Radio Free Asia (RFA) recently reported that the news is spreading widely in the Chinese media that the prices of agricultural products have been dropping. As an example, key Chinese cabbage producers saw a sharp drop in prices – 90% compared to last year. Even if they sold out their entire inventory of products, the farmers could hardly recover their basic costs. Famous Chinese economist Hu Xingdou suggested that this pattern of the price dropping every other year resulted mainly from unbalanced information between the farmers and the market. The lack of a futures market for agricultural products and the lack of organized farmer’s associations have contributed to farmers’ inability to manage market risks. Nor has the government lent a helping hand to the farmers. The recent adjustments in the macro economy had a negative impact on the capital market for investment in agricultural products.
Source: Radio Free Asia, November 10, 2011