By Yu Tianyu (China Daily)
Updated: 2008-03-22 09:56

As global agricultural product prices are expected to keep climbing in the short term, transparent competition mechanisms and technological development are key to ensuring China's agricultural commodity security, said Gregory R Page, CEO and president of Cargill Inc, a globally leading provider of food, agricultural and risk management products and services.

A major trend in agricultural production pricing is a strengthening of the link between production prices and global energy prices, Page said.

"The linkages are becoming more sensitive," he added.

Page also said that with petrol prices soaring globally, he doesn't expect any dramatic declines in agricultural commodity prices in the short term.

He said if the oil price doesn't drop to between $65 and $70 a barrel, agricultural product prices would continue rising because of increasing global demand.

So, Page said, the free trade system and transparent competition mechanisms have become crucial to food safety for every country.

Taking protective measures, such as raising export tariffs, is not helpful to the development of agricultural industries, because it would discourage farmers from planting certain crops.

"It will exert negative impacts on the prices in the long run, as the supply of agricultural commodities has been extensive," he said.

A better choice is to let the farmers receive specific signals from the market and then produce what the markets needs. "Following the market adjustments, it could largely prevent food crises, as well as promote the development of industries," Page said.

Another reason for soaring agricultural product prices is the increasing frequency of severe weather and climate-related natural disasters, which cannot be prevented, Page added.

Investing in education and research, and encouraging technical innovation would improve production capacities and disaster response capabilities. It would also ensure China's food safety and curb soaring food prices, Page explained.

"What Cargill has been doing is introducing advanced technologies to China and sharing our experiences of investment and risk management with them," he said.