Why is the rate of grain price increases unable to keep up with the cost of living?

Summary: Why is the rate of grain price increases unable to keep up with the cost of living?

Science Farming has previously made a rough comparison of prices over the past decade, and found a problem: the rate of grain price increases is roughly around 1.5 times, while the price levels of other goods are basically around two times, and the rate of price increases for things like housing is even like a rocket. Based on the decade-long housing price comparisons of several places I am familiar with, the rate of increase is basically above 5 times.

And this asymmetry in the rate of increase is probably the reason farmers generally feel that grain prices are not rising or that grain prices are very low. What farmers consider to be very low grain prices is not that grain prices are truly very low, but that they appear low relative to other prices. Judging from the current income composition of most farmers in our country, agricultural planting income still accounts for more than 90% of total household income, and households like this make up the vast majority. Therefore, complaints about grain prices being too low are naturally not hard to understand.

As for the root cause of low grain prices, this is universal throughout the world, and low grain prices are not only the case in our country; it is the same all over the world. Moreover, in foreign countries, grain prices are even cheaper than in our country, and this is also an indisputable fact. For example, the price of corn in the United States is around 5 mao, and soybeans are around 1.2, both much lower than in our country. And a major reason slowing the process of grain price increases in our country is that our grain prices themselves are already much higher than international grain prices. Therefore, after our country joined the WTO, it has been difficult for grain prices in our country to rise in the short term, and there has even been stagnation, with the rate of increase unable to match other prices.

Secondly, our country's smallholder economy crops also make farmers' planting economic benefits low, leading them to believe that the current state of grain prices cannot achieve high economic benefits. For example, in foreign countries, the cost line for growing corn is 3 mao per jin, and selling at that price still yields very good profits, while the cost of grain grown by Chinese farmers is 7 mao per jin. The higher cost price naturally makes farmers feel that planting cannot achieve economic benefits. And in international competition, if circulation occurs at the same market price, the market competitive advantage of American agricultural products is naturally greater. While American grain still has profits, our country's grain prices are in a loss-making situation.

The solution to cracking the current low planting benefits is to seek a breakthrough, pursue large-scale planting while increasing agricultural subsidies, and raise farmers' enthusiasm for planting. At present, our country has already been accelerating the process of land transfer, and many farmers who awoke first have already taken up the banner of land leasing, carrying out large-scale planting of land, reducing agricultural production costs, and achieving higher economic benefits.