China's Hog Market "cobweb Phenomena" Nature, Causes And Crack Measures

Currently, our pork industry is in a crucial transitional period。The feeding pattern is changing from scatter feeding to scale feeding, with the two great puzzles or problems: the diseases and the sharp fluctuation, which puzzle all the pig producers.The presence of such problems is very disadvantageous for the farmers to increase income and for us to construct of socialist new countryside. It is a very important question for solving three dimensional rural issues to maintain our live pig market developing continuously, stably and healthily. Solving these problems—mastering the fluctuation laws and characters of our live pig market—will be very important for us to crack the sharp increasing and decreasing of live pig price.The author analyze the abnormal market such as sharp increasing and decreasing of pig price in recent decade deeply by economic theory including cobweb theory, and think that the fluctuation of our pig price appears three forms of cobweb theory, with very obvious disorganized phenomenon of cobweb model. The three forms of cobweb model in economics are Convergence-cobwebs, closed cobwebs and. The impact of divergence cobwebs model on China's live market is greatest.Therefore, we can master the operating laws of pig market, as long as mastering the cobweb model of pig market and cracking the disorganized phenomenon.The nature of Cobweb model is the influence of demand relation and the result of the law of value. This is an economic law that sometimes live price is away from it's value, but the price fluctuations of live pigs is around the it's value for long-term.The author found five causes of cobwebs phenomenon after his research,which are that the first is growth cycle of the pig, the second is the lack of access-out system on pig industry, the third is lower concentration on the industry, the fourth is the lack of reasonable guide on pig production, the fifth is the threat of the pig's disease. The majors factors are leading to rise and fall sharply on the pigs stock.To solve the cobweb model disorder of live pig market, the government is advised two tools ,which are the establishments of pig futures and early-warning systems. To establish pig futures market, We will get following aspects of the benefits through the establishment of pig futures:The First is stabilizing pig prices, the second is spreading the risks, the third is promoting the changes of swine production from quantity to quantity, the fourth is increasing profits.To establish early-warning systems of live pig market, we should adoptfollowing five measures mainly:The First is disease warning, which focus on outbreaks and changes of pig's diseases, the second is price warning, which focus on up-down of pig's prices, the third is profit cycle warning, which focus on the changes of profit cycle on live pig market, the fourth is demand and supply warning, which focus on changes of amount of live pigs. the fifth is production warning, which focus on analysis of increasing stocks and decreasing stocks.The author had analyzed the main factors, hypostasis and primary problem, through defining that the disorganized cobweb model is the main reason which results our pig price fluctuation in recent decade, and indicate that establishing live pig futures and pig market early-warning system are the main two measures to solve the sharp fluctuation of pig market and maintain developing stably.This paper has three outstanding characters:The first is that adopted the basic economic theory, from simpleness to complexity. Firstly, we explained the fluctuation phenomenon of our pig price, and then analyze how the pig price come into being, which is defined by the three factors, including value law, relation between supply and demand and parley transaction(the asymmetry of information). The value law is the lever and the invisible hand behind of the price, while the parley is the way that the price comes into being, and is predicted by everyone thorough the relation between supply and demand. The relation between supply and demand is the direct defining factor and defines the change trends and increasing or decreasing range.The second is that theory combines with practice.This paper doesn't stand on the research of economics, but adopts cobweb theory and practical situation of our rural pig feeding, combining with the changes of pig price developing in different stage, including correlative cases, and tries to scientific conclusion.The third is the paper with the view of solving the sharp fluctuation of our pig market and mastering the operation laws of our pig market. Based on analyzing pig price deeply through adopting cobweb theory, we defined the main problems of our pig market, and indicate the concrete solving schemes and suggestions.