Local authorities in southwest China are moving to clamp down on food price hikes as the worst drought in decades shows no sign of easing.

Authorities in Guiyang, capital of the poverty-stricken mountainous Guizhou Province, have indicated they would step up price monitoring and crack down on price gouging.

Vegetable vendors will be fined up to 100,000 yuan (US$14,650) if they are found involved in jacking up vegetable prices. The maximum fine for businesses is 1 million yuan.

In Kunming, capital of the hardest-hit Yunnan Province, the local government is monitoring food prices and supply on a daily basis. Local price control and industry and commerce authorities have launched campaigns to crack down on food hoarding and price gouging.

Local governments in their neighboring regions have taken similar measures to prevent huge rises in prices of grain, edible oil, and vegetables.

The dry weather has been ravaging southwest China for months, affecting 61.3 million residents and 5 million hectares of crops in Guizhou, Yunnan, Sichuan, Chongqing, and Guangxi.

The worsening drought has damaged wide swathes of vegetables and sparked sharp price hikes. Many vegetable prices have more than doubled.

Hou Junfa, a purchasing manager in a hotel in Nanning, capital of Guangxi, said vegetable prices continued to surge even after the Chinese Lunar New Year when prices usually fall.

Wang Wenying, a wholesaler in Nanning, said that prices of onion and potato continued to rise because of output declines in Yunnan, a main vegetable producing region.

The price hikes have resulted in increases in household expending.

A local resident in Nanning, surnamed Yang, said he spent five yuan more on vegetables than a month ago.

Some residents choose to buy cheaper vegetables to cut household expending.

Amid other efforts to curb huge price rises, the local governments have also started importing vegetables from non-drought-stricken regions to increase supply.

Authorities in Kunming earlier in the week bought 250 tonnes of wax gourd, pumpkin, and eggplant from other regions to ease supply shortage in local markets.

Prices of grain, including the staple food rice, has recorded relatively moderate gains of about 10 percent.

Some sellers, taking advantage of the lingering drought, have started increasing their rice prices in some cities.

The drought has caused speculation of further inflation rises as it has damaged hundreds of millions hectares of crops and disrupted spring planting as well.

But prices are expected to stabilize as grain is being sent to the drought-stricken regions. China has sufficient grain stock after six years of bumper harvests.

"The drought has limited impact on China's grain output as the five regions account for a small portion of the country's total output," according to a research note of Dongxing Securities.

In addition, the main grain production base in the Northeast is seeing better weather conditions than this time last year.

The disaster, however, is set to reduce production of fresh flowers and sugar cane as Yunnan and Guangxi are the main producers of the crops.

Retail prices of fresh flowers, as a result, have risen by about 50 percent in many Chinese cities.

The decline in sugar cane production would cause China's white sugar output to decline to 11 million tonnes this year, 9 percent lower than the projection in November, the China Sugar Association said.

The drought, the worst in 100 years in Yunnan and parts of Guizhou, would likely to continue till May as no substantial rainfall was expected ahead of the raining season, according to meteorological agencies.

It has left 18 million residents and 11.7 million head of livestock in the region with drinking water shortages and caused direct economic losses of 23.7 billion yuan, the Ministry of Civil Affairs said Wednesday in a statement.

(Xinhua News Agency March 26, 2010)