Agriculture Reference
In-Depth Information
Gathering and Editing, China Agricultural Web 2002). The recovery in prices
has been mld snce the surplus of gran stock has not been fully absorbed.
Total gran stocks were stll large at the end of 2001. 8 Therefore, a larger
recovery in grain prices could be expected in the coming years—without a
major increase in imports—before normal storage levels are reached.
One may conclude from the above description that either the 1995-96
domestic market prices or the 1997 quota price significantly exceeded an
intermediate internal equilibrium level, whereas the 2000 domestic prices
were far below that equilibrium. To compare with world prices, we may
use the average domestc market prce level (n constant terms) durng
the period of 1985-2000 to represent an intermediate internal equilibrium
prce level. Ths average level s equal to 79 per cent of 1995 market
prices and 137 per cent of 2000 market prices. It is 10 per cent higher than
1985 market prices. By accident, it is equal to the mean of market prices
between 1995 and 2000.
We should note that the farm gate prces are not comparable wth
world market prces for two reasons: the prce of mported gran wll be
higher than world market prices after including transport, insurance and
other costs; and to compare domestic prices with prices of imported grain,
domestic purchase, transport and wholesale costs should be added.
It s reasonable to compare domestc wholesale prces and the mport
CIF prices. Laping Wu (2001) has found that the CIF prices of imported rice
and wheat were significantly higher than the domestic wholesale prices from
1996 to 2000. In this comparison, however, there are a few important things
we should note. First, the quality of exported, imported, and domestically
wholesale grain may not be fully comparable. For example, imported rice
and wheat is usually of a higher quality than the domestic grains. Second,
f we compare the domestc wholesale prces of gran wth rural market
prices or state purchase prices, the former were usually similar to, or even
lower than, the latter. This was either a result of state subsidy in the earlier
years or due to surpluses n the domestc market n recent years.
Historical data on quota, above-quota, rural market, wholesale, FOB
and CIF prices for rice, wheat, corn and soybeans are presented in Tables
A5.4-A5.7. They show that the rural market prices of wheat, corn and
soybean were not significantly lower than the CIF or FOB prices, even in
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