China Peanut Economics: Supply And Demand, Price And Distribution Of Benefits

China is a major peanut production, consumption and exporting country, with the largestproduction and export in the world. The stable development of the peanut industry has had profoundimplications on balancing the agricultural structure, increasing farmers' income, improving the edible oilself-sufficiency, as well as enhancing export ability of agricultural products.This thesis sets up econometric models, based on value chain approach, to systematically analyzethe changes and impacts of China's peanut production, consumption, trade and prices. The majorconclusions are as follows:(1) On production: Since the founding of the PRC, the peanut productionexpanded by12times, resulting from both the increases in planted area and yields. The year of2003is aturning point before which production increases were mainly contributed by the enlarged acreage whileafter which, the yield gains have been playing a major;(2) On factors contributing to increasedproduction. Firstly, the production responds well to input factors, particularly to the physical inputs,such as fertilizers and seeds, but much less to the labour input, reflecting the production increases arebased more on physical inputs. Furthermore, technical progress only contributes to24.1%of peanutproduction, less than half of the share of China's overall agricultural technological progress to the wholeagriculture sector, therefore promoting peanut production through scientific and technological progressis imperative. Secondly, the models show that the increased peanut prices could stimulate the increase insown area;, while price increases in competitive crops such as wheat and maize will lead to the peanutacreage decrease. However, the changes of peanut acreage are much less sensitive to the prices ofcompetitive crops than to peanut prices themselves.(3) On optimizing the industry layout: Comparedwith other grain crops, peanuts have more prominent comparative advantage. Transportation costs havea positive impact on the peanut industry layout, while the urbanization level, non-farm employment, andtechnological progress have significantly negative impact on peanut producing layout. Throughcalculating peanut industrial concentration, results showed that China has been accelerating theconstruction of main specialized producing areas with obvious advantages, and the peanut producinglayout will concentrate increasingly.(4) On the oil-and food-use of peanut: the conclusion reached bypeanut consumption model showed that the edible peanut demand had a positive relationship with theincreasing urban resident income, while the increasing of rural residents income created conditions forthe expansion of meat and egg consumption, leading to the reduction in peanut consumption. However,the rising peanut prices would constrain the direct peanut consumption by urban and rural residents, andthere are certain differences in its impact. Moreover, peanut price has fluctuated significantly in recentyears, and supply and consumption etc. have increasingly influence on peanut price. And (5) On thepeanut external trade, Peanut Trade Competitiveness Index has presented a downward trend in recentyears, and the peanut export was less competitive, rather than showing its comparative advantage.Based on the above findings, according to the survey conducted in Linxi City, Shandong Province,the major peanut producing area, and by means of tracking the price formation of peanuts and peanut products, the author analyzed the pattern of benefit allocation of the peanut industry chain and hasdrawn the following conclusions:(1) Peanut farmers has undertaken more production and market risksin the industrial chain with relatively low benefit;(2) Under the context of the open edible-oil producingand processing market, the profits obtained by the peanut oil businesses are relatively low. In this case,the small processing enterprises were at a disadvantageous competitive environment, and in themeantime, only by relying on amplifying the processing volume, can the large peanut oil processingenterprises maintain their low profits;(3) The peanut oil profits obtained by the large supermarkets weresignificantly higher than that of the other part in the industry chain, and also overweighed the wholesalemarket profits. The reason lay in that the large supermarkets controlled the majority of distributionchannels for the small package edible oil, and by virtue of the market monopoly, large supermarketsextracted high profits. It's crucial to correct and adjust the reverse regulation in peanut oil and peanutindustry development.Due to the above-mentioned conclusions, the policy recommendations proposed in this paper are:(1) to improve policy support;(2) to increase capital investment;(3) to stabilize peanut production;(4)to promote dominant regional development;(5) to improve mechanization level;(6) to enhance deepprocessing capacity of peanut industry; and (7) to strengthen the supervision over large-scale edible oiland fat processing enterprises and large supermarket chains...