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, said.

 

In major Chinese cities, prices for top-grade flour rose 7 percent in early December from a month earlier, with soybean oils increasing by about 16 percent, 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 percent 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 level.

 

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 percent, from 2005, the Food and Agriculture Organization said last Thursday.

 

In contrast, China's wheat output increased by 7 percent year-on-year to hit 105 million tons in 2006, slightly exceeding demand, according to Wang.

 

Wheat accounts for nearly 90 percent 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 percent from October.

 

But rice and flour rose by a modest 4 percent, according to the local pricing department.

 

Of the cooking oils, bulk colza and soybean oil led the price hike, rising 37.9 percent and 33.3 percent.

 

In Shanghai, the price of refined oil increased 12-13 percent from a month earlier, with soybean oil showing the biggest gains, according to the Shanghai Economic Committee.

 

(China Daily December 13, 2006)