March 13, 2008

China can prevent major fluctuations in domestic grain prices

The Chinese government has the ability to prevent big fluctuations in domestic grain prices despite a global price surge, according to a senior grain executive.

State-owned company, China Grain Reserves, published an article on its website on Wednesday, where its general manager Bao Kexin said China's grain supply and demand are basically balanced although there isn't much surplus in supply.

Whether grain prices will rise and by how much this year should depend on the market, Bao said, adding that grain prices should be higher if the consumer price index is acceptable, as this can help increase farmers' incomes.

China aims to cap the rise in the consumer price index at 4.8 percent this year - the same level as 2007.

Food prices rose 23.3 percent in February, up from 18.2 percent growth in January, helping drive on-year growth in the country's consumer price index in February to 8.7 percent, the highest in almost 12 years.