The price adjustment mechanism for agricultural products needs improvement

Recently, merchants coming to Beijing's Xinfadi wholesale market to stock up have been arriving in an endless stream, gathering around large trucks loaded with ginger. “The wholesale price of ginger is now 10 yuan per jin. Although ginger is not a staple vegetable, it is still a necessity, and people will not buy less even when the price rises.” said Song Xiaolin, a ginger broker from Anqiu, Shandong. At present, the retail price of ginger is as high as 15 to 16 yuan per jin, a 10-year high, more expensive than pork. Brokers at Xinfadi recall that since ginger prices began to rise in April last year, there have been only brief declines at the end of last year and in May this year, with prices rising continuously the rest of the time.

As ginger prices rise, Yang Chengbin, a ginger farmer in Muli Town, Gaoqing County, Shandong, is overjoyed. “Ginger is a high-yield crop, with an average yield of seven to eight thousand jin per mu, and high-yield fields can reach 12,000 jin. Calculated at 8,000 jin per mu and a field purchase price of 5.5 yuan per jin, the gross income per mu exceeds 40,000 yuan.” He explained that this year's ginger will not be dug until the Cold Dew solar term, and only after 2 to 3 months of cellaring and aging can it be sold on the market.

China has many ginger-growing regions, mainly Shandong, which accounts for 70 percent of total output. Ginger is a typical agricultural product produced in one year and sold year-round. In Shandong's main producing areas, almost every household has a cellar, and as long as the weather is suitable and storage is proper, ginger can be kept in the cellar for more than two years. Reduced ginger production last year and the year before was the decisive factor in this year's prices. Data show that Laiwu's ginger planting area was 100,000 mu in 2011, reduced to 80,000 mu in 2012, and reduced to 59,000 mu in 2013. This undoubtedly affected this year's ginger prices.

Liu Tong, head of the statistics department at the Xinfadi market, said that for agricultural products such as ginger, cultivation techniques and per-unit yields are basically stable, and the main factor affecting output in different years is planting area, followed by whether there are droughts, floods or pests and diseases. In 2011 and 2012, the ginger market was oversupplied and prices fell sharply, causing ginger farmers to significantly reduce planting area last year. Combined with high temperatures and drought in the production areas last year, ginger output was reduced, leading to tight supply since the beginning of this year. And this year's drought and little rain in Shandong have made it even harder for the market to expect a bumper ginger harvest after autumn.

Experts at growing ginger are not necessarily experts on the market. For most ginger farmers, price trends have always been a mystery. In the past, they have repeatedly gone through cycles of sharp rises and falls. According to calculations, ginger farmers can only break even when the field purchase price is around 1 yuan. When fresh ginger was harvested in October 2011, the wholesale price at the production area fell to an average of 0.7 to 0.9 yuan per jin. In 2012, the ginger market remained sluggish, with prices hovering at 0.7 yuan per jin and once falling to 0.5 yuan. For ginger farmers, in those two years, it was good enough not to have worked in vain, let alone make money.

Growing and selling ginger clearly has “big years” and “small years”, generally “two good years, two bad years, two flat years.” One must endure the losses of a “small year” to enjoy the prosperity of a “big year.” In fact, ginger price trends are changeable, and many ginger farmers, when the ginger can be taken out of the cellar, do not choose to sell it all at once, but adopt the conservative approach of selling half and keeping half. Now, what the ginger farmers are gradually clearing out is the ginger stored in cellars from last year and the year before, a typical case of reluctance to sell.

⟦NL> Li Guoxiang, a researcher at the Rural Development Institute of the Chinese Academy of Social Sciences, believes that niche agricultural products such as ginger have low per capita consumption, and consumers are less sensitive to price than producers. Their price fluctuations have limited impact on individual consumers, which is also the result of the price mechanism at work. In the long run, although scallions, ginger, garlic and other niche agricultural products are niche, they also affect the daily lives of consumers and market stability. Relevant departments should improve monitoring and early-warning mechanisms for market information, improve the construction of the circulation system, and raise the degree of production-sales alignment and the level of organized production.