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Food Price Surge Ease but What about the Cash Corps for Interlining Industry in China

Written by Strategic Planning Team
Thursday, 23 December 2010, 11:40


The trend of food price surged in the past couple of months. This is also true to the cash corps for the interlining industry. The price on raw materials for the interlining product like cotton increased dramatically, which resulted in the high cost for the manufacturing of woven interlining, non-woven interlining and fusible interlining.


There are several reasons for the crazy surging trend for the price of food and cash corps. Of all factors, decreasing supply and market speculation are the most influential.


“The continuous stagnant incomes for years urge farmers to select a new doing for a living,” said Sam, the Managing Director of Interlining Source Limited, “with the increase costs on agriculture materials, the balanced incomes for farmers are actually decreasing.” In addition to the surging living costs, farmers are facing a time of difficulties.


The price on food and cash corps is blowing out further, due to supply’s failure to fill the irrational demand gap, amid hoarding and other illegal speculative activities.


“Hot Money in the agriculture futures market exacerbates the price crisis on food and cash corps,” Sam pointed out, “this money is extraordinary huge and most probably comes from real estate, as the speculative market on real estate is cracked down by the administrative measures.” The manufacturing cost for woven interlining, non-woven interlining and fusible interlining is affected accordingly.


Facing with the food price surge, the Chinese government launched a series of measures, including punishing hoarders, subsidies to farmers and ensuring supplies, to stop rising prices in November.


As a result of the authorities’ measures to curb inflation, the trend of increasing food prices, eased in late November.


However, some analysts pointed out that the respite is only temporary and high inflation will remain if the authorities rely only on administrative measures. The ultimate solutions that they believed are significant raise in interest rates and increase supply capacity.


“The government should raise the interest rates to increase the financial costs of market speculation,” Sam suggested, “the current administrative measures may not lead to increase in food productivity for the long term, which may result in worse situation in the coming months.”


Learning from the experience on easing food price surge, the government is advised to focus on significantly raising the agriculture productivity and the costs of market speculation, when takes steps to rein in surging cash corps prices.


“The current prices on cash corps for interlining products like woven interlining, non-woven interlining and fusible interlining are extremely high, which have a serous impact to the interlining suppliers,” Sam pointed out.


“Unless agricultural capacity is dramatically improved, surging demand for products cannot be simply cracked down by administrative measures.” Sam added.


One of the key factors in rising prices for cash corps of interlining products such as woven interlining, non-woven interlining and fusible interlining is the government’s insufficient investment in agriculture.


“The current trend of cash corps prices looks like out of control,” Sam said., “it is hoped that the authorities will introduces measures to increase the agriculture productivity while raising the market speculation costs.”


Last Updated on Thursday, 23 December 2010, 23:45