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Grain price hikes set to continue
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Grain prices will continue to edge upwards next year despite a turbulent 12 months in which costs soared, according to a leading agricultural policy maker.

The surging cost of oil, production material and fertilizer will make it increasingly difficult for the government to curb hikes generated by rising food prices since last year.

"Rising oil prices will be boosting costs for the agricultural sector and the price hike trend will continue next year," said Chen Xiwen, deputy director of the Office of the Central Leading Group on Financial and Economic Affairs yesterday.

Chen made the forecast despite news from the Minister of Agriculture Sun Zhengcai last week that China would record a fourth consecutive bumper food harvest and an output of 500 million tons, a target originally set for 2010 by the National People's Congress, China's parliament.

"The grain supply can be guaranteed but the prices will go higher driven by growing cost," said Chen, who is also director of the Office of the Central Leading Group on Agricultural Affairs.

Production materials and fertilizer costs increased by a year-on-year average of 17 percent during the first nine months of 2007.

Chen said rising oil prices, after reaching a record high of about $90 a barrel last week, would continue to drive up costs for the agricultural sectors.

The National Development and Reform Commission (NDRC) said grain prices both at home and abroad continued to increase in September, when rice, wheat and corn prices shot up 8.9 percent, 10.2 percent and 16.1 percent on corresponding time in 2006.

Rice, wheat and corn reached 1,710 yuan (US$220), 1,561 yuan (US$201) and 1,472 yuan (US$189) per ton, respectively.

In international markets, rice, wheat, corn and soybean increased year-on-year by 3.1, 112, 47.3 and 75.1 percent, respectively, in September.

Huang Jikun, a think-tank agricultural expert with the Chinese Academy of Sciences, said China's foodstuff market had been integrated into the global market and "the high-rising trend would unavoidably affect the domestic grain prices".

Rising food prices have already become a thorn in the side of the government's goal of minimizing consumer costs.

"The rise of foodstuff prices may lead all the other commodities to follow suit," NDRC Vice-Minister Zhu Zhixin said last week.

He made a cautious forecast at a sideline press conference of the 17th CPC congress that China's price level would remain high and that the growth rate would slow down.

China's consumer price index, a major barometer for inflation, eased slightly to 6.2 percent in September after surging to an 11-year monthly high of 6.5 percent in August, Zhu said.

(China Daily October 22, 2007)

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