Price changes in the farm produce market may be no less
unpredictable than the stock market, although the latter catches
much more attention.
The price of dabaicai, or Chinese cabbage, has fallen to a new
low in Beijing since 2000 due to its high yield this winter.
Many farmers are selling their dabaicai at just 0.12 yuan (1.5
US cents) per kilogram to dealers about half last year's price. For
farmers this means their income would not cover costs and some are
refusing to harvest and sell the cabbage.
Sadly, cabbage growers grow more and get less. The harvest hurts
them. This is a perpetual puzzle for not only farmers, but
economists worldwide, who can see the facts but cannot figure out a
workable solution.
Cabbage growers are not the only victims of the changeable
market. This year we have heard a series of sad stories about dairy
farmers, and watermelon, date and celery growers in various regions
who cannot avoid making losses in the wake of bumper harvests.
This is the risk of the market. We have shaken off the fetters
of the planned economy and stepped into the freer but more
unpredictable market economy. All market players must get prepared
for the uncertainties the market brings.
In the case of cabbage growers, last year's high price
encouraged farmers to increase production causing oversupply,
which, in combination with other factors, has driven down the price
this year.
Farmers should learn lessons from the losses. Given China's
specific situation, however, it would be unfair to put all the
blame on them.
Individual farming is a label of Chinese farmers. It is not
because they would like to choose that mode; it is a natural choice
as China, historically, has had huge numbers of farmers but meagre
acreage of farmland.
It is easier for individual farmers, who lack scale of
production, to fall victim to market fluctuations.
They should not be left to rely on their wisdom to ward off
market risks. The government should and can offer a hand to help
them through.
Market risks are everywhere and cannot be totally avoided. They
arise primarily from information imbalance.
If the relevant government departments and industrial
associations under their auspices can provide more information on
market trends, the farmers would feel more assured as to what and
how much they should produce to cater to market demand.
But of course farmers cannot wait around for help. They can
organize co-operative associations to collect information, open up
new markets and bargain with dealers on behalf of individual
farmers. It may prove to be a new option for those
information-hungry farmers.
(China Daily November 14, 2006)