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Rice price fluctuation and government price review system explained

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Vice Premier Jiang Yi-huah held a press conference on May 22 to respond to media reports that the market price of packaged rice had increased 30 percent and that the government had not monitored the price properly.

Jiang clarified that packaged rice prices had not spiked, as the media reported; they had merely returned to their normal levels following the conclusion of various sales promotions by vendors. He also gave a comprehensive explanation of the government's price review system, which integrates field surveys and industry reports collected by a host of government agencies. If there were aberrant inflation or collusion to raise prices, the Fair Trade Commission and the Ministry of Justice would initiate investigations. "The public should not doubt the government's price review operations or its determination to stabilize commodity prices," he assured.

Since 2007, the Consumer Protection Commission (CPC) has checked the market prices of 18 brands of rice twice a month. Liu Chin-fang, its director-general, reported that from October 3, 2011 onwards, the prices of each brand rose and fell across six different hypermarket chains. Price cuts were made for promotional purposes, and after those promotions ended, prices returned to their original levels. In other words, the reported hike was a mirage caused by marketing. "Calling such a change a price recovery would be more accurate," the vice premier noted.

The government closely monitors price increases, Jiang said, regardless of whether they are universal or limited to specific items. In addition to gathering price information from the sellers, the Directorate-General of Budget, Accounting and Statistics (DGBAS), the CPC, and the Ministry of Economic Affairs (MOEA) all send staff into the field, and their findings are all integrated into the system.

Among the government agencies, the DGBAS has the most thorough commodity price review, Jiang said. The DGBAS conducts comprehensive reviews of prices for goods and services in five categories—food, clothes, rent, transportation, and recreation—at least twice a month. Its investigation covers more than 14,000 items belonging to 424 types of commodities and requires the labor of more than 140 employees each month. Meanwhile, the MOEA undertakes similar surveys thrice monthly of 32 items belonging to 17 types of essential commodities, and the CPC checks the sales prices of 55 items in 17 types of products sold in markets and chain stores. Besides regular surveys, the government also launches snap reviews in response to media reports and consumer complaints.

Jiang said the method the press used to investigate commodity prices was similar to the government's, but the base period it employed was different. For instance, the media reported that the prices of rice, milk powder, detergent and soap are going up, but the prices of eggs, instant noodles, tissues and flour have dropped between 0.3 and 3.3 percent. In fact, the prices of the 17 essential commodities often rise and fall, Jiang stated; what is important is that they oscillate within a specific range. The government initiates investigations if a commodity price rises more than 10 percent.

Shih Hui-fen, Deputy Minister of the Fair Trade Commission, said her agency monitors the market for violations of the Fair Trade Act and collects potential evidence during this monitoring process. If further legal examination is required of a case, then according to Article 27 of the Fair Trade Act, parties under investigation may be asked to come to the commission to explain their circumstances, and further investigations may be carried out at company marketing headquarters and points of sale.

As the media have reported, businesses being investigated are required to provide relevant information. Shih explained that the commission also follows up on that information by probing all businesses and other parties in the supply chain. "The Commission decides a company's culpability based on more than just self-provided information," she said.

If a business fails to provide proper information, provides false information, or refuses to cooperate, a first-time fine of NT$20,000 to NT$250,000 may be imposed on it in accordance with Article 43 of the Fair Trade Act, with successive fines of NT$50,000 to NT$500,000 for every subsequent refusal.

On a related note, Deputy Minister of Agriculture Chen Wen-deh spoke about whether recent heavy rainfall in southern Taiwan would affect vegetable prices. He noted that while the Tainan and Kaohsiung areas bore the brunt of the storm, the island's main sources of vegetables are Yunlin and Changhua counties. About 1,640 tonnes of vegetables went to market today, more than last week's average output of 1,550 tonnes. Furthermore, in recent years the government has continuously supported the production of vegetables in greenhouses, so there are currently about 8.5 million tonnes of leaf vegetables in stock which could be immediately used to relieve food shortages if there were a natural disaster. The Council of Agriculture will continue to monitor the prices of vegetables, Chen added.

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