How can agricultural product price reform achieve multiple goals?

Recently, it was learned from the National Development and Reform Commission that since late November 2014, the National Development and Reform Commission, together with relevant departments, has issued 8 documents, liberalizing the prices of 24 goods and services and delegating 1 pricing authority. This includes liberalizing the purchase price of tobacco leaves. The tobacco leaf purchase price was the last item in the agricultural product sector subject to government pricing, and this move marks that all agricultural product prices in China will be formed by the market, with government pricing completely withdrawing from the stage of history.

Since the 18th National Congress of the Communist Party of China and the Third and Fourth Plenary Sessions of the 18th Central Committee, many beneficial explorations have been made in reforming agricultural product pricing. After liberalizing the purchase and sale prices of the vast majority of agricultural and sideline products in 1985, liberalizing the prices of live pigs and pork in 1992, and liberalizing the purchase price of cotton in 1999, China liberalized the grain purchase market and prices in 2004. The Third Plenary Session of the 18th Central Committee also clearly emphasized: “Let the market play a decisive role in resource allocation and better bring into play the role of the government.”

This withdrawal of agricultural product pricing from the stage of history fully demonstrates the government's determination and intensity in liberalizing the “invisible hand,” allowing the market to play a decisive role in resource allocation. At present, China has initially established a minimum purchase price policy for rice and wheat, an temporary purchase and storage policy for corn and rapeseed, a pilot reform of target price subsidies for cotton and soybeans, and a regulatory plan for live pigs to alleviate cyclical fluctuations in market prices, and through comprehensive measures such as establishing a reserve system for important agricultural products, improving import and export adjustment mechanisms, and increasing fiscal subsidy efforts, it has prevented large fluctuations in the prices of major agricultural products and protected farmers' interests.

Liberalizing agricultural product prices is not simply a matter of changing everything at once; rather, while fully giving play to the role of market mechanisms, it combines market regulation with government regulation and continuously strengthens and improves the macroeconomic regulation system for agricultural product prices. The purpose of price reform is to take into account safeguarding national food security, improving agricultural production efficiency and competitiveness, and protecting farmers' income. It is necessary to comprehensively use multiple market means to achieve the goals of agricultural product price reform.