Domestic Grain Prices Skyrocket: Agricultural Product Crisis Will Sweep The World

After the subprime crisis, the next global crisis will be a crisis of agricultural products.

Despite the fact that farmers around the world are trying to increase production, grain supply is still tight.

Wheat has doubled in the past six months, and corn prices are picking up. Prices of barley, sunflower seeds, rapeseed and soybeans are rising sharply.

Soaring grain prices have become the most pressing economic problems.

Weather chaos encourages inflation expectations

Recently, the US Department of Agriculture said that in the past few months in 2010, China has bought over US $10 billion of US agricultural products, and in recent weeks China has bought 369 thousand tons of US corn.

Because of the poor spring ploughing caused by natural disasters at the beginning of the year, the price of corn continued to rise.

To stabilize price fluctuations, China began importing corn, and industry experts predict that in the next few weeks, China will go abroad in large quantities.

Price inversion is the most direct reason for enterprises to import corn.

Not long ago, China's Ministry of Agriculture released the monitoring information of corn market in April 2010, showing that domestic corn prices reached a record high in April, while the price of international corn continued to decline.

In the domestic market, Shouguang, Weifang, Shandong, most of the grain purchase price of corn has exceeded the "1 yuan / Jin" mark in May, and the price of corn broke through the "1 yuan / Jin" mark in Binzhou Zouping, which only took 35 days.

A private enterprise owner who has long been engaged in corn pportation admitted that from the end of the Spring Festival to mid May, the price of corn was running above 0.92 yuan / Jin, and the price of the corn broke 1 yuan in a week or so.

Kunming, Yunnan, a local feed processing enterprise official said that the price of corn purchased from the countryside has reached 1.1~1.2 yuan / Jin. It is estimated that the price of new corn will reach 1.3 yuan / Jin by June and July.

He believes that the main reason for soaring corn prices is natural disasters.

In the impression of locals, corn prices began to rise year after year, and in March, they rose slightly, and have been greatly improved.

Grain analysts in the industry believe that in 2010, domestic corn prices rose nearly 20% over the same period.

In fact, in recent years, China's corn has always been imported. Last year, although the main production area of corn was dry, the gap between maize and maize has not yet changed due to the short supply and demand relationship.

This year's surge in grain prices and so on can not be attributed entirely to market supply and demand, rising production costs, sharp domestic inflation expectations, and the gimmick of grain production caused by drought, all of which have become the driving force for the price movements of agricultural products in the past six months.

This phenomenon is also reflected in rice grain crops. Due to the dual squeeze of raw grain acquisition and profits, many small scale rice factories in China are closed down.

According to the relevant personage, as the price of rice continues to rise, the price is higher than that of the same period of history. The downstream and end consumer groups do not approve of this, leading to the fact that the price of rice is not enough to pmit at the terminal. Next, the profit of the intermediate processing sector is beginning to squeeze, so that the sellers reduce the purchase and the small processing plant stops purchasing and processing.

International monopoly restraining domestic agriculture

In past studies, Chinese scholars are more optimistic that the inevitable trend of China's grain imports will not create a crisis for China or the world.

Professor Kang Xiaoguang, Professor of agriculture and rural development of Renmin University of China, predicted that the grain market gap will expand in 2020, and then there will be a marked decline.

In 2010, 2020 and 2030, China's grain production and demand gap was 0.83 billion tons, 1.83 billion tons and 0.91 billion tons respectively, and the import dependency was 15.67%, 16.13% and 4.78%.

As we all know, the international grain and oil market prevails in the "four largest grain merchants" of ABCD, namely, ADM (ArcherDanielsMidland), Bunge (Bunge), Jiaji (Cargill) and French Louis (LouisDreyfus).

The four giants belong to the top 500 companies in the world. They are currently monopolized 80% of the world's grain trading market. They have absolute authority over the import and export of food, packaging and pricing of food in the world.

Many food experts in the industry are generally worried that if multinational enterprises share too much in China's grain market, it will undoubtedly increase the possibility of domestic grain price fluctuations, and increase the difficulty of macroeconomic regulation and control from the side.

German economist Lester once proposed the theory of "immature industry protection". He believed that productivity is the key to determining the rise and fall of a country, and that the protection of national industry is to protect the development of its productive forces. Therefore, the state and government need to serve as a powerful shield for the development of national industry, rather than inherit the laissez faire principle of the classical school.

The development process of China's agricultural products market is a proof of this theory. The fact that domestic agricultural enterprises are born out of the small-scale peasant economy and their own competitiveness is not enough to compete with foreign enterprises. This leads to the loss of control and discourse power of agricultural products in the international market.