China Sells Wheat from National Grain ReservesOf the total, 276,000 tons worth 387 million yuan (US$46.6 million) were sold when the auction concluded at five o'clock in the afternoon. This is the third auction of this year, and the sixth since China began to invite bids for its national grain reserves in 1999. The China Grain Reserves Corporation (CGRC), the seller, said that the purpose of the auction was to sell old wheat in order to buy new wheat. More than 600 traders representing some 130 companies from 22 provinces and municipalities gathered in Tianjin for the auction. "The wheat looks good and it's not always available in the market," said a trader from south China's Guangdong Province, "we are given many options too." Samples of 337 wheat varieties were on display. Many business people were satisfied with the quality. The wheat was imported from Canada, the United States, and Australia in 1996. They are now stored in barns in 16 provinces, including north China's Hebei Province, northwest China's Shaanxi Province, east China's Fujian Province and south China's Guangdong Province. "Today's auction is nationwide. It will influence the grain prices a little bit but not decisively," said Wang Qingrong from the Tianjin cereals and oils wholesale market, one of the three major wholesalers for China's national grain reserves. The other two are located in Zhengzhou of central China's Henan Province, and Dalian in northeast China's Liaoning Province. According to CGRC general manager Gao Tiesheng, China is able to effectively practice macro-control with the national grain reserves through public trading at wholesale markets. It will become an important way for CGRC to achieve an efficient operation at a lower cost. Gao said that buying and selling national grain reserves will continue to be done via the market in the future. E-business will also be introduced to further improve efficiency and fairness. China had practiced State monopoly for the purchase and marketing of grains between 1953-1984. It gradually introduced contract purchasing in the mid-1980s. China established the national grain reserves system in 1990 aiming to regulate crop failure with bumper harvests, protect the interests of farmers, and control the domestic grain market. However, the inflow and outflow of national grain reserves were carried out through quotas distributed to local grain dealers. The government was not active and preventive in guiding the market and influencing the prices. The central government found it difficult to stabilize the grain market with the subsidies. Because the price of grain reserves was usually lower than the market price, some local grain dealers advanced the price or even cornered the market. The current auction of the national grain reserves is much more efficient, quick in reaction, fair, and less costly. China's grain wholesale markets have witnessed sound performances as over 90 percent of the contracts were executed. "Price bidding makes the business fair and clear. I will come here and buy more in the future," said Liu Xiliang, board chairman of Tieling Dongshou Flour Co. Ltd in Liaoning Province. Liu bought 2,500 tons of Canadian wheat and 2,500 U.S. wheat for his company. This was the first time that Liu has attended such an auction. He said that grain business used to be blind as both buyers and sellers were ill-informed. Prices differed from place to place. Experts took the auction as part of the reform China has done to its grain circulation system, looking for a new way of rotating, inflow and outflow of the country's grain reserves. China has set up thousands of grain wholesale markets across the country. Over 20 of them are large-scale and relatively mature markets. |
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