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NDRC consults on edible oil

By Zhao Qian (Global Times)

08:28, July 27, 2012

China's top economic planner made inquiries with major cooking oil producers who announced earlier this month to raise the prices of some products, especially peanut oil, in a bid to stabilize domestic edible oil market and curb inflation.

The National Development and Reform Commission (NDRC) assembled Tuesday to discuss price adjustment plans with major cooking oil producers including Yihai Kerry Foodstuffs Marketing Co and State-owned COFCO, who complained of increasing raw material costs, the Xinhua News Agency reported Thursday.

COFCO did not confirm with the Global Times Thursday whether it had received inquiries from the commission or if it would increase edible oil prices further in an e-mail reply, but said it began to adjust peanut oil prices in July because of rising costs.

"We did face operational pressure because of rising costs, and have taken measures including improving management efficiency to offset costs and to curb price rises," Yu Xue, a staff member from the Public Relations Division at COFCO, told the Global Times.

The spokeswoman of Yihai Kerry told the Global Times Thursday that she had no idea about the commission's inquiry.

The commission could not be reached by press time.

Domestic cooking oil producers like Yihai Kerry and Shandong Luhua Group raised the price of peanut oil by eight to 15 percent at the beginning of July, the second round of price hikes this year. In late March, Yihai Kerry and COFCO raised their peanut and rapeseed oil product prices eight percent.

The average price of peanut oil rose 10 percent between April and July 23. In big cities like Beijing, the growth rate was as high as 25.3 percent, 23.3 percent and 19.2 percent respectively, according to Xinhua's agricultural product price index.

"The hike was mainly caused by the rising prices of peanuts, which are harvested in September and are always in short supply in July and August," said Guo Qingbao, a researcher at oil industry website cnyouzhi.com.

Peanut prices doubled in the last five years from about 5,000 yuan to about 10,000 yuan ($785 to $1,570) per ton, according to the website.

"Unlike a lot of other agricultural products including soybeans, planting peanuts requires heavy labor, the cost of which also rose fast in the last few years," Guo said.

Guo noted soybean oil producers still enjoyed an average profit margin of 10 percent, while average profit margin for the cooking oil sector is between 5 to 6 percent.

Ordinary consumers are forced to choose soybean oil, which is half the price of peanut oil.

"I have no better choice but to use mixed oil and peanut oil, which doesn't taste that good," Li Ming, a 28-year-old Beijing mother told the Global Times.

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