| Prices for agricultural products is an important part of the price system, relatedto the sustainable development of agriculture, rural incomes and the overall pricelevel, thereby affecting the normal operation of the national macro-economy. Thestabilization of prices for agricultural products is an important guarantee of socialstability and people’s normal life. Discussing the characteristics and reason of pricesfor agricultural products is the premise for stabilizing agricultural prices. Recognizingthe characteristics of price fluctuation for agricultural products, clarifying thehierarchy between factors, clearing the dynamic evolution mechanism of factors andunderstanding the dynamic effects of agricultural prices on the farmers’ income hasimportant theoretical and practical significance to promote the farmers’ income,safeguard food security, maintain the sustainable development of agriculturalproduction and guarantee the effective supply of agricultural products market.Firstly, Census-X12and HP filtering method are used to analyze the cycle ofprice fluctuation of agricultural products; The ARCH models are built to study theclustering, risk and asymmetry of the overall prices of agricultural products anddifferent varieties of agricultural products. The study finds that the domestic pricefluctuation of agricultural products appears four cycles since2000, has undergonesignificant change from relatively stable to small amplitude fluctuation, finally torapid fluctuation; Retail food prices and rice prices have significant clustering.Soybean, wheat and corn prices have not obvious clustering; Food market is high-riskand high-return and asymmetric. There are neither high-risk characteristics nor‘leverage effect’ in the rice market. When building ARCH model, AIC and SC aresmaller on the assumption that the residuals obey GED distribution than obey normaland t distribution.Secondly, this paper discusses the reason of Chinese agricultural prices from theperspective of structure based on the theory of equilibrium price and system structure.Firstly, the paper extracts factors for price fluctuation by reading the literature andexpert consultation method, and builds the interpretative structural model, calculating the reachable matrix by MATLAB software program to clear the hierarchy of factors.The results showed that factors for price volatility can be broadly divided into6layers, including surface factors, intermediary factors and deep-seated factors. Supplyand demand of agricultural products, money supply, inflation and the RMB exchangerate are surface factors. Cost of agricultural production, circulation cost, internationalprices of agricultural products, advances in technology, agricultural production cycle,arable land, population, urban and rural incomes, biomass energy, economic growthand urbanization are intermediary factors that affect supply and demand ofagricultural products and inflation. National agricultural policy, international oilprices and natural disaster are deep-seated factors. On the one hand, International oilprices affect the supply of agricultural products through cost of agriculturalproduction. On the other hand it boosts demand for agricultural products throughbiomass energy, double pathways to price fluctuation of agricultural products.Thirdly, the paper identifies significant factors such as the international oil pricesand so on. The path analysis model is built to explore the direct and indirect action offactors on agricultural prices.The results show that the impact of inflation ranks firstand have the largest direct action (0.704) on fluctuation in the prices of agriculturalproducts, with decision coefficient of0.909. The influence of the money supply rankssecond, whose direct path coefficient is0.211and decision coefficient is0.372.Itsindirect effect through inflation is0.69. The contribution of the international prices toagricultural products ranks third (0.121), with decision coefficient of0.214, mainlyby cost of agricultural production and money supply transmitted to domestic marketsfor agricultural products. Cost of agricultural production is located in the fourth, withdirect path coefficient of0.0847and decision-making factor of0.161; Internationaloil price is located in the fifth, with small direct impact and large indirect impact. Theinfluence of income of urban residents is the smallest and demand is not the maincause for price fluctuation.Fourthly, the paper explores the cause of agricultural price volatility from theperspective of dynamic evolution. Firstly, NWOLS model is built to identify foursignificant factors including the international oil prices, costs of agriculturalproduction, money supply and RMB effective exchange rate. This paper finds that the coefficient is time-varying by CUSUM test, and therefore establishes a state spacemodel. It is found that price elasticity is not fixed, but there is a large fluctuation overtime. Elasticity coefficient of Cost of agricultural production varies from0.0001to0.884, with an average of0.427; Elasticity coefficient of Money supply varies from0.009to0.104，with an average of0.073; Elasticity coefficient of RMB effectiveexchange rate changes from-1.609to0.853, with a mean value of-0.661.International oil price is a volatile factor and its elasticity coefficient varies from-0.014to0.036, with the mean of0.013. The mean of elasticity coefficient is0.0034before June2008, while it is0.0282after that. Its influence on domestic prices ofagricultural products is increasing, belonging to a new factor. Therefore, this chapterdemonstrates the volatility of international oil prices on the domestic agriculturalprices by multivariate GARCH models, finding that there are not only meantransmission but also volatility transmission between two markets. International oilprice has the greatest influence on soybean prices, the10th contribution rates of6.6%.Its influence on corn prices ranks second, the10th contribution rates of2.34%,without significant effect on wheat prices. Fluctuation in international oil prices andsoybean prices both show asymmetric, while asymmetry of the corn and wheat pricesis not significant. Asymmetric item of covariance about international oil prices anddomestic prices of agricultural products is not significant.Fifthly, the paper analyzes the time-varying impact of agricultural prices onfarmers’ income from the perspective of mechanism analysis based on Cobb Douglasproduction function. The results show that elasticity of production prices ofagricultural products for farmers’ income changes between-0.069~0.245from1985to2011, with the mean of0.111.1%increase in agricultural production price will leadto an average increase of0.111%per capita net income of farmers. The increase inproduction prices of agricultural products plays a positive role in increasing farmers’income, with a negative elasticity in individual year due to increase in means ofagricultural production and the influence of agricultural policy. At the same time, itdiscusses the dynamic effect of agricultural prices and urban residents income onfarmers’ income from the structural perspective.The results show that farmers’ incomeis mainly influenced by themselves. Production prices of agricultural products have positive and delayed impact on farmers’ income. Increasing the income of urbanresidents can promote the growth of farmers’ income, whose contribution has beenrising and finally stabilize at16.8%.Lastly, the paper presents the main conclusions and promotes that asymmetryand nonlinearity in price conduction, evaluation of national agricultural policy andsub-regional and sub-category study about price fluctuation are to be focused on. |
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