Analysis On The Impact Of International Energy Prices On China’s Grain Prices

Because fertilizers, pesticides, machinery and equipment have been used in agricultural production process,most produce has the feature of energy- intensive in the production process with the development of Agricultural Modernization.Since World War II,oil has surpassed coal as the world’s largest energy.In the context of slow economic growth and structural adjustment,China’s oil gap of supply is increasing and imported more than 50%.The volatility of international energy prices has raised concerns on food security issues and the discussions of coping strategies for food security.Thus,this paper analyzes the status quo of the fluctuations of oil prices,food prices and prices of different agricultural commodities,and also makes a theoretical analysis of the mechanism of influence of international oil prices on China’s grain prices in terms of cost-driven effect demand-driven effect.Then the intrinsic relevancy between international oil prices and China’s grain prices has been confirmed through empirical analysis and the influence of international oil prices on China’s grain prices has been quantified.First,the DCC-MGARC H model is applied to make an empirical analysis of the relevancy between international oil prices and China’s grain prices and the empirical results prove that the overall correlation betwee n the two is quite significant.There is a significant positive correlation with international oil prices specific to each grain,except rice,rice outside,soybeans,wheat,corn and other food crops. Besides,the VECM model is adopted to analyze the long-term and short-term impacts of international oil prices on food prices separately.In terms of the long-term impact,the oil price fluctuations have a significant positive impact on food prices;while in aspect of the short-term impact,the international oil price has a certain adjustment function on that of each grain.In summary,the fluctuations of international oil prices have significant impacts on China’s grain prices.Thus,the future trend of China’s grain prices can be predicted based on the analysis of the international oil price fluctuations,thereby,proper measures can be taken in advance to deal with the impact of oil price volatility on grain prices,which carries important implications to the long-term food security issue of our country.