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A contingency plan to stabilize Beijing's food supply following recent grain price increases will be introduced by the city's municipal food supply authorities. 

Officials told Beijing residents yesterday there was no need to panic because the city has abundant supplies of all food types. The contingency plan will cover the entire supply chain in Beijing from processing to commercial supplies.

Ma Changwang, deputy director of the municipal grain bureau, said the city had sufficient resources of rice, flour and vegetables. Delivery of the products had been "normal" despite some price rises.

However, the official did foresee an increase in staple food sales during the forthcoming festive season and the Chinese Lunar New Year.

Beijing itself has limited farmland resources and is dependent on cross-region supplies for more than 90 percent of its daily food supplies.

The cost of many food items has increased in the last few weeks on the back of higher corn and wheat prices.

Sources at the Dalian Commodity Exchange said corn prices had jumped 19.5 percent in the past two months ending November. This is a 10-year high.

In east China's Shandong Province wheat prices have risen from below 1.4 yuan (US$17 cents) per kilogram in September to 1.6 yuan (US$19 cents).

Prices for edible oil and flour along with some other products have increased on average by 10 percent since August, according to the municipal grain bureau.

For rice, which mainly comes from the three northeastern provinces of Heilongjiang, Jilin and Liaoning, the average price rise has been 0.12 yuan (US$1.6 cent) per kilogram.

The three brands of edible oil that dominate the Beijing retail market all saw their prices go up between 8 and 19 percent last month compared with October, according to the local media.

The price of flour reportedly increased more than 4 percent in about two weeks in south China's Guangdong Province from 2.2 yuan (US$28 cents) per kilogram on November 15 to 2.3 yuan (US$28.2 cents) on December 3.

In Shanghai soybean oil has also seen a major hike ranging from 17 to 21 percent in the last two months, the Shanghai Morning News reported.

Experts say the price rises are a rational recovery from the low-side, witnessed in the early months of the year, and a normal adjustment in the domestic and foreign markets.

Cheng Guoqiang, a senior professor with the Development Research Center of the State Council, said the increase in the price of wheat was due to the minimum purchase price for the grain imposed by the central government.

"Following three consecutive years of bumper harvests the state imposed the minimum prices to curb a possible over-flow to protect farmers," Cheng said. "With better prices farmers sold more wheat early this year than previous years resulting in a tighter supply for the rest of the year."

(China Daily December 7, 2006)