The overall inflation figure for 2012 will be contained within the official target of 4 percent, said Ma Wenfeng, an agricultural economist with Beijing Orient Agribusiness Consultant Ltd.
Policymakers have not yet set the inflation target for 2013, Ma said, noting that he was hoping the target could be lower, as rising prices severely affect people's lives and weaken the competitiveness of small and medium-sized enterprises (SMEs).
The rise in prices of wheat is largely due to the current rigid policy of the State Reserve, which accounts for as much as 80 percent of China's grain market share, Ma told the Global Times Sunday.
China normally raises the price that the State Reserve pays farmers every year in order to encourage them to grow the crop and ensure food safety.
But this policy benefits the China Grain Reserve Corp (or Sinograin), due to its monopoly status as the major arm of the State Reserve, more than it benefits the farmers, Ma said.
The State Reserve purchased wheat from farmers at 2.04 yuan ($0.33) per kilogram in 2012, but sold it to the market at 2.5 yuan per kilogram, making a substantial profit, Ma noted.
As a result of the State Reserve policy, domestic grain prices are currently higher than international prices, and many SMEs' grain mills are unable to get cheaper raw materials due to import quota limits and the State sector's monopoly.
"That's why food prices will never fall once they rise," Ma said. He suggested that the State Reserve could reduce its market share and set a target price instead of a rigid one.
Girl wearing "military uniform" parade on the street to publicize the new traffic regulation
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