Officials urge retailers to boost stock to counter falling prices

Large supermarkets have been urged to overstock on vegetables to help farmers struggling with a slump in sales, it was revealed on Monday.

Chinese chain stores, including Wumart Group, are now boosting supplies after a plea from Beijing's commerce commission to remedy a drop in wholesale prices.

"Our purchasing amount for vegetables from farmers has been raised to 230 tons per day from Monday to Friday, up 35 percent on several weeks ago," said Wumart spokesman Fu Yu. "The figure during weekends is 400 tons, up 33 percent."

The move will likely come as a relief to farmers like Liang Ping, who manages 70 vegetable sheds in the capital's rural Daxing district. Since the rape price fell to 1 jiao per 500 grams "the more I sell, the more I lose", he said with a sigh. The Sichuan-born 34-year-old needs to make 6 jiao per 500 grams just to break even.

By contrast, shopper Shi Peifeng, 58, said she is constantly changing her family food budget to accommodate the rising costs at the markets near her home in Chaoyang district.

The main cause of the poor sales is nature, according to Fu. "The temperatures were similar in south and north China this year, meaning vegetables from both areas came to market at the same time and created an oversupply," he said, adding that his company will make little profit from the increased purchases.

Shi Huiyu, a publicist at the Shuangqiao branch of Xinfadi, the largest wholesale farmers' market in Beijing, said the miscalculation of the market is also to blame. "According to our research, vegetable prices were comparatively high in 2010 and 2009, which encouraged farmers to expand their output and led to the overproduction of vegetables this year," he said.

According to figures from Xinfadi, wholesale prices have fallen about 30 percent in the last week, with the worst affected being leafy vegetables, such as rape, cabbage, pakchoi and celery. The wholesale price of pakchoi, for example, has fallen by 70 percent to 2 jiao per 500 grams in the last week.

The commerce commission is now working to improve the retail chain, said Zhang Zhigang, its director of circulation planning. He added that an optimized model, which links the farmers and supermarkets directly, will be promoted throughout the capital.

Chen Tao, deputy director of rural affairs for Beijing, said his office will strive to inform farmers of the market demands as early as possible, as well as strengthen cooperation with commerce officials.

Rumors over the risk of contamination by radioactive particles from Japan have also had a major impact on vegetable prices, as well as seasonal factors and market trends, he added.

China Daily

(China Daily 04/26/2011 page25)