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Cause analysis of the squeeze effect of China’s grain market

WENG Ming1

(1.Rural Development Institute of Chinese Academy of Social Sciences)

【Abstract】The rigidly rising price of China’s grain and the constantly decreasing price of international grain led to the price of domestic grain significantly higher than that of international grain, also caused the squeeze effect of China’s grain market. This paper analyzed the mechanism of the squeeze effect of China’s grain market and the change in the wheat and corn production cost of China and America as well as the international shipping expense of grain. What the research results showed were as the follows. The squeeze effect mainly originated from the change in the grain production cost both at home and abroad. Especially, the proportion of domestic labor cost was great and the growth range was large, and the rising range of domestic land cost was significant while the decrease in the international shipping expense of grain prompted the further decrease in the CIF price of imported grain. Meanwhile, given the negative effect of the squeeze effect of the grain market, this paper calculated space for reducing the import tariff of grain when the prices of grain at home and abroad were in an inverted relation in 2015, and the result was that space for reducing the tariff of major grain varieties was very limited in China.

【Keywords】 the grain market; the squeeze effect; the production cost;

【DOI】

【Funds】 Partial research results of the innovation project of the Rural Development Institute of Chinese Academy of Social Sciences

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    Footnote

    [1]. ① Data source: the website of ifeng (http://news.ifeng.com/a/20150307), (2015–3–7). [^Back]

    [2]. ① Data source: the website of Ministry of Commerce of the People's Republic of China (http://www.mofcom.gov.cn/article/b/gl). [^Back]

    [3]. ② To make it easy for the comparison at the same place and the same time, the prices of domestic and foreign wheat and corn (see below) are all with the prices to Huangpu Port of Guangzhou as a standard. Data source: Monthly Report of the Supply-Demand Analysis of Agricultural Products, the website of Ministry of Agriculture of the People's Republic of China (http://www.moa.gov.cn/zwllm/jcyj), (2015–12). [^Back]

    [4]. ① The value of the squeeze effect = 1 / (the over-quota CIF price of imported grain - the wholesale price of domestic grain). The greater the value of the squeeze effect is, the greater the intensity of squeeze is; the smaller the value of the squeeze effect is, the smaller the intensity of squeeze is. [^Back]

    [5]. ① The value of output is deflated with the price index of agricultural means of production with 2003 as the base year, and the price index of agricultural means of production comes from the website of National Bureau of Statistics of the People's Republic of China (http://data.stats.gov.cn/easyquery). [^Back]

    [6]. ② Data on the cost are deflated with the price index of agricultural means of production with 2003 as the base year, and the price index of agricultural means of production comes from the website of National Bureau of Statistics of the People's Republic of China (http://data.stats.gov.cn/easyquery). [^Back]

    [7]. ③ Data on the cost are deflated with the price index of agricultural means of production with 2004 as the base year, and the price index of agricultural means of production comes from the website of National Bureau of Statistics of the People's Republic of China (http://data.stats.gov.cn/easyquery). [^Back]

    [8]. ① Calculation formula: the price of domestic grain to port - [the CIF price of imported grain (1 + x%) + value-added tariff + loss + fees for loading and unloading] = 200 (CNY/ton). In this formula, x% means the tariff rate which is actually implemented. [^Back]

    References

    1 Chen, X. Rural Economy (农村经济), (1) (2015).

    2 http://finance.ifeng.com

    3 http://opinion.caixin.com

    4 Ma, X. Chinese Rural Economy (中国农村经济), (5) (2011).

    5 Weng, M. Global Times (International Forum) (环球时报(国际论坛版)), (2015–7–21).

    6 Rural Development Institute of Chinese Academy of Social Sciences & Department of Rural Surveys at National Bureau of Statistics of China (eds.). Analysis and Forecast on China’s Rural Economy (2014–2015) (中国农村经济形势分析与预测, 2014–2015). Beijing: Social Sciences Academic Press (China), (2015).

This Article

ISSN:1002-8870

CN: 11-1262/F

Vol , No. 11, Pages 29-39

November 2015

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Article Outline

Abstract

  • 1 Discussion of the academic circle on the change in the grain price both at home and abroad
  • 2 Changes in grain prices domestically and internationally and the squeeze effect of the market
  • 3 Major reasons for the squeeze effect of the grain market
  • 4 Main conclusions and policy enlightenment
  • Footnote

    References