Analysis on the present situation of production and Marketing structure of Agricultural products in China and suggestions for improving problems (part I)

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Social and political news in the past two months has devoted considerable space to the issue of banana, pineapple, papaya, dragon fruit and other fruit producing areas collapsing in price, leaving farmers with no return. Among them, there are helpless appeals and protests from farmers in various places, explanations by officials of the Council of Agriculture for their own administration and response measures, and even incidents in which buyers of origin are excluded and attacked by their peers because of high purchase prices.

In fact, the phenomenon of sharp rise and collapse of agricultural product market price in China is a regular and irregular occurrence. When an event occurs, ordinary people usually feel the price increase deeply, because the retail market price will be too high for people to buy; for the production harvest price falls, the retail price drop at the consumer end is often insensitive, at most it returns to the normal price or is slightly cheaper than usual.

But for the farmer, the general reaction is that when market prices rise, he can get a higher price from the origin than the wholesale market, but when the wholesale market falls because of a bumper harvest, it is the beginning of pain, often with no sales or no return.

This kind of agricultural product market price rises sharply, plummets the question, the government unit also often becomes the target which is accused. It seems unfair to say that the government has done nothing about this problem, because the government has long used various subsidies (such as de-marketing surplus products or secondary products) to compensate farmers 'losses, or initiated regulatory measures such as special foreign agricultural purchases to calm price fluctuations and appease public grievances.

if the government can respond immediately to such incidents, the controversy will be much smaller; but if the response is too slow, social and political news will be hyped up. However, no matter what the outcome of the treatment, when the incident subsided, it was usually like a ship passing through water without a trace. We could only wait for the next time to deal with it, and the problem seemed to never be solved.

Every time there is a major price surge, the Council of Agriculture will put forward some policy guidelines and measures to deal with it. For example, in this incident, Chairman Lin of the Council of Agriculture announced a briefing at the press conference on July 3 to explain what measures the government has taken to deal with the problem of overproduction and price collapse. However, the problem has persisted for so many years, and it is obvious that these measures have not really solved the problem.

Three types of agricultural producers are circled in the background box above, including individual farmers, production and marketing teams and production cooperatives. The production methods of producers include open-air cultivation, warm/net cultivation and plant factories. Basically, besides the production type of plant factory, the peasant association organization will play a certain role of production guidance and distribution coordination among these producers.

In accordance with the norms of the Agricultural Products Market Trading Law, farmers basically have three channels for selling agricultural products as shown in the figure: self-production and self-marketing, contract production, self-production and wholesale market or specific trading market sales. In order to meet the special needs of different marketing channels, farmers will have different practices in the production and management of agricultural products and different bargaining power for product prices; the production and marketing environment and problems they face will naturally be different. They are described as follows:

Self-produced:

As shown in the figure, there are four kinds of sales channels for self-production and self-marketing: market, farmer association store/store, self-built official website/e-commerce website and healthy (self-operated) characteristic restaurant. (Other practices such as farmers pulling carts to market/roadside sales are ignored here)

Agricultural products sold through this channel, whether fresh or simply processed products such as sauces and pickles, can be sold as commodities to farmers, and farmers have the dominant power in selling, ordering and bargaining products. However, this direct/indirect sales method to consumers requires a certain amount of sales (including product packaging), publicity and non-agricultural production manpower and cost input, which is unfamiliar to farmers, so only some farmers will sell their products through this channel, and many farmers who sell will not bet all their agricultural products on this channel for sale.

The proportion of farmers who sell all or most of their produce in this way is even smaller. Usually, such farmers will focus on the production of specific agricultural products, operate their own brands, establish product quality reputation, and also have their own websites (official websites) or join electronic marketplaces based on agricultural product sales.

Note: The words "proportion" mentioned in this article are only a conceptual statement due to the lack of specific statistics to support it. If government departments do not have relevant statistics, they may be collected in the future as a basis for decision-making and management.

Through online marketing, these farmers usually rely on professional website operators (such as Austin Market) to build brand image and expand network customers and cultivate fixed customers. More ambitious farmers will join or operate multiple websites at the same time to expand the contact surface of network customers, thus increasing the sales volume and sales speed of products.

Generally speaking, the proportion of agricultural products and processed agricultural products sold through this channel in the total sales volume of agricultural products in China is very low, so it will not affect the price changes of agricultural products nationwide. Farmers who thus build their own brands and reputation for quality are less susceptible to market price fluctuations and can sell at better prices than wholesale/retail markets.

Although online shopping has become popular, agricultural authorities have encouraged farmers and farmers 'organizations (such as farmers' associations) to set up websites to sell agricultural products through guidance and subsidies. There are also various commercial website operators who mainly sell agricultural products. However, this type of sales channel is only suitable for specific consumption patterns, specific types of agricultural products, and specific types of consumer groups, and cannot be promoted to meet the general public's consumption needs and consumption habits. Even if the development is successful, only a small number of farmers who invest in it early and continue to operate will benefit because of the small market size. Therefore, the prices of agricultural products sold through this channel cannot affect the daily trading of large quantities of agricultural products, nor can it improve the risk that most farmers face from time to time.

Contract production:

Contract production is a production model similar to contract production or guaranteed acquisition. For the acquirer, since he must satisfy the market demand of the existing channel or the commercial interest of developing the channel, he must find a reliable agricultural product producer to obtain a stable source of agricultural products to meet his commercial and service operation needs. On the other hand, for agricultural producers, since they do not have to worry about the difficulties of selling their agricultural products or losing their prices in the future, they can reduce the risks of agricultural production and focus on agricultural production management. Therefore, contract production is a relatively safe production and marketing model for farmers.

the selling price of agricultural products (origin) contracted for production is basically agreed upon in advance by both parties. The acquirer calculates its business costs and profits and proposes an acceptable purchase price; the producer estimates its production costs and expected revenues and proposes an expected sales price, after which both parties negotiate. The ideal price agreement results in a purchase price range based on a certain product quality; that is, a flexible pricing scheme will be adopted depending on the quality of the harvested agricultural products and the wholesale market price at that time; but the highest price will not be higher than a certain number of dollars, and the lowest price will not be lower than a certain number of dollars. As to whether this price is better for the farmer, the bargaining power is mostly in the hands of the purchaser.

Because the buyer's terminal market demand will have a considerable amount, his cooperative objects for contract production will usually be mainly production and marketing classes and production cooperatives, and less contract with individual farmers. However, some buyers still consider profit as their main consideration, and farmers will be attracted by the chance high profits of other farmers. Therefore, the stable and popular contract production relationship needs to be further cultivated, and government departments can play a certain guiding role in it.

Although the quantity of agricultural products released by contract production is obviously higher than that of self-production, and because of certain sales mode and production and marketing order, the price fluctuation of agricultural products sold in this channel is obviously lower. As shown in the figure above, since the overlap between the sales channel and the wholesale market is low, and the quantity and variety of the products are still unable to compete with the wholesale market; in most cases, the attributes of the products are different from the wholesale market, and the unit price is mostly higher than the average price of the wholesale market; therefore, the product price of this channel cannot significantly affect the selling price and price fluctuation of the wholesale market. At most, when the retail market price of agricultural products rises unreasonably, the agricultural government will use both soft and hard methods to persuade the hypermarket operators to increase the shipment volume of their contracted production areas to slightly balance the soaring agricultural product prices.

From the above analysis, we can see that contract production is a production mode that can guarantee farmers and produce good production and marketing relations. Agricultural administrative units should think about how to effectively expand the development of contract production mode and guide wholesale markets to open up trading environment for such products or induce wholesale market buyers (zero suppliers) to purchase agricultural products from contract production suppliers. At the beginning of last year (106), the Council of Agriculture, the Ministry of Health and Welfare and the Ministry of Education promoted the policy of "Four Chapters and One Q" for school nutrition lunch ingredients based on food safety needs, which is an excellent policy for improving the environment of agricultural production and sales procurement. The agricultural administration unit can further track the impact of this policy on the contract production environment and understand whether the two sides have established a healthy contract production cooperation model.

Self-production to wholesale market sales

In fact, the source of the sudden rise and fall of agricultural product prices mentioned every time is the transaction prices of this wholesale market, especially the daily wholesale prices of Taipei's first and second agricultural fruit and vegetable markets, which have obvious effects on guiding the price changes in the retail market.

In the 1960s and 1970s, the Agricultural Products Market Trading Law was passed and agricultural wholesale markets were established. The original purpose was to establish a unified and open agricultural products trading environment and order throughout the country, so as to avoid unfair regional distribution of goods and unfair trading phenomena caused by artificial monopoly or information gap, resulting in unreasonable agricultural products selling prices and exploitation of the purchase price of origin by middlemen.

This system has been implemented for many years, and the transparency of transaction information is also fast and refined with the help of information technology. However, the frequency and intensity of large fluctuations in agricultural prices have not shown any signs of slowing down. Moreover, farmers are still often heard complaining that when wholesale market prices rise, they do not get the corresponding benefits, but when prices collapse, they lose their money and lose heavily. The role of government departments here is also unusually passive and awkward. They have no coercive force to restrict the price changes of agricultural products, but they have to bear the scolding of farmers and end consumers when the prices of agricultural products rise and fall sharply, and spend huge amounts of public money to clean up the rotten stalls. The cycle seems endless.

To explore the reasons for the sharp rise and fall of agricultural product prices in wholesale markets, it can be attributed to the imbalance between supply and demand caused by seasonal and climatic factors (abundance or disaster shortage). However, if we examine the relevant data and information, it is not difficult to find that there are also problems worthy of discussion in the whole agricultural production and marketing chain in Taiwan.

Mr. Lin Yuhong, who has long been concerned about agricultural production and marketing problems in China, and Mr. Jiao Jun, another columnist of "Two or Three Things in Agriculture", have pointed out some problems in many articles. For example: The operation methods of suppliers/dealers and underwriters in wholesale market that may affect wholesale price, the compression behavior of dealers to farmers 'purchase price, the phenomenon that the production and marketing mechanism of wholesale market cannot effectively link purchase price with market price, and the appeal for continuous review and improvement of China's transportation and marketing system and structure.

In addition, it can be seen from the news event that banana vendors were beaten in June this year that there are also so-called hidden rules in the field of agricultural product purchase vendors. When someone does not abide by this rule and affects the interests of others, he will be excluded or even attacked; this hidden rule is not conducive to the producers (farmers) to obtain the production profits they deserve.

Therefore, if the agricultural administration authorities want to change this passive role, they should actively face the problem, take effective measures to gradually improve the production and marketing structure and constitution of our country, reduce the fluctuation range of agricultural products prices and increase the farmers 'due income.

How? The next paragraph is clear.

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