Chinas agricultural production prices rose by 18.5% in 2007. Influenced by this, CPI rose by 4.8% and food prices rose by 12.3%. The increase in agricultural product prices greatly increased farmers incomes. It is worth noting that the continued rapid increase of agricultural product prices will certainly result in an increase in labour costs and production costs in industries which use agricultural products as raw materials, thus increasing the risk of structural price increases leading to noticeable inflation. Allowing for the interests of both producers and consumers, agricultural product prices must be set within an appropriate range. Excessive increases in agricultural product prices will be bad for both consumers and producers. Establishing a long-term mechanism for increasing agricultural output and farmers incomes is rooted in intensified reform in rural areas to promote agriculture and rural economy. This chapter discusses several issues that are unavoidable as part of this intensified reform.