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Edible oil firms urged again to be reasonable in pricing

(Xinhua)
Updated: 2007-11-06 17:20

China's major edible oil manufacturers and traders were urged again on Tuesday by the central government to exercise self-discipline and to be reasonable in price-setting in the wake of rising market prices for the product.

In a harshly-worded statement, the National Development and Reform Commission (NDRC), the nation's top economic planning agency which oversees price affairs and other economic and social matters, said edible oil producers and traders would face punishment, including fines of up to 300,000 yuan (US$40,000), and have their business licenses revoked for violation of price laws and regulations.

Major edible oil maker executives and guild leaders were summoned to Beijing on Monday by the commission for a closed door meeting where the government asked them to step up production to rein in the soaring market prices, the commission said in a statement made public late on Monday.

An NDRC official who asked not to be identified, said it was understandable for the edible oil processing firms to raise prices as a continuous rise in the prices of raw materials had increased their production costs.

Rough statistics from various regions revealed the prices of domestic edible oils rose 20 percent from November last year to June as prices for peanuts and other oil-bearing crops rose.

However, the latest weekly market monitoring report by the Ministry of Commerce showed the prices of cooking oil fluctuated only slightly between October 22 to October 28. The price of peanut oil edged up 0.1 percent from a week earlier, while rapeseed oil was down 0.1 percent. Soybean and blended oils were basically the same.

In a statement made after the meeting, the NDRC spelled out five requests, including increasing the supply of more small-packaged oils to meet market demand.

In addition, oil processors were not allowed to disturb market order or stoke up fear for price hikes by hoarding raw materials, rigging raw material supplies, cutting production or restricting supply.

Price hikes must be kept within reasonable margins and be made when absolutely necessary, it said, adding that oil processors must enhance cost controls, improve management and absorb the costs from raw materials as much as possible.

The NDRC also warned large cooking oil makers not to collude in setting prices or to provide short measures or shoddy products.

Under current price conditions, enterprises should transfer part of their interests to the people and cherish their public reputation, it said.

Industrial associations were also required to provide guidance to firms, make sure they abided laws and regulations, admonish enterprises in cases of unfair competition, and to keep market supervisors informed of malpractice.

If the price hikes exceeded the extra production costs market supervisors would step in, it warned.

China's consumer price index, a key measure of inflation, rose by 6.2 percent in September after hitting an 11-year high of 6.5 percent in August. Food prices, which contribute significantly to CPI, jumped 16.9 percent from January to September over the same period last year, according to the National Bureau of Statistics.


(For more biz stories, please visit Industry Updates)



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