A Study On The Development Of The Potato Industry In Wulanchabu Based On Price Fluctuation

In recent years，the potato productions of Wulanchabu have maintained ahigh level which are always higher than other cities. At the same time, thedevelopment of potato industry gradually forms integration. The developmentof potato industry will promote the economy of Wulanchabu and increase theformers incomes which play an very important role in building a NewCountryside. However, recently the price of potato fluctuates which hasaffected the interests of the farmers and industries. Therefor to find theelements that affect the price of potato and study the market mechanism thatcan mitigate the fluctuation will have great significance to the development ofpotato industry. This paper studies the development of potato industry inWulanchabu from a price fluctuations perspective. Besides, it also analysesissues related to price fluctuation of potato by economic fluctuation and pricefluctuation theory.First, this paper introduces the development status of potato industry inWulanchabu and makes the scope of study from the formation of the“production and marketing integration” to now which is based on theconclusion of the potato industry development. Second, this paper studieshow price fluctuation influences the development of potato industry from twoaspects. One aspect is price fluctuation affects production. In this section,the major research which is conducted by using the theory of equilibriumprice is the potato supply. The research indicates that fluctuation of supplyis consistent with the industry level and macropolicy the same stage. In mostyears, the fluctuation of potato price has negative correlation with theproduction of potato. The key factor that affects the production is the pricefluctuation when the market and climate are not changed. The other aspectis price fluctuation affects the structure of demand and supply. In fact, price fluctuation not only affects the demand but also the supply which is throughaffecting capital, labor and technology.Chapter three of this paper analyses the factors that leading to the pricefluctuation by using theory of economic fluctuation and theory of economiccycle. Through the analysis we find that it is two reasons leading to the pricefluctuation: the internal conduction mechanism and the external shockmechanism. Under the internal conduction mechanism, studied by using thecobweb theory, we find potato industry belongs to divergent cobweb and pricefluctuation will lead to market disorder more seriously. At the same time,divergent volatility is also applicable to producers’ supply behavior. While thegrowth cycle leads to a seasonal price fluctuation. Potato production costshave a high correlation with selling price. Under the external shockmechanism, the factors that influence price fluctuation including naturalcalamities, seasonal factors, macropolicy, the income level of residents etc.Based on the analysis above, this paper conducts an empirical analysis ofthe factors that influence potato price fluctuation. This analysis mainly aims atdemand and supply. To quantify the relevant variables and by means ofstepwise regression the paper gets the factors that affect the price fluctuation.The conclusion indicates that the influencing factors contain the expectedprice of potato, cabbage price index, the average per capita disposable incomeand natural calamities. At last, the paper proposes some measures andcountermeasures that can mitigate the fluctuation of the price of potato inWulanchabu.