Research On Corn Price Fluctuation And Control Policy In China

Corn production and a healthy and steady development of corn market are both important. In China’s four major food crops, corn has become the largest acreage and the highest yield of food crops, accounting for35%of the proportion of total grain output. In recent years, the corn is not only a kind of important food crops, but also fodder crops and industrial raw materials. With economic and social development and technological progress, corn processing industry has developed rapidly, demand for corn has increased. According to corn market situation in china, our agricultural policy has provided strong support to the market price of corn, and the price of corn has become higher and higher. With the deepening of marketization and internationalization, the linkage between domestic market and international market has been becoming increasingly enhanced. And the use of biomass energy has aroused widespread concern around the world in recent years, especially in USA. The price fluctuation of corn and other food crops is more intensive, and the market situation becomes more complicated. T he fluctuation of Corn price affects the price level of the whole society directly, and then it will affect people’s lives and national economic development, especially for food income-based of peasants’ lives.The paper analyzes the fluctuation in corn prices over the past decade, analyzes the factors and their results, and then provide the policy recommendations of market regulation.The paper analyzes the situation about china corn’s production, consumption, processing, trade and industrial policies, etc. Then it does the empirical research with the mean regression model and vector auto regression (VAR). The result includes, firstly, with the support of national policies, china corn’s current situation is that demand for corn has increased, the scale of production has expanded, and the linkage between domestic market and international market has been becoming increasingly enhanced. Secondly, We can find that the major factors of fluctuation of corn price that includes weather, supply, demand, cost, the international markets, alternatives, income and the macroeconomic situation through the graphical analysis. Thirdly, we use the cointegration and granger test to analysis the short-term impact with the Corn prices influencing factors. Johansen cointegration test showed that corn consumption, production costs, CPI, international market price and domestic corn price exist long-term stable cointegration relationship. Granger test also shows that these factors are the causes of domestic corn price fluctuations.Thereafter, we find the most significant factors are cost through the stepwise regression with corn prices influencing factors data between the years1993-2012in the long-term analysis.In addition, corn consumption, changes in the macroeconomic situation and income also have some impacts on the market price of corn. According to the results, we bring out the policy recommendations so as to stabilize the corn market, including control of corn costs, increasing subsidies for peasants, enhancing the development of production technology and market warning.