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People's Daily Online>>China Business

New policy to stabilize food prices

By Guo Kai  (Global Times)

09:35, December 21, 2011

China will focus on government-invested markets as an important way to stabilize agricultural produce prices and meet people's basic needs, according to a document from the State Council.

The document released on Monday said governments at all levels should increase investment in purchasing or constructing agricultural produce wholesale markets, farmers' markets and vegetable markets.

It is the first State Council document that requires local governments to purchase and have a stake in agricultural produce wholesale markets, and to clarify the public welfare nature of fresh agricultural produce markets, Dai Zhongjiu, director of the China Vegetable Marketing Association, told the Economic Information Daily.

Beijing is pioneering government-invested markets and is promoting the model of using reduced stall fees to lower vegetable prices in government-invested markets, said Dai.

Beijing plans to hold stakes in 10 vegetable markets and purchase five vegetable markets in each of the city's districts in the future, said Zhang Yuxi, the board chairman of Xinfadi, the largest wholesale market in the capital, the Beijing Business Today reported.

"The main benefit of involving local governments in running vegetable markets is that it will help the government control retail sales of vegetables, which will then stabilize prices," said Zhang.

"In government-invested markets, stall fees are easy to control, as the government can just shoulder part of the cost," Li Binglong, a professor with the China Agricultural University, told the Global Times.

It would rely heavily on government investment while pushing forward the model, Li noted, while the existence of government-invested markets would influence other market operators. "Rising costs in other areas also affect agricultural produce prices, such as labor costs."

Linking sales directly to production has become a common method of reducing overall distribution costs. The State Council proposals encourage large-scale distribution enterprises to have stable relationships with leading agricultural enterprises.

However, the "hard to sell and expensive to buy" problem is still an outstanding issue across the country. In October, potatoes sold at four yuan ($0.63) a kilogram in Beijing, while in the Inner Mongolia Autonomous Region, about 300 kilometers from the capital, the price was just 0.6 yuan a kilogram, with fewer people buying them, the Beijing Business Today reported earlier.

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