The government has "ample stocks" to meet market demand amid sharp price
rises of some major food items, officials told China Daily yesterday.
"We have sufficient grain reserves supply can be ensured," Yao Xiumin, deputy
chief of the Macro-Management Department of the State Grain Administration,
In major Chinese cities, prices for top-grade flour rose 7 per cent in early
December from a month earlier, with soybean oils increasing by about 16 per
cent, according to official statistics.
"It is not unusual to see prices go up before the Spring Festival, and the
purpose of macro controls is to cap them from rising too much," Yao said.
The government procured at least 41 million tons of wheat, or 40 per cent of
the country's total output, for supply to the urban market, according to
officials. Farmers do not usually count on State reserves for food supplies.
Another factor likely to keep prices in check are good harvests anticipated
this year for all major grains, except for paddy in Southwest China's Sichuan
Province and Chongqing Municipality because of drought, according to Wang
Jianlin of the National Meteorological Centre.
To control price rises, Yao's agency and the National Development and Reform
Commission have approved the auction of 3.8 million tons of grain reserves since
the end of November.
China is capable of keeping the food prices from "spiralling" by selling
State reserves, Yao said, but declined to specify the size of the reserves.
There might have been certain delays in sales of wheat reserves, procured
exclusively by China Grain Reserves Corp, which could have led to price rises
since October, said Wang Xiaobing, an official with the Ministry of Agriculture.
Wang, division director with the ministry's Crops Cultivation Department,
said that as long as the reserves are released at a "reasonable pace," there
would be no problem with supplies; and prices would remain at a reasonable
The shortage in international markets, caused by drought in some grain
producing nations, coupled with rising enthusiasm to use grains for making
biofuel, have also contributed to the rising prices in China, experts said.
The latest forecast for world wheat output in 2006 stands at roughly 592
million tons, a drop of nearly 33 million tons, or 5.3 per cent, from 2005, the
Food and Agriculture Organization said last Thursday.
In contrast, China's wheat output increased by 7 per cent year-on-year to hit
105 million tons in 2006, slightly exceeding demand, according to Wang.
Wheat accounts for nearly 90 per cent of the crops harvested in summer.
Summer grain, in turn, contributes to a quarter of China's total grain
production, Wang said.
In Shenzhen, the wholesale price of cooking oil increased by 20 to 30 per
cent from October.
But rice and flour rose by a modest 4 per cent, according to the local
Of the cooking oils, bulk colza and soybean oil led the price hike, rising
37.9 per cent and 33.3 per cent.
In Shanghai, the price of refined oil increased 12-13
per cent from a month earlier, with soybean oil showing the biggest gains,
according to the Shanghai Economic Committee.