonne after slumping 3.2% on March 28. Prices are down 17% this year. The contract for January delivery lost 0.5%, sliding for a fifth day, Bloomberg reported.

Agriculture Minister Han Changfu said this month that China will seek to reduce acreage planted with corn in less-efficient production areas. The government had already announced a 10% cut in the price it pays for corn in September as a way to deplete inventories.

Domestic corn stockpiles are forecast at 111.5 million tonnes at the end of the 2015-16 season, U.S. Department of Agriculture data show. That’s more than double the reserves held in the U.S. and more than half of world inventories, Bloomberg reported.

“Like others, we are closely following the market implications of the announcement from China that it will end its corn stockpiling program and reduce its surpluses of corn that have negatively impacted global markets,” the U.S. Grains Council said in a statement.

“Our offices in Washington and Beijing have been monitoring signals that reforms were coming. While we are surprised they have been accelerated, we are hopeful they will be a step in the right direction toward more market-oriented decisions related to the supply and demand for corn,” USGC said. “Although domestic corn prices in China have declined by about 30% in the past six months, and this announcement has had market impacts already, Chinese corn is still priced well above the world market. We will be seeking additional details about this announcement and monitoring its ongoing impact on feed grains markets, particularly as farmers in both our country and China begin planting.”