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Egg, garlic prices rise sharply

By Wang Xinyuan (Global Times)

08:02, June 05, 2012

The prices of egg and garlic have risen sharply due to a shortage of supply, but because of their relatively small weighting in the consumer price index (CPI), the hike will have a limited effect on the pricing indicator, analysts said yesterday.

Consumers have started referring to "rocket eggs" to complain about the speed of the price hike, the Xinhua News Agency reported Sunday, noting that local wholesale prices in Guangzhou, South China's Guangdong Province, Shenyang, Northeast China's Liaoning Province and Jinan, East China's Shandong Province jumped 1 yuan ($0.16) per kilogram in just 10 days.

The average wholesale price of eggs reached 8.35 yuan per kilogram yesterday, up about 24 percent from a month earlier, and coming close to the level of December 2011, according to statistics from www.agri.gov.cn, a farm produce price information portal under the Ministry of Agriculture (MOA).

The average wholesale price of eggs reached a record high of 9.67 yuan per kilogram in September 2011. It had been easing since then until early May when prices started to pick up again.

Another farm product that has shot up in price is garlic. The average wholesale price has reached 6.36 yuan per kilogram, up 55 percent from a month ago, according to the MOA.

The current price is close to the record high reached in 2010, and the main reason is the lower supply of garlic this year, Beijing Youth Daily reported yesterday, citing an unnamed market analyst at Beijing Xinfadi, Beijing's largest farm produce wholesale market.

The price hike of eggs is also a result of cyclical fluctuations in output, said Wang Xiaoyue, an agribusiness analyst with Beijing Orient Agribusiness, a consulting firm.

Egg prices were high last year so more farmers joined the poultry farming business and egg supply increased as a result. Prices consequently fell in the first half of this year, and farmers suffered losses of as much as 1.6-1.8 yuan per kilogram of eggs. Many reduced their number of egg-breeding hens in order to cut losses, leading to a lower supply of eggs, said Wang.

Due to rising feedstock prices and labor costs, poultry farmers could barely cover the costs from egg sales even when the average ex-factory price reached 7.2 yuan per kilogram by end of May, Wang told the Global Times.

Wang said the egg price hike would have a small effect on the CPI, an indicator of inflation, due to its limited weighting in the overall calculation.

Unlike pork, which accounts for about 3 percent of the CPI calculation, eggs only account for 1-1.2 percent, and the impact of garlic as one type of vegetable on the overall CPI is also small, Zhang Jing, a macroeconomics analyst with Shenzhen-based Huatai United Securities, told the Global Times.

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