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China says collusion by noodle makers partly to blame for inflation surge
China says collusion by noodle makers partly to blame for inflation surge
17/8/07 (AP) BEIJING - The government slammed Chinese instant noodle makers Friday as being partly to blame for a surge in inflation, saying they illegally colluded to boost prices by up to 40 percent in a scheme that prompted a public outcry.
The report came amid a nationwide probe into whether price-fixing or hoarding by producers is to blame for a 15.4 percent jump in food prices in July over the year-earlier period. The government accused violators of damaging social stability.
Investigators found managers of China's major noodle companies met three times since December to illegally set prices, the Cabinet's National Development and Reform Commission announced.
Their collusion "seriously disturbed market price order, harmed normal competition among managers and injured consumers' legal rights," the agency said on its Web site.
The NDRC cited no individual companies or managers and gave no indication of what penalties they might face. Phone calls to the agency were not answered. There was no indication when results from probes of other food producers might be released.
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Chinese law allows for companies to be fined up to five times the illegal income from price-fixing and possible confiscation of business licenses in serious cases.
Instant noodles are a staple of the Chinese diet, and the price hike prompted public complaints on Internet bulletin boards and appeals for a government investigation.
An official of China's branch of the International Ramen Manufacturers Association, quoted by the official Xinhua News Agency, defended the price hikes as a response to soaring raw material costs.
The price of palm oil, which accounts for 18 percent of the cost of noodles, has more than doubled to 8,200 yuan (US$1,100; €800) over the past year, said the official, Meng Hesu. He said profit margins have been cut to just 1 to 2 percent.
"If we don't lift the prices, there will be no profit," Meng was quoted as saying.
Among other food items, pork prices have risen fastest, jumping by 86 percent in July over the same month last year. Authorities have blamed the rise on a shortage of pork caused by farmers' reluctance to raise pigs when prices were low earlier.
Premier Wen Jiabao has promised to increase pork production by offering farmers free vaccinations and other aid. Local authorities have been ordered to pay subsidies to the poor.
The cost of eggs was up 30.6 percent in July and that of edible oil up 30.1 percent, according to government figures.
Food processors have been squeezed by intense price competition in China's crowded grocery industry, which has blocked them from passing on rising raw materials costs.
The NDRC said earlier its investigators also would look into why prices of grain, vegetable oil, pork, beef, mutton and poultry were rising so fast.
"Some industry groups have organized coordinated price rises," the agency said in an Aug. 3 statement. It said the collusion "influences social stability."
The report came amid a nationwide probe into whether price-fixing or hoarding by producers is to blame for a 15.4 percent jump in food prices in July over the year-earlier period. The government accused violators of damaging social stability.
Investigators found managers of China's major noodle companies met three times since December to illegally set prices, the Cabinet's National Development and Reform Commission announced.
Their collusion "seriously disturbed market price order, harmed normal competition among managers and injured consumers' legal rights," the agency said on its Web site.
The NDRC cited no individual companies or managers and gave no indication of what penalties they might face. Phone calls to the agency were not answered. There was no indication when results from probes of other food producers might be released.
Today in Business
Asian markets continue slide despite Wall Street rallyPaulson brings laissez-faire approach on financial crisisFloyd Norris: Why is the credit panic being played out in slow motion?
Chinese law allows for companies to be fined up to five times the illegal income from price-fixing and possible confiscation of business licenses in serious cases.
Instant noodles are a staple of the Chinese diet, and the price hike prompted public complaints on Internet bulletin boards and appeals for a government investigation.
An official of China's branch of the International Ramen Manufacturers Association, quoted by the official Xinhua News Agency, defended the price hikes as a response to soaring raw material costs.
The price of palm oil, which accounts for 18 percent of the cost of noodles, has more than doubled to 8,200 yuan (US$1,100; €800) over the past year, said the official, Meng Hesu. He said profit margins have been cut to just 1 to 2 percent.
"If we don't lift the prices, there will be no profit," Meng was quoted as saying.
Among other food items, pork prices have risen fastest, jumping by 86 percent in July over the same month last year. Authorities have blamed the rise on a shortage of pork caused by farmers' reluctance to raise pigs when prices were low earlier.
Premier Wen Jiabao has promised to increase pork production by offering farmers free vaccinations and other aid. Local authorities have been ordered to pay subsidies to the poor.
The cost of eggs was up 30.6 percent in July and that of edible oil up 30.1 percent, according to government figures.
Food processors have been squeezed by intense price competition in China's crowded grocery industry, which has blocked them from passing on rising raw materials costs.
The NDRC said earlier its investigators also would look into why prices of grain, vegetable oil, pork, beef, mutton and poultry were rising so fast.
"Some industry groups have organized coordinated price rises," the agency said in an Aug. 3 statement. It said the collusion "influences social stability."