Agriculture Reference
In-Depth Information
where 1,815 is the mean of 1995 and 2000 real grain price levels as a
weighted average (constant yuan of 2000 per tonne), which is the assumed
internal equilibrium price before shock, 6 per cent is the calculated price
reduction due to the import shock, 215 is the calculated volume of market
grain that is produced domestically before the shock, 3.1 per cent is the
calculated reduction in total grain output, 40 per cent is the ratio of
materal nput costs derved from the rato between gross output value
and value-added of agriculture in 1998, 10 per cent is the assumed ratio of
fixed costs to the reduced output, which cannot be proportionally reduced,
and 30 per cent is the assumed proportion of farmers who can move to the
non-gran sector n the short run and earn the same ncome as before.
In this calculation, farmers' self-consumed grain is excluded because it
s offset by ther own producton.
The derived 28.0 billion yuan of net losses is equal to 0.31 per cent of
GDP, or 2.0 per cent of the agricultural value-added in 2000, and 4.2 per
cent of farmers' net ncome from farmng. Those gran farmers who have
no other employment opportuntes would ncur a 9.1 per cent net ncome
loss on average.
Producer losses could be much smaller if grain farmers can efficiently
shift to non-grain production with the same resources available. However,
the current stuaton s that the number of gran farmers (those fully or
mainly engaged in grain production) is still very large, at least accounting for
60 per cent of the total 350 million farmers. Grain farmers are concentrated
in the less developed central and west regions. Most of them have very
low productivity, annually producing only 2 tonnes of grain per capita, and
receive very low incomes. However, the transfer of these farmers to other
sectors has been slow. The major obstacles are
lmted employment opportuntes for unsklled labour n other
sectors and the low level of educaton and sklls
accessng domestc or nternatonal markets of non-gran products s
difficult for many farmers due to poor information, telecommunication
and transport servces n the remote rural areas
the government has mposed gran producton quotas and provded
price protection, and thus reduced farmers' incentives to move out
of the gran sector. These polces have been gradually relaxed n
recent years.
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