Does Wholesale of Agricultural products push up the Circulation cost? is it necessary for the Circulation of Agricultural products

The wholesale market of agricultural products must charge fees, but this does not mean that the profit of the wholesale market of agricultural products is higher than the average profit of the society. On the contrary, the market of agricultural products is to a large extent a livelihood project of low-profit management.

In October 2013, the overall level of the consumer price index in Beijing rose 3.4% compared with the same period last year, but the price of fresh vegetables rose by 51.3%. Statistics show that the price of agricultural products has risen year by year in recent years, and the change is much greater than the CPI growth rate has become the norm. According to the data of Beijing Xinfadi Market: from 2011 to 2013, vegetable prices fluctuated greatly, but from the same period last year, vegetable prices were basically higher than those of the same period last year. Vegetable prices in June 2013 were about 7% higher than those in 2011, and from 2007 to 2010, vegetable prices increased rapidly and greatly. Vegetable prices on June 30, 2010 were 23.35% higher than the same period in 2009, 58.46% higher than in 2008, and 64.8% higher than in 2007.

The continuous rise in the price of agricultural products has aroused people's attention to the circulation costs of agricultural products, and there is a great controversy over the rationality of the circulation of agricultural products and the impact of the circulation costs of agricultural products on the final price. Some people think that eliminating wholesalers and agricultural products brokers and reducing the circulation links of agricultural products can control the rise in the prices of agricultural products. We hold different views on this. We believe that the circulation cost of agricultural products is high, and the crux of the problem does not lie in the link of "wholesale market." agricultural products trading market as a wholesale link is necessary, the existence of agricultural products wholesale market will not push up circulation costs, but reduce circulation costs. The proportion of circulation cost of agricultural products in retail price is a ratio. The proportion of circulation cost of agricultural products in retail price in China is higher than that in developed countries such as the United States and Japan. The reason lies not only in the numerator's "circulation cost of agricultural products", but also in the denominator's "retail price of agricultural products". In terms of the relative position in different national price systems, the price of agricultural products in China is far lower than that in developed countries. The production characteristics of agriculture determine that the rise in the price of agricultural products in China is a long-term inevitable trend.

The necessary links in the Circulation of Agricultural products

The wholesale market, as an intermediate link specialized in commodity circulation, undertakes the function of "collecting and dispersing", realizing the function of concentrating a large number of producers and retailers and completing transactions quickly, reducing the number of social transactions and saving commodity circulation time.

Theoretically, the wholesale link is an indispensable part of the circulation chain of agricultural products. For a long time, China's one-household mode of production of agricultural products determines that the wholesale circulation link must transfer scattered products to retailers and consumers, and connect the small-scale production of thousands of households with the ever-changing large market. If the retailer buys directly to the ground, because the purchase quantity is small and the acquisition efficiency is low, the packing cost, transportation cost, labor cost and process loss will only be higher than the circulation mode through the wholesale market, therefore, the role of both the primary and secondary wholesale markets in the circulation of agricultural products is irreplaceable.

In practice, what exists is reasonable, and the circulation mode chosen by market participants must be the most economical, that is, to complete the movement from producers to consumers with the fastest speed and the least cost. More than 70% of China's agricultural products pass through the wholesale market, a circulation channel. On the surface, the existence of the wholesale market of agricultural products seems to increase the circulation link, but in fact, the addition of a circulation link does not increase the transaction cost, but shortens the commodity circulation time and saves the circulation cost. After the wholesale link, the price of agricultural products has not increased but decreased. If we "avoid" the wholesale market and adopt a "small and comprehensive" circulation mode, the prices of agricultural products will only be higher, not lower.

Although the "agricultural super-docking" saves the circulation expenses spent on the wholesale link, however, due to the limitations of China's vast territory, large population and scattered production, it is difficult for "agricultural super-docking" to achieve large-scale growth in a short period of time, both in terms of total scale and variety. In terms of "super", in order to achieve economies of scale, most supermarkets have certain scale requirements for farmers or cooperatives. However, in terms of "agriculture", the variety produced by each household is limited, and the total amount is relatively small. It is difficult to match the type and quantity of agricultural products required by the supermarket. In addition, the important link of "agricultural super docking" is that professional cooperatives process and package agricultural products, turn them into commodities and push them into supermarkets, but only less than 10% of China's farmers have joined agricultural cooperative organizations, and their role is very limited. Most small and medium-sized supermarkets do not have a perfect logistics distribution system, the low degree of modernization is difficult to support the timely and effective distribution of agricultural products, can not circulation and processing of agricultural products, so "agricultural super docking" still has a high circulation loss. Due to the difference in scale and degree of organization between "agriculture" and "super", the direct circulation mode of agricultural products such as agricultural super docking can not replace wholesale at this stage, and will not become the main channel of agricultural product circulation for a long time in the future.

"quasi-public welfare" nature

Wholesale markets for agricultural products are public welfare undertakings of the government in many countries. For example, wholesale markets for agricultural products in the United States and Japan are set up with government investment. Financial support for wholesale markets for agricultural products also includes exemption from taxes and subsidies for infrastructure improvement. China's wholesale agricultural products market does not belong to the public welfare undertakings of the government, but is operated by enterprises, and enjoys very limited policy concessions and infrastructure subsidies. In the market economy, the operation of the wholesale market bears a heavy burden. Take the Beijing Xinfadi market as an example, the operation of the market needs to pay the wages of more than 1700 employees, pay various taxes and fees, and pay various expenses for the operation and maintenance of water, electricity and equipment. These expenses all come from the admission fees, exit fees and fixed booth fees charged by the market. In order to recover the expenditure, the agricultural products wholesale market must charge fees, but this does not mean that the profits of the agricultural products wholesale market are higher than the social average profits. To a large extent, the agricultural product market is a livelihood project of low-profit management. The newly developed market charges no more than 2% of the transaction volume for different types of agricultural products according to the amount, and the proportion of charges for some agricultural products is even less than 1%.

Each circulation link has to spend a certain amount of circulation costs and make a certain profit, and wholesale is no exception, but this does not affect the "quasi-public welfare" nature of China's agricultural products wholesale market. Specifically, the wholesale market of agricultural products has undertaken a lot of public welfare functions.