Wen orders crackdown on food hoarding Li Xiaowei 2006-12-14 PREMIER Wen Jiabao ordered government departments to crack down on hoarding and ease supply bottlenecks to cap surging food prices that threaten to fan inflation and create social unrest, Bloomberg News reported.
Stockpiling of food by traders who speculate on future gains should be closely watched and efficient stocking, logistics and distribution ensured, Wen said on Tuesday during a tour of food markets in Beijing. His remarks were broadcast on China Central Television.
Corn, soybean oil and wheat costs have increased after global prices of the commodities reached 10-year highs in October and November as droughts in the United States and Australia cut crop yields. Food costs, which make up a third of the consumer price index in China, rose in November at the fastest pace in almost two years.
"The government's got to take a stance now on rising food costs, given that food accounts for such a large a share of consumer expenditure in China," said Zhang Qiushi, general manager of Dalian Northern Futures Brokerage Co.
The rising cost of food caused China's inflation to accelerate to 1.9 percent in November, the fastest pace in 20 months, a report showed on Tuesday. Tang Xu, research head of China's central bank, called the jump in prices "temporary."
China was set to auction 500,000 metric tons of rice yesterday and at least 650,000 tons of wheat today in a bid to bring down grain prices, which surged 5.1 percent in November from a year earlier after climbing 4.7 percent the previous month.
The government will also cap prices of oil, steel and public services including health care and education, Wen said.
Higher prices of edible oils pose a bigger threat to consumers than rising grain costs because oils account for a larger share of the average Chinese family's spending on food, said Zhang.
Wen said rising food costs will hurt low-income families the most in a nation where about 150 million people still live on less than US$1 a day.
"Surging food prices may not affect families with average incomes, but it will affect those with low incomes," Wen was quoted by Xinhua news agency as saying. "I feel at rest only when people have a stable life."
Even so, gains in food prices will benefit China's 750 million farmers, who have profited less than other groups from two decades of annual economic growth averaging almost 10 percent, Zhang said. Wen vowed to protect farmers' interests while stabilizing food prices.
Soybean oil for delivery in May 2007 fell 46 yuan (US$5.87), or 0.7 percent, to settle at 6,716 yuan a ton yesterday on the Dalian Commodities Exchange. The contract has surged 25 percent in the past seven months.
Strong-gluten wheat for delivery in September 2007 fell 15 yuan, to settle at 1,867 yuan a ton on the Zhengzhou Commodities Exchange.
