Center

Keep a close watch on rising grain price

By Shi Weigan (China Daily)
Updated: 2006-12-16 10:16

On December 7, the State Grain Administration (SGA) and theNational Development and Reform Commission(NDRC) held auctions on the grain wholesale markets inAnhuiProvince and Zhengzhou,HenanProvince.

Bidders bought 636,000 tons of wheat for 820 million yuan (US$102.5 million) during the auctions.

Residents in Zhengzhou, Henan Province purchase edible oil in a supermarket on November 3. Grain and edible oil have seen continuous price increases since November in major cities around the country. [Newsphoto]

This is the fourth bid to sell wheat from the government's reserves since November 25. And 3.8 million tons of wheat from the State reserve have been sold on the market.
The frequency of the auctions and the total amount of wheat under the hammer is unusual since the country established a temporary reserve for wheat, indicating the earnest resolve of decision-makers to stabilize the grain price.

Grain and edible oil have seen continuous price increases since November in major cities around the country. As a result, the prices of rice, flour, vegetables, edible oil and many other foods jumped by various degrees, most of them up by more than 10 per cent.

The prices of grain and edible oil are so crucial to the daily lives of millions of families that even slight changes would have a great impact on social stability. It is natural for authorities to pay close attention to this issue.

During the three open auctions held in November, 3 million tons of wheat in temporary reserve were sold, but this failed to beat down the grain price as expected.

Several central government departments, including the Ministry of Finance, the NDRC and the SGA, consulted with the Agricultural Development Bank of China and the China Grain Reserves Corp in December, issuing a notice on selling the wheat in State reserves.
The market price of wheat has now been brought under control and is steady after 3.8 million tons were poured into the market.

But what about the price of rice, edible oil and vegetables? What kind of counter-measures should be taken to ease the rising cost of agricultural produce?

The cost increases actually started in August when the price of edible oil began to float. The price of rice, wheat and other produce began to rise considerably in November.