Logistics to help stabilize food prices

Updated: 2011-12-23 08:06

By Zhou Siyu (China Daily)

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BEIJING - China will strive to improve logistical connections between farms and supermarkets to develop the agricultural sector while stabilizing food prices, said a senior official from the Ministry of Commerce on Thursday.

"Closer connections between farms and supermarkets will give urban residents a wider choice of agricultural products while boosting farmers' incomes," said Jiang Zengwei, vice-minister of commerce.

"It will also help stabilize food prices, easing the government's burden in combating high inflation," he added.

Jiang made the comments at a conference held by seven government ministries in Beijing. The meeting came one week after the government issued a directive calling for the accelerated development of the agricultural logistics system.

According to the directive, the country will facilitate the construction of logistics and storage facilities for farm products, improve the market information network for farmers and provide financial support to retail markets of agricultural products.

With better logistics, city dwellers could get much cheaper food, while farmers could earn 10 percent more by selling direct to supermarkets instead of using middlemen, according to the Ministry of Commerce.

Logistics costs account for more than 20 percent of the price of China's agricultural products. For fruit, the percentage is even higher, said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant Ltd, a major agricultural consultancy.

Improving the logistics system "would put downward pressure on China's food prices and help the government contain the inflation rate", Ma said.

The government has made inflation fighting a priority this year. In July, the consumer price index (CPI), the chief gauge of inflation, surged to a 37-month high of 6.5 percent from the year before.

The CPI slid to 4.2 percent in November, the lowest point in 14 months, according to the National Bureau of Statistics.

The CPI's average monthly increase from January to November was 5.5 percent, official data show, well above the government's full-year target of 4 percent on average. Higher farm product prices were believed to be a major driver of the surging inflation rate.

"The government will encourage the development of several major companies for cold-chain transportation, packaging and the storage of agricultural products," said Jiang.

Less than 15 percent of China's agricultural products are transported using cold-chain equipment, industry data show. This type of equipment keeps food at a constant temperature.

The commerce and finance ministries have allocated 3.76 billion yuan ($578 million) so far to support 2,135 development projects for more than 1,200 agricultural companies and retail markets.

Shandong province, one of the chief sources of fruit and vegetables in China, has 140 cold-chain transportation systems and a total logistics capacity exceeding 300,000 tons, according to data from the provincial government.

China Daily