Experts Say the Price Hike of Agricultural Products Will be a Trend

China has been confronting price hikes a year now. The State Council announced a slew of measures during the weekend to rein in rising commodity prices to ease the pressures on people. However, some experts say the price increases are an inevitable trend. He Fei has the details.

"The prices have dropped 20 to 30 percent. For example, the eggplant was about 4.4 yuan per kilo before and now it's about 3.6 yuan."

"Today the cabbage is about 1 yuan cheaper than a few days ago."

After months of price hikes, people finally see a hint of food price stabilization. According to the new measures announced by the State Council, China's Cabinet, local governments are required to boost agricultural production and stabilize the supply of agricultural products and fertilizer while reducing the cost of agricultural products and ensuring the supply coal, power, oil and gas.

Sang Mingde is with the vegetable and subsidiary food department of the Ningbo Bureau of Trade.

"We have subsidies for farmers who plant vegetables. The subsidy is 400 yuan per Mu. We also have subsidies for farmers using organic fertilizers. That's 500 yuan per ton."

China's consumer price index, the main gauge of inflation, rose to a 25-month high of 4.4 percent to the end of October. That was mainly due to a 10-percent surge in food prices.

Kong Xiangzhi, from the School of Agricultural Economics and Rural Development of Renmin University, says the increase rate may slow down next year as the new measures take hold.

"I think the commodity prices may become stabilized or even drop till the first half of next year. But that depends on several combined elements, not only the government's manipulation."

Professor Kong says the price hike earlier this year was triggered by a series of events, including natural disasters which led to the reduction of agricultural output and inflation both in China and abroad. He points out that the new manipulation measures cannot be a cure-all price control.

"On one hand, it may control the malicious speculations to some extent but not eliminate them. On the other hand, the price hikes definitely have a more severe impact on some special groups such as students and low-income people. The measures actually put their needs in priority, regulating several subsidies to needy people. It is a good long-term regime."

He adds that price increases for agricultural products are an inevitable trend.

"First, China lacks cultivated land compared to its large population. Second, the costs of agricultural products are rising, such as land cost and labor cost. Third, we can see that our neighbors like Japan and South Korea, their agricultural products' prices are higher than ours. I'm not sure whether our prices will become as high as theirs but one thing for sure is that the rising price of agricultural products in China is a trend."

For CRI, I'm He Fei.