Executives of China's major edible oil manufacturers and guild leaders were
summoned to Beijing yesterday for a closed door meeting at which the government
required them to step up production to rein in the soaring market prices.
An official with the National Development and Reform Commission(NDRC) who
asked not to be identified said it was understandable for the edible oil
processing firms to raise prices as the continuous rise in the cost of raw
materials had increased their production costs.
However, the public had responded strongly to the price hikes of edible oils,
coming as they did with rapid rises in the prices of other goods, the official
said.
Edible oil makers were told to "deepen their sense of social responsibility"
and "bear the overall interests of the country in mind".
Incomplete statistics from various regions show prices of domestic edible
oils rose by 20 percent from November last year to June as the prices of peanuts
and other oil-bearing products had risen.
In eastern Shandong Province, first grade peanut oil has risen by 28.6
percent from 14,000 yuan per ton in April to a record 18,000 yuan per ton. While
supermarkets marked down cooking oils to boost sales, people were reportedly
standing in long queues. On Oct. 26 in Shanghai, 15 shoppers were injured after
people swarmed in a local supermarket to snap up edible oils on sale only five
minutes after the store opened.
But the latest weekly market monitoring report by the Ministry of Commerce
showed the prices of cooking oils fluctuated only slightly from Oct. 22 to 28,
with the prices of peanut oil edging up 0.1 percent from a week earlier, while
rapeseed oil was down 0.1 percent, and soybean and blended oils were basically
the same.
Wang Hanzhong, director of the Oil Crop Institution of the Chinese Academy of
Agricultural Sciences, attributed the price hikes to a shortfall of oil crop
output as the acreage under oil crops had dwindled drastically. Major oil crop
producer Hubei Province, for example, had found the acreage under rapeseed
shrank from 18 million mu to 15 million mu last year. The situations in Sichuan,
Anhui and Jiangsu were even worse.
Soaring domestic demand that registered an annual average growth of 8.95
percent from 14.54 million tons in 2001 to 22.35 million tons in 2006, had
aggravated the problem, turning China into the world's largest edible oil
consumer. Domestic edible oil supply met just 40 percent of domestic demand.
In a statement after the meeting, the NDRC spelled out five requests
including the supply of more small-package oil to meet market demand.
Oil processors were not allowed to disturb market order or stoke up fears for
price hikes by hoarding raw materials, rigging raw material supply, cutting
production or restricting supply.
Price hikes must be kept within reasonable margins and be made when
absolutely necessary, it said, adding that oil processors must enhance cost
controls, improve management and absorb the costs from raw materials as much as
possible.
The NDRC also warned large cooking oil makers not to collude insetting prices
or provide short measures or shoddy products.
Under current price conditions, enterprises should transfer part of their
interests to the people and cherish their public reputation, it said.
Industrial associations were required to provide guidance to firms, make sure
they abide by laws and regulations, admonish enterprises in cases of unfair
competition, and keep market supervisors informed of the malpractice.
If the price hikes exceeded the extra production costs, market supervisors
would step in, it warned.
Without identifying the participating cooking oil makers, the statement said
that representatives from business communities had promised to maintain market
order with their actions and contribute to the stabilization of market prices.
China's consumer price index, a key measure of inflation, rose by 6.2 percent
in September after hitting an 11-year high of 6.5 percent in August, while food
prices jumped by 16.9 percent from January to September over the same period of
last year, figures from the National Bureau of Statistics showed.
The Ministry of Agriculture released 11 measures in late September, including
rewards to major oil crop planting counties as well as total subsidies of 300
million yuan for soybean cultivation and assistance of one billion yuan for
rapeseed cultivation.
The import duty on soy beans was also cut from three percent to one percent.
The State Grain Administration released 200,000 tons of state edible oil reserve
to meet rising demand prior to the the National Day holiday that fell on Oct. 1.