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Lift veg output to cut food costs
By Wang Yanlin |
September 4, 2010, Saturday
|
Print Edition
Print Edition
China has ordered local governments to reduce food prices by raising vegetable production and improving retailing services for the people, the State Council, the nation's Cabinet, said in a statement yesterday.
Local governments have to ensure markets have at least a week's supply of vegetables, and banks should extend loans to producers for them to increase vegetable output amid a possible shortage due to the summer's extreme weather and several natural disasters.
There should be subsidies to encourage the construction of wet markets and stores selling vegetables and other food, while leasing fees should be affordable for vendors.
Over the long term, the State Council will also require big cities with a population above 1 million people to allocate more land for planting vegetables and other staple food to ensure supply needs are met.
"Ensuring vegetable supply and price stability is an important task for now and in the future," the statement said. "Realizing the importance and urgency of this issue, local governments should try to manage inflation expectations."
The Consumer Price Index, a main gauge of inflation, is set to hit a new record in August after rising 3.3 percent in July, the fastest pace in 21 months.
Food costs, which account for one-third of the CPI basket, climbed 6.8 percent from a year earlier in July, while prices of the non-food sector rose 1.6 percent.
Wang Qing, a Morgan Stanley economist, forecast the headline CPI to rise 3.4 percent in August on higher food costs.
But Wang said with government intervention food prices may stabilize as production gears up to meet demand.
Local governments have to ensure markets have at least a week's supply of vegetables, and banks should extend loans to producers for them to increase vegetable output amid a possible shortage due to the summer's extreme weather and several natural disasters.
There should be subsidies to encourage the construction of wet markets and stores selling vegetables and other food, while leasing fees should be affordable for vendors.
Over the long term, the State Council will also require big cities with a population above 1 million people to allocate more land for planting vegetables and other staple food to ensure supply needs are met.
"Ensuring vegetable supply and price stability is an important task for now and in the future," the statement said. "Realizing the importance and urgency of this issue, local governments should try to manage inflation expectations."
The Consumer Price Index, a main gauge of inflation, is set to hit a new record in August after rising 3.3 percent in July, the fastest pace in 21 months.
Food costs, which account for one-third of the CPI basket, climbed 6.8 percent from a year earlier in July, while prices of the non-food sector rose 1.6 percent.
Wang Qing, a Morgan Stanley economist, forecast the headline CPI to rise 3.4 percent in August on higher food costs.
But Wang said with government intervention food prices may stabilize as production gears up to meet demand.
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