Agricultural product market regulation must make good use of the concept of tight balance

Marketization is the soul of agricultural modernization. To understand agricultural modernization under the new normal, we can approach it from the perspective of marketization. In the 1950s and 1960s, agricultural modernization was summarized as mechanization, electrification, water conservancy and chemicalization, which was agricultural modernization in the traditional sense. Today's agricultural modernization also depends on consumer recognition; only then can modernization truly be achieved.

If agriculture has no market-oriented mechanism, no supporting modern market system, and no modern supply-demand relationship, with production arranged by the government and growth driven by the government, then such agriculture can only be regarded as planned agriculture and traditional agriculture. Only the driving force from the market is the most fundamental driving force for promoting agricultural modernization. Modern agriculture is not certified by the government, but is built on the basis of a modern market system, and is agriculture in which consumers can express their wishes through market choices.

Since the launch of market-oriented reform in the 1980s, China has formed an agricultural product market operation and management mechanism that is mainly regulated by the market and supplemented by government regulation, which has played an important role in ensuring the effective supply of agricultural products and the smooth operation of the market. Over more than 30 years of reform and opening up, the process of agricultural marketization has in fact been a process of "letting go"; whatever could be let go in the agricultural product market has been let go. Now, to achieve modernization in the true sense, a word must be added: "help." The Third Plenary Session of the 18th Central Committee of the Communist Party of China clearly proposed that the market should play a decisive role in resource allocation and the government should better play its role. The government must "help" well, and the ways and methods of "helping" must be continuously studied and improved.

Then, in the process of marketization, what standard should be established to measure whether the agricultural marketization system with Chinese characteristics is successful? The author believes that this standard is "tight balance." Tight balance is an optimal market state that takes into account the interests of both producers and consumers, and it should be the goal of market-oriented reform.

The essence of tight balance is a kind of management of the supply-demand relationship of agricultural products. Tight balance should be understood from three levels: the first level, tight balance is a state of supply-demand relationship. At present, the supply-demand relationship of our agricultural products, especially grain, is in a state of tight balance. The tight balance of grain must focus on two core issues: first, solving the basic balance of grain supply and demand; second, preventing a decline in grain prices after grain supply becomes loose, which would affect enthusiasm for growing grain. This is a dilemma. This shows that tight balance is first of all a state. The supply of agricultural products is not better the more there is; a tight balance in which supply is slightly less than demand is optimal. In marketing there is a similar term called "hunger therapy," which means that the goods provided by manufacturers are always slightly less than demand, which can instead stimulate demand. We should use the principle of tight balance to manage and control agriculture well.

The second level, tight balance is a technical task. Tight balance is like walking a tightrope; if it is not adjusted well, it becomes unbalanced. The author believes that tight balance means that supply and demand are not 100% equal. Achieving this requirement is absolutely a technical issue and a test of regulatory capacity. Traditionally, we have always emphasized increasing production, which is a way of thinking under the shortage model, while tight balance requires a change in concept, allowing the market to spontaneously regulate the supply-demand relationship and keep it in a state of tight balance.

The third level, tight balance is the standard for measuring whether market modernization is successful. Managing production must use the mechanism of tight balance, that is, too much is not acceptable, and too little is not acceptable either. If the state of tight balance is destroyed, it will either sacrifice the interests of farmers or harm the interests of urban residents. Whether tight balance can be handled with the right proportion depends on our level and also on the broader environment. When formulating evaluation indicators, we should propose a reasonable range; price fluctuations within this range are all reasonable, rather than saying the more the better. Simply emphasizing that "cheap vegetables hurt farmers, cheap grain hurts farmers" is unscientific.

Tight balance is the primary issue to be studied in our agricultural marketization. Especially during the "eleven consecutive increases" in grain production, some said there was too much, and some said it was not enough. On one side there were large imports, and on the other side storage capacity was insufficient. This requires studying and mastering methods of tight balance management from the perspective of market economy management departments.

The price formation mechanism is the core of the market mechanism. Whether the price formation mechanism is reasonable determines whether the role of the market mechanism can be brought into normal play. The price formation mechanism of agricultural products directly determines the interests of farming households, directly determines farmers' enthusiasm for planting, and also directly determines the stable supply of agricultural products. The following discusses two issues that urgently need to be solved in the reform of the price formation mechanism of agricultural products.

First, quickly improve farmers' ability to negotiate prices. The prominent problem in the current pricing process of agricultural products is that farmers do not have corresponding pricing power in the transaction process. Generally speaking, agricultural producers in China receive 14% of the final selling price, while producers in developed countries can receive 30%. Agricultural producers in China have almost no pricing power at all, and their bargaining ability is extremely unequal. There are two solutions: first, gather farming households together and, through large-scale and organized operations, let collective organizations such as cooperatives negotiate on behalf of farming households; second, improve existing bargaining ability, focusing on improving four abilities of farming households: the ability to "not sell," that is, improving farming households' cellar storage capacity; the ability to "sell," that is, improving the direct sales and distribution capacity of agricultural products; the ability to obtain information, that is, establishing a socialized information service system for farming households so that farmers know "what is right to plant in spring, what is expensive to sell in autumn, and what means of production are most cost-effective to buy"; and the ability to create brands, that is, the ability to create brands based on their own products.

Second, quickly solve the problem of information asymmetry. First of all, the problem of information transparency must be solved. Farmers actually need only three aspects of information: area, output and price. The government can compile these three figures, and they are also what farming households most need to know. But now government data lag behind, and farmers cannot obtain them or obtain them too late. Second, the problem of unified information standards must be solved. Unifying the standards solves the problem of unified criteria. Information collected under different standards and different samples cannot be compared.

Third, the problem of the authority of data release must be solved. At present, in addition to information collected by different market entities themselves, information from government departments also comes from many sources, and farming households do not know whom to trust. Such data not only fails to serve as a baton for the market, but may also mislead the market. It can be seen that establishing China's authoritative monitoring and early warning system is a pressing task.