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Government moves to keep grain price low

03-01-2011 15:32 BJT

Authorities have reportedly moved to limit wholesale grain purchases by four State-owned dealers, out of fears that prices could further escalate.

This directive is hoping to strengthen attempts to contain soaring inflation, amid nationwide concerns over higher food prices.

The National Development and Reform Commission (NDRC) ordered the China National Cereals, Oils and Foodstuffs Corporation (COFCO), the China Grain Reserves Corporation, the China National Textiles Import and Export Corporation, and the China Grain and Logistic Corporation to suspend their procurements of grains in the market this year, the China Business reported Monday.

The companies were reportedly notified verbally before Spring Festival, without any official directive, to stop their purchasing of grains, in an attempt to stop their price from soaring, the report said, citing anonymous insiders and procurement personnel with COFCO.

Neither the NDRC nor COFCO could be reached Monday.

Many companies had been purchasing grain since January, but after being told by local and central governments to stop, the prices remained stable in many regions over the Spring Festival holiday, according to the report.

China Business also reported that there was a possibility that tariffs on grains would be reduced, and that overseas purchases would be increased.

The regulations on grain purchases by State-owned companies are the result of government efforts to tame inflation and control food prices.

Chinese Premier Wen Jiabao mentioned Sunday in an online chat with Web users that controlling prices was key to keeping people happy.

He added that the central government had allocated 12.9 billion yuan ($1.92 billion) to help offset the impact from an ongoing drought in rural areas.

Wen said China has ample grain and "abundant" foreign exchange reserves that will help keep rising prices in check.

China's inflation in January came in at a lower-than-expected 4.9 percent, year-on-year. Food prices rose by 10.3 percent.

Prices of main staples such as rice and wheat have been rising across the country in recent months, and as of January, the average price of grain was up 8 percent from November and up 16 percent in the past year, according to the UN's agriculture-monitoring figures.

Editor:Yang Jie |Source: Global Times

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