Farmer

In 2017, domestic food supply increased, prices dropped, and the circulation in large markets decreased, the total annual supply of various domestic foods was 1.993 billion tons, an increase of 1.50% over the previous year; the per capita supply was 1,441 kg, an increase of 0.90% over the previous year. 

1 Product structure changed in large-scale agricultural product wholesale markets, and the circulation decreased

According to the weekly sales of key agricultural product wholesale markets monitored by the Ministry of Agriculture, the sales volume of edible agricultural products has dropped from the beginning of 2017 to February,2018, especially in January-February 2018.

From January to February 2018, the total sales volume of edible agricultural products in major wholesale markets in China was 4.108 million tons, decreasing 13.51% year on year.

By varieties, the sales volume of livestock products and grain respectively increased by 13.04% and 9.65% from January to February, while the sales volume of other products declined to varying degrees from 6.28% to 60.83%. Aquatic products, vegetables and fruits decreased by 23.34%, 14.95% and 6.28% respectively in terms of sales volume. From the perspective of product structure, the sales volume of vegetables and fruits was the largest with shares of 73.45% and 16.71% respectively; livestock products, grain, and aquatic products respectively accounted for 3.49%, 3.33%, and 1.91% from January to February, 2017.

In 2017, the sales volume of agricultural product totaled 30.16 million tons, down 1.53% from the year before. Except the sales volume of fruit increased by 9.9%, other products all saw decreases to varying degrees from 1.22% to 38.06%. Specifically, the sales volume of vegetables, grain, livestock products and aquatic products decreased by 1.22%, 2.91%, 12.37% and 20.72% respectively. From the perspective of consumption structure, vegetables and fruits respectively accounted for 73.03% and 17.77%, increasing 0.23% and 1.85% year on year; aquatic products, livestock products and food separately accounted for 2.28%, 2.66% and 2.86% of the total sales volume, down 0.42%, 0.36% and 0.04% from the year earlier respectively.

On the one hand, the change in sales volume of different products in large-scale wholesale markets is caused by changes in operating profits caused by price changes; on the other hand, it reflects that supply led to changes in the balance of supply and demand and thus brought prices fluctuation. The changes in the actual income of residents have important influence on their consumption choices.

2 Price decline impacted industrial profits, which is the key to the reduction in circulation in large markets.

From the perspective of price changes, in 2017, the national comprehensive agricultural product price index and vegetables price index were at the lowest levels since 2012. Prices decrease heavily affected the income and profitability of the operators, but the prices of real estate and transportation costs both hit record high, which pushed operation costs up. Some operators have withdraw from the market, leading to the decline in sales volume of large wholesale markets.

In 2017, the annual agricultural product price index was 190.5, down 8.66% from the previous year; the vegetable basket price index was 198.6, down 10.24% year on year. From February to December, 2017, the comprehensive price index of agricultural products and vegetable basket prices both showed significant year-on-year decline.

The decrease in the overall wholesale price index of agricultural products restrained the income and profits of the operators and producers. When the profits of the operators are too low, the sales of the products will stop, the circulation of agricultural products will be docked, the demand can’t be effectively connected, resulting in product waste and loss. From the perspective of the further influence of price changes in agricultural products, the decline in real income and spending power of rural residents will also bring down the sales revenue and profits of SMEs in rural areas. However, from the perspective of consumer prices of urban residents, there’s no significant decline in consumption.

In 2017, the overall consumption price of food decreased 0.53%; of which, the prices of grain and aquatic products respectively were 5.68 yuan/kg and 24.09 yuan/kg, up 3.35% and 8.91% from the previous year separately; the price prices of vegetables, meat, eggs and  fruits were 6.09 yuan/kg, 46.00 yuan/kg, 17.31 yuan/kg, and 9.04 yuan/kg respectively, decreasing 3.95%, 2.62%, 1.65%, and 0.12% from the year before separately; price changes in wholesale markets reflects that the sharp growth in the production costs of domestic farm produce circulation links has led to significant drop in farmers’ income.

3 Changes in sales structure and the supply of fresh food brought about the growth in total supply of farm produce and pushed producers’ prices down

In terms of changes in sales structure and prices, domestic food supply structure has been adjusted in 2017. The state adjusted grain support policy and cancelled the temporary purchase and storage policy for corn in the Northeast in 2016, corn prices declined sharply, but only producers in the Northeast were provided with subsidies, so corn production in other regions decreased. In 2017, the state lowered the minimum purchase price of paddy, which led to the reduction in paddy production. At the same time, due to increase in the supply of vegetables, melons and fruits, the prices dropped. Decline in feed grain prices brought the growth in animal products and the fall in prices. Affected by adverse weather conditions, fishing production declined and the prices rose.

According to BOABC’s monitoring, national grain production totaled 606.8 million tons in 2017, down 1.53% from the year before; of which, the output for paddy and corn was 204.6 million tons and 205.8 million tons, decreasing 1.15% and 5.84% from the year before. The production of other grains and beans sharply increased to 19.31 million tons, up 11.55% from the previous year. The production of potatoes amounted to 34.45 million tons, up 2.65% year on year. Affected by the decrease in corn price, the demand of sorghum was suppressed, and the price rose significantly. The production of oil plants and cotton seed was 37.30 million tons and 8.48 million tons, increasing 2.77% and 3.50% from the year earlier. 

The production of fresh fruits and vegetables amounted to 1.119 billion tons, increasing 3.47% from the year before; specifically, the output of vegetables, fruits and melons was 822 million tons, 190 million tons and 106 million tons respectively, up 3.05%, 5.06% and 3.95% year on year separately. The increase in the production of fresh food led to a sharp decline in annual vegetable basket price index.

In terms of animal food, the output of meat, poultry eggs, milk and aquatic products was 222 million tons, up 0.08% from the previous year. The output of meat, poultry eggs and milk was 86.01 million tons, 30.70 million tons and 35.45 million tons, increasing 0.7%, -0.8% and -1.6% year on year separately. The total production of aquatic products was 69.39 million tons, up 0.6% from the year before. The amount of cultured fish reached 5.281 million tons, an increase of 2.4% over the previous year, and the amount of fishing was 16.56 million tons, down 5.0% from the previous year.

On the whole, the total annual supply of various domestic foods was 1.993 billion tons, an increase of 1.50% over the previous year; the per capita supply was 1,441 kg, an increase of 0.90% over the previous year. The total supply of food was sufficient in domestic. If we can ensure the effective circulation and distribution of products, the availability of domestic agricultural products is not a problem. Considering the large amount of imports of various raw materials and finished products, food supply in domestic was more abundant. Great supply obviously suppressed domestic prices and led to waste and loss.

4 Do a good job in information monitoring, effective circulation and processing and transformation to promote industrial development.

Comprehensively considering the sales volume in key markets, the total supply in domestic market, wholesale price index and retail price change, there are obvious incompleteness in China's agricultural product circulation market. Accelerating market management and technical upgrade of agricultural product circulation link, effectively reducing circulation costs and waste are urgently needed in current economic society. 

Accelerating the application of new technologies, such as big data and the Internet of Things, in production and distribution, is the core and key to effectively reducing transaction and circulation costs.

In particular, non-free competition in the road transport and trading market has caused cost growth in circulation. The distance between the production and consumption of non-grain  products in urban agriculture is continuously expanding and has passed the optimal transport radius of over 200 kilometers, leading to high transportation costs. The terminal retail price is  more than 10 times of the price of farmers, and such extremely high circulation costs will seriously hinder the efficient circulation of products and result in a large amount of waste and loss.

Primary processing of agricultural products can change the storage characteristics of products and facilitate long-distance transportation of products; effectively sorting and processing of products will enhance the value of products, reduce the proportion of logistics costs in the market value of products, and more effectively use the nutritive value of food, raise the utilization efficiency of food, ensure food safety and supply, and reduce planting area, which is of great significance for the protection of the ecological environment. It is conductive to decrease import volume of farm produce and increase varieties of products, which is important to maintain global food supply and food security and fully implement the duties and responsibilities as a world power.