Why is the price of Wuchang rice affected by the four major grain traders?

    This winter, rice farmers in Wuchang have run into the hardest time selling their grain in years, in sharp contrast to 2009, when rice was snapped up feverishly by the grain giants.

    It is understood that this year the four major grain traders (Dongfang Group, COFCO, Yihai, and Beidahuang Group) have been extremely subdued in Wuchang: those who signed contracts early in the year have been buying slowly, and those not bound by contracts have bought almost nothing.

    According to people familiar with the matter, the 2009 rice price was hyped up through reckless speculation, with the highest purchase price for Wuchang rice reaching more than 2 yuan/jin. Many people along the industry chain turned into speculators, and this was passed down to the farmers at the very end of the chain: farmers with grain on hand began to hold back from selling, and even hoarded it, turning producers into speculators. Before the four major grain traders entered Wuchang, Wuchang rice had no trouble selling either, but after they arrived, with their tremendous financial strength, the rice price was driven to a historic peak, showing the enormous influence of capital on the market.

    Experts analyze that the current situation stems from several factors. First, farmers' expectations are too high, so they hold back from selling. The 2009 rice price rise was unprecedented in scale, leading farmers this year to expect too much from rice prices. Second, the current price of high-quality Daohuaxiang rice in Wuchang is around 1.8 yuan/jin; at this price, the cost of Wuchang rice comes to around 4.2 yuan/jin. Without brand image support, such a price is very hard for consumers to accept, so the more than 190 rice processing enterprises in Wuchang find it hard to accept, while major rice traders with the strength and brand support, such as COFCO, are not buying. For this reason, the government should step up publicity efforts, help farmers analyze and grasp market price adjustments well, and also give enterprises some preferential policies to encourage them to buy grain.