Research On The Fluctuation And Transmission Of Vegetable Price

Vegetables are one of the main non-staple foods in daily life. Higher requirements ofvegetable quality and diversity are coming with higher living standards. Therefore, vegetableproduction becomes an important part of economic development in rural area. The pricefluctuation of vegetables is a normal phenomenon in the market and moderate fluctuation canregulate the market. However, excessive fluctuation can lead to many negative effects. Since2008, the frequency and range of the price fluctuation of vegetables has tended to increase, forexample, the price of ginger and garlic experienced dramatic fluctuations. Intensive pricefluctuations of vegetables affect not just the vegetable farmers’ income and also people’snormal daily life of consumption. Therefore, a research on characteristics and transmissionmechanism of the price fluctuation of vegetables is crucial to stabilize the price of vegetable,protect lives of the residents, and increase vegetable farmers’ income.This dissertation analyze the characteristics of the price fluctuation of vegetables bysummarizing international and domestic price fluctuation and transmission theory, the price ofvegetables in different area and the relationship of vegetable produce between the upstreamand downstream area from horizontal and vertical perspective of space and vertical industrychain. Then this dissertation measures the impacts of price fluctuation of vegetables toconsumers’ welfare in urban area from the angle of welfare economics. At last, suggestionsfor reducing the price fluctuation of vegetables and stabilizing the price of vegetables inChina are given according to above research results. The main study contents and conclusionsof the dissertation are as following:(1) Analysis on timing characteristics of price fluctuation of vegetable. This dissertationanalyzes the characteristics of price change both in long-term (year) and short-term (month)cycle by using HP filtering methodology. In long-term cycle, from1978to2010, the pricefluctuation of vegetable production can be divided into five cycles. The average cycle length,range, height, depth of the price volatility is6.25year,11.30%,10.38%,11.30%respectively.The price volatility of vegetable sale can be divided into four cycles. The average cycle length,range, height, depth of the price volatility is8.25year,17.30%,9.9%,7.4%respectively.According to the analysis of month data, the price volatility of vegetable wholesale price canbe divided into five cycles from January2013to December2010. The average cycle length, range, height, depth of the price volatility is12.25month,81%%,33%,49%respectively. Theyearly cycle of price fluctuation of vegetable is a long, high peak and strong fluctuation; Theprice volatility of vegetable wholesale within one year is significantly seasonal fluctuation,showing as a “U” shape with higher price in two tails and lower price in the middle. Theability of increasing and decreasing of vegetable wholesale price is strong and the rate isrelatively rapid. The main factors affecting the prices of vegetables have the demand, supplyand macro government regulation. The annual cyclical fluctuations of China’s GDP growthrate, currency circulation, the price index of agricultural means of production, are same yearlycyclical fluctuations of Vegetables price. So the main reasons of yearly cyclical pricevolatility of vegetable are the change of price index of agricultural means of production andmacro government regulation. The main reasons of seasonal price volatility of vegetable arethe vegetable demand structure and vegetables supply structure asymmetry, climaticconditions, alternatives, festivals and other factors.(2) Analysis on the volatility in spatial geographic area and transmission of vegetableprice. This dissertation measures the synchronization of price volatility of vegetables atprovincial, regional and national level by using synchrotron coefficient method. Among theresults of synchronization measurement at provincial and national level, the synchronizationin Anhui province is the highest,0.9722, as same as the national level. At regional andnational level, the synchronization in northern China is the highest,0.9222. At the differentregions, the synchronization in northeast and northern China, northwest and central south areais the highest,0.8611. At different regions and national level, the synchronization in westernChina is the highest,0.8889. According to the synchrotron coefficient of price index volatilityof vegetables at different levels, this dissertation analyze the six transmission paths of priceindex volatility of vegetables from provincial to regional and then to national volatilities.(3) Analysis on transmission of industry chain in price volatility of vegetable. Thisdissertation analyzes the transmission of vegetable price along the industry chain by usingvector autoregressive model from the perspective of industry chain. The price in the upper,middle and down sectors of industry chain of vegetables reaches a long-term dynamicequilibrium. Although the market is connected smoothly, the price during the transmissionprocess shows obvious asymmetry. Means of production, production price and wholesaleprice of vegetables are significantly affected by their lagged price. When the price volatility ofvegetables are transmitting along the upper, middle and down sector of entire industry chain,the squeeze effects occurred from upper and down sector to the middle. In the short-term, theresults of impulse response function and variance decomposition show that the trend oftransmissions in vegetable price spreads from middle sectors to upper and down sectors of entire industry chain while the price volatility of vegetables transmit alone the upper, middleand down sectors.(4) Analysis on the effects of the price volatility of vegetables. This dissertationmeasures the impacts of price volatility of vegetables to consumers’ welfare in urban areafrom the angle of welfare economics by using MINOT model. The results indicate that thetrends of welfare changes of urban residents in long and short term, which show negativerelationship with vegetable price, are the same. In the short term, the welfare changes aredetermined by CR in the short term while by price elasticity and income elasticity ofvegetable demand in the long term. Long-term welfare is better than short-term welfare withunconspicuous effects. The results of research on different income group show that thewelfare loss of low income level is higher than the high income level and the effects fromprice change to lower-income urban residents’ welfare are greater than higher-incomeresidents’ within the same income level.(5) Suggestions for stabilizing the price of vegetables. Based on above research results,suggestions for stabilizing the price of vegetables are given to the following aspects:macroeconomic environment,farmers’ production of vegetables, market service information,supervision on the vegetable price in special areas, warning mechanism of vegetable price,improving and perfecting price formation mechanism for industry chain of vegetables,establishing subsidy policies for the price volatility of vegetables.