The Study On Food Price Forming Mechanism And Food Price Control Policy

The price mechanism is the core of the market mechanism, and fluctuation of food pricesaffects the vital interests of economic entity and the fluctuation of the national economy.Since the reform and opening up, the formation of food prices is gradually dominated bymarket from government along with the gradual deepening of the grain circulation system andthe market play an increasingly prominent role in the process of the formation of food prices.The cycle of the fluctuation of food prices gradually shortens and food prices increases widthof fluctuation. The abnormal fluctuation of food prices directly influences farmers’ incomeand the living standards of the consumers, especially the living standards of low-incomegroups, and the burden of national finance. The above situation is the important basis of thecontrol policies of food prices. In order to protect the farmers’ income, to promote the stabledevelopment of food production, to ensure the national food security, our country hasimplemented crops’ minimum purchase prices system since the year of2004. The policy hasplayed an important role in increasing farmers’ income, developing grain production andstabilizing food prices. In addition, government also regulates domestic food market supplythough grain reserves adjustment mechanism and food import and export adjustmentmechanism.Through the empirical analysis to the China’s grain price forming mechanism, China’sgrain prices fluctuation is caused by many kinds of factors, including the grain production,climate, social, economy and policy and so on. To facilitate the analysis all the factorsinfluencing food prices, the factors are divided into internal factors and external factors. Theendogenous factors are the basic factors on food prices; it includes the total grain output oflast year, planting areas of grain crops, grain net imports, population and price index ofagricultural means of production and so on. Exogenous factors have the characteristics ofexternalities relatively to internal factors of the food market, including the internationalmarket prices and food prices control policies.Reasonable food price forming mechanism is beneficial to the improvement of farmers’positivity, to the increase of farmers’ income and to ensure food security for the nation.However, there are many problems in China’s current food price forming mechanism. TheseProblems include the "reverse adjust" problem of food reserves and food import and export,the unreasonable price gap of food and agricultural material of production, the unreasonableprice gap of food and other agricultural products and crops’ minimum purchase prices. Facedwith these problems, the measures include perfecting food reserves adjustment mechanism,perfecting food import and export adjustment mechanism, establishing the linkage of themechanism of agricultural production means prices and food prices, establishing the linkageof the mechanism of domestic food prices and international food prices and perfecting crops’minimum purchase prices policy and so on.