Officials in quandary on prices of vegetables

PUBLISHED : Tuesday, 26 April, 2011, 12:00am
UPDATED : Tuesday, 26 April, 2011, 12:00am


Mainland officials are dealing with a tough balancing act: cracking down on price rises to curb inflation while also starting a campaign against the sagging prices of farm produce to stave off rural discontentment.

The agriculture and commerce ministries have asked local watchdogs to help farmers sell produce such as cabbages and celery, which suffered poor sales in some parts of the country in the past few weeks.

Yet prices in the retail market remain high - the result of rising transport costs and fees at vegetable markets, experts say.

Average prices for green beans dropped 15.5 per cent in 50 cities from April 11 to Wednesday compared with the first 10 days of this month, the National Bureau of Statistics said on its website yesterday. In addition, cucumber prices fell 11.5 per cent, celery prices dropped 6.5 per cent and tomato prices declined 2.3 per cent.

Frustration over low prices has prompted vegetable farmers in Beijing, Shanghai and in Shandong, Zhejiang and Henan provinces to dump hundreds of thousands of kilograms of cabbages, celery and other produce.

In Jinan, Shandong, an oversupply of cabbage caused prices to fall to just 20 fen (12 HK cents) a kilogram from last year's two yuan.

But retail prices in many community markets in Beijing, a major consumer of vegetables produced in Shandong, have not fallen accordingly. Wang Wanli, a vendor at the vegetable market in the Tuanjiehu community, said cabbages now sold for 1.6 yuan a kilogram, when during good times they sold for three yuan.

'The purchase price might be lower, but you still need trucks for transport, and rent is always rising,' he complained.

Professor Li Guoxiang, of the Chinese Academy of Social Sciences' Rural Development Institute, agreed that high transport costs, which include increasing diesel fuel prices, and rising rent for stalls in markets had offset the wholesale price drops.

'The two ends cry and the middlemen laugh - that's how we describe China's farm produce supply chain today,' he said, implying that most of the benefit had gone to traders while growers sold at low prices and consumers paid high prices.

Gao Wang, an analyst at Beijing Orient Agribusiness Consultant, said the government had failed to find a long-term remedy for the problem. Instead, it tackled new situations with short-sighted, temporary measures such as subsidies and government purchases.

He expected prices to fall further because they are usually at their lowest in April and May.

Average wholesale vegetable prices fell 9.8 per cent in the week that ended April 17 from the earlier seven-day period, the Ministry of Commerce said last Tuesday. It was the fourth weekly decline reported since March 13.