A report conducted by the Ministry of Agriculture said that
although farm product prices continue to grow, it won't "surge" as
nationwide demand is still far less than supply. The report was
delivered to the State Council.
A trial farm product price surveillance system is in operation
in some provinces, reflecting simultaneous price changes.
Han Yijun, an expert from the Market and Trade Office of the
Rural Economy Research Center of the Ministry of Agriculture, said,
"We discovered that demand for most farm products was still less
than supply, which means abrupt price surges are only short-term
phenomena." Wang Xueqing, a price expert from the State Development
and Reform Commission, expressed similar ideas.
After the weeklong National Day Holiday of 2003, the prices of
grain and oil rose, which triggered that of other farm products.
Until the middle of October, the price of edible oil reached its
peak in recent years in Jiangsu, Shangdong, Henan, Anhui, Zhejiang
and Hubei provinces.
Han Yijun also stated the slow and backward price surveillance
systems of some provinces were facing challenges from shrewd
businessmen who acted as agents manipulating farm product prices in
circulation processes.??
However, it is certain that prices will continue to grow in the
long term for other reasons.
Since China entered the WTO, the prices of grain and oil have
dropped sharply. Compared with 1996, the price of wheat dropped 43
percent, rice 42 percent, and cotton 68 percent. This year, the
price of cotton rose to 450 yuan a dan (50 kilogram), but
still less than 1998, which was 700 to 800 yuan a dan, Wang
Xueqing said.
China has an annual population increase of 13 million. Supposing
the average consumption of grain remains static, in order to
maintain the supply and demand balance, the farm product
manufacture must keep a 1 percent growth rate.
At the same time, foreign farm product exporters have down
played their expectations in the Chinese market. After the WTO
entry, China had a surplus in international wheat and cotton
trade.
According to WTO regulations, export allowance should be paid to
farmers, not farm products. Since farmers don't export their
products to be sold at prices lower than cost, the international
farm product prices will see a slow increase, which may affect
domestic prices.
Wang Jimin, a researcher with the Institute of Agricultural
Economics of the Chinese Academy of Agricultural Sciences, said
that the demand and supply of grain are affected by the overall
national economy. In 1994, China had a 10 percent growth in GDP,
with only a 2 percent growth in grain. The gap between the two
growth rates may lead to a higher demand for grain, which is
destined to increase the price. On top of that, the booming economy
will shrink farmland, and create more grain consuming opportunities
at the same time.
A prediction report conducted by the College of Economic
Management of Northwest
Sci-Tech University of Agriculture and Forestry supports
Wang Jimin's opinion, stating that in
2004, China will see a
five-percent price increase for products like corn, wheat, rice,
soybean, livestock and oil.
(China.org.cn by Li Liangdu and Daragh Moller,
November 20, 2003)