Study On Barley’s Supply And Demand Structure And Market Price In China Under The Condition Of Trade Openness

With the rigid growth of the demand on agricultural products in China, it is inevitable to moderately use the international market and foreign resources to fill up the shortage of domestic supply of main agricultural products. Under the condition of trade openness, the Chinese government provides tariff protection on key agricultural products like grain, cotton, sugar, which have high relevance with national economy and people’s livelihood, however barley is lack of tariff protection. Barley is not only the main raw material for brewing beer sector, but also a kind of high quality feed, and main food for the people living in Qinghai-Tibet plateau. On the whole, it is an indisputable fact that China is highly dependent on the international market to meet domestic demand on barley. The significance of the study on supply and demand structure and market price of barley in China under the condition of openness is how to deal with the risk that bringing from international market to domestic market when it makes good use of the international market and foreign resources rationally.The paper has analyzed demand structure change, potential supply capacity of barley and trade market structure of barely, the correlation and volatility of domestic and international market prices under the condition of openness. This study has comprehensively utilized on-the-spot investigation, comparative analysis and econometric analysis methods. The author has investigated the actual production and operation of barley, compared the comparative advantage in main provinces in China and cost-benefit between barley and competing crops, and used stochastic frontier analysis methods to evaluate the supply potential of barley, the residue demand model to estimate the market power in the international market and used ARCH model to analyze the price volatility of barley.The research results show that:(1) The contradiction between supply and demand is evident, the gap between demand and supply of malt barley is large, the feed barley import is mainly used to replace corn, which is driven by the price differentiation, so the quantity of import of feed barley will be volatile; from the regional point of view, the barley in western region of China is basically balanced, however the gap between demand and supply in eastern and central regions was quiet huge.(2) The supply ability of domestic barley is limited, barley production has less comparative advantage compared to other crops, it’s difficult to expand the planting area, the increase of technology efficiency of barley production is also limited, so the import trend in China will continue to increase.(3) From the perspective of the trade, the barley import is facing a high market concentration; the world’s major barley exporters have market power in international market, at the same time, there exist long-term stable equilibrium relationship between domestic barley price and international barley prices, the price risk could transmit from abroad to domestic side. However, the price fluctuation of barley obviously presents cluster, it shows that the fluctuations of barley price can be monitored to some extent.(4)Making moderately use of foreign barley resources could promotes the development of barley industry, however, under the condition of trade openness, price fluctuation may have an adverse effect on farmers in Northwest and Southwest regions, the government should protect the reasonable revenue of the farmers in these regions.The innovation in this paper mainly reflected in: comprehensively analyzed the regional differences and distribution costs of barley planting and the production efficiency of barley by using survey data, it is concluded that the technical efficiency of barley in China is difficult to effectively improve. The analysis of trade has considered the existence of market power, it is concluded that China’s barley import faces an imperfect competition market.In order to ensure the healthy development of barley industry, the paper puts forward the following policy suggestions. Firstly, the government should support the establishment of production base of barley and strengthen the inventory management of barley, improve the ability of domestic barley supply. Secondly, the government should strengthen the monitoring and analysis of the market prices, establishing market risk warning mechanism, in order to stabilize the expectations of relevant market actors. Finally, China should strengthen the construction of trade partnership with main barley export countries, at the same time, broaden the import sources of barley, reduce the risk of import, and achieve barley import diversification.