Govt: Emergency in rising grain, oil, food prices

BEIJING - The rising prices of grains and edible oil in China is unlikely to drop in the fourth quarter, but the quick rise lasting months is likely to slow, predicted economists.

China's grain and oil prices have maintained an upward trend for months.

The State Development and Reform Commission (SDRC) had organized a nationwide emergency research of the price hike. Reports on price hikes of all localities have been presented to the industry watchdog, and it is studying how to deal with the situation.

The latest economic data in August released by the National Bureau of Statistics has caught high attention of all sides in the market. China's consumer price index (CPI) went up 5.3% year on year in August. The main pulling factor is the price hike of foods: on a yearly basis, the price of grains soared 31.8% in August; fats, 22.5%; meat and poultry and their products, 23.5%; and eggs, 30.3%.

In such a situation, all localities announced various emergency plans to aid residents of low income and some local governments have granted subsidies to people covered by the minimum cost of living program in the way of providing coupons.

Researches shows though standards for low-income people differ in different regions, this group of people has a common character, that is, they use the majority or even all of their income for food, with an Engle coefficient as high as 80-10%.

According to the standard put forward by the Food and Agricultural Organization of the United Nations, people live in poverty with the Engle coefficient higher than 59%, simply have enough food and clothing with a coefficient of 50-59%, lead a relatively comfortable life with a coefficient of 40-50%, live a rich life with a coefficient of 30-40%, and have the richest life with a coefficient lower than 30%.

Experts pointed out the CPI hike was triggered by the grain price hike, and that the price hike of main farm products resulted from the supply reduction which was caused by the structural adjustment.

The price just presented a kind of rehabilitative growth on the basis of the negative growth in previous years and it is still low and on the ascendant, experts added. From 1999, China's grain production started to decline gradually. The grain shortage has stayed at 25 million-35 million tons annually since 2000.

(Asia Pulse/XIC)