The Analysis On Main Reasons Of Farm Product Price Fluctuation

From 1979 on, the agriculture policy of our country began to transit from national planning to market leading gradually. The policy changes have stimulated the agriculture product, brought product gains to new annals for times. But there are also problems during the reformation of the agriculture policy, the most important thing is the fluctuation of farm product price. According to the difference of main reason of fluctuation, I could divide the past 25 year into two periods: the period before 1990 and the period after 1991. In the period before 1990, agriculture policy was the most important reason which affected the farm product price, because the farm production was running under national planning greatly. In this period, the price tool was almost the only tool that was used by the government to affect the farm produce, so it's very difficult to satisfy both controlling farm product and farming incoming through the only tool. It made the agriculture policy very active to improve the farm product but embarrassed when the farm product supply was much more than the demand. In the period after 1991, the farm product price was mainly decided by market instead of government policies, so the whole social market and the inflation became the first reason to affect the farm product price. The market became important because the government gave up the policy gradually as time goes by. It means if the government wants to use the policy tool again, it could make the market unimportant immediately, as it happened during 2003. But fortunately, in the other time, the market was the first important. The econometric analysis proves that the inflation affected the farm product price so much during this period.