An Study On Early-warning Of Citrus Market In China

After development and planning for more than20years, China has set up the producing areas of citrus in20provinces such as Hubei, Hunan, Fujian, Guangdong, Sichuan and Jiangxi, which are in the south of Yangtze River, and has formed four dominant citrus areas including south of Jiangxi province, north of Guangxi province, south of Hunan province and the middle and lower reaches of the Yangtze River. Since joining the WTO, Chinese citrus industry has achieved great progress in many aspects from production, consumption, import and export trade to processing and storage. In2011, the yield of citrus was29440400tons and the planting area was up to2288300hectares, ranking first in the world. Fresh citrus fruit exports reached more than900000tons, and canned citrus exports was also ranking the first in the world. What’s more, citrus processing developed rapidly, and processing factories was built up in many producing areas, for refrigeration, cleaning, waxing, packaging and canned orange juice processing. Citrus industry has become an important force in China’s national economy, and played a significant role in poverty alleviation of peasants.However, Chinese citrus industry is faced with a series of problems while with rapid development. After long-term efforts with citrus experts, variety breeding, cultivation management and pest control are no longer the major difficulties of citrus production. The main difficulty has become problems of production marketing and income increasing. While the price fluctuates in the stable pace for a long time, the productive investment is rising, the labor is increasingly scarce, the brand is passed fish eyes for pearls, and the profits is constantly on the decline.Is the industry scale of citrus in China too huge? Is Chinese demand for citrus inadequate? Is Chinese citrus market stable? How will the future development trend? These problems has attracted the attention and provoked reflective thoughts of both academia and industry. Based on these considerations, this paper establishes the Chinese citrus market early-warning model with the use of economic expectation theory and partial adjustment model, to explore the problems in the development of citrus industry, and propose reasonable suggestions for the benign development of citrus industry.Indicator System Establishment and Model Framework Construction of Chinese Citrus Market Early-warning. In reviewing the development history of Chinese citrus and research trends of agricultural market early-warning theory, indicator system and framework of Chinese citrus market early-warning model are constructed, combined with the general requirements of agricultural market early-warning theory. A total of33indicator variables are put forward in three layers of indicator system, which named core layer, auxiliary layer and constrained layer. These indicators involved many aspects such as aspects of production, demand and price of citrus, including not only variables about citrus industry, supply, fresh fruit domestic consumption, imports, exports, prices, for example, but also macro variables about entire social development, such as marketization, urbanization, traffic conditions, RMB exchange rate, world economic environment and whether to join the WTO. Model framework contains five main models which are supply model, fresh fruit domestic consumption model, import model, export model and processing capacity model, and four auxiliary models which are sales price model, import prices model, export prices model and processing prices model. These nine models constitute a system of mutually dependant and constrained.The Construction of The Theoretical Model of Chinese Citrus Market Early-warning.The expression forms of nine sub-models with residual information are then deduced through the application of logarithm linear model, using relevent economic theories, expectation theory and partial adjustment model. In order to deal with economic information of residual variables in these nine sub-models, data of33variables are collected and analyzed. Factors affecting the supply, fresh fruit domestic consumption, import, export, sales price, import prices, export prices and processing prices are screened out using the Spearman rank correlation coefficient and the economic laws, and are put into the residual variables of the model, to reconstruct the citrus market early-warning model.Since there are a lot variables within residual information in each model, and considering the model fitting sample size is inadequate and the problem of multicollinearity will be serious in the model, this paper introduces the method of principal component analysis comprehensive variables into the model, and modifies the previous theoretical model.After parameter fitting for the entire model through application of the method of three-stage estimated simultaneous equation, the result shows that fitting precision of citrus supply model reaches97%, and that of fresh fruit domestic consumption model reaches93%. The rest of the model fitting precision are more than80%. The overall model fitting has achieved the expected eftect.Then the model is used to study four questions, which are about the estimation of China’s largest citrus demand under the condition of revenue growth, the research of the citrus supply and demand balance under the Chinese control of planting area, the study of the impact on the China’s supply brought by the process of urbanization, and the impact on China’s export of citrus brought by the RMB rate changes. Here are the relevant results and conclusions of the study:First of all, according to the current trends, by2020, the citrus supply in China will reach55.44million tons, while the citrus demand will only reach48million tons. The gap between supply and demand will increase further, and citrus sales will be still difficult.Second, in2050when the resident’s disposable income reaches U.S. current level, the demand will reach60million tons. If the planting area is controled to less than3million hectares, the demand will only reach57.57million tons, and the Chinese citrus industry will appear in short supply at that time.Third, accelerated urbanization is a development plan that China proposes recently. The accelerated urbanization can be helpful to accelerate the integration of urban and rural, to increase the velocity of circulation of citrus, and to enhance the ability of supply of citrus.Fourth, RMB appreciation over the next several yeas seems to be the consensus. In the case of other conditions remain unchanged, the RMB appreciation has an negative impact on citrus exports.The main research conclusions is as following:(1) The Chinese citrus industry has been in a oversupply situation, which is a state of imbalance between supply and demand.(2) The slow speed of growth of Chinese residents’disposable income is the main reason causing the imbalance between supply and demand.(3) The sales price of Chinese citrus has an obvious’cobweb model’effect.(4) The main factors that has an impact on citrus supply and fresh citrus domestic consumption is the sales price of citrus.(5) The sale of Chinese citrus is not constant all year round, giving many sales opportunities to the alternatives.(6) The foreign trade of Chinese citrus is in disadvantage.(7) The RMB appreciation and the severe decline of world economy seriously restrict the ability of exports in recent years.(8) Chinese citrus has a low level of processing, and the industrial chain is incomplete.(9) Chinese citrus is still in the stage of using expansion of planting area to increase production.In the end, the paper puts forward seven countermeasures and suggestions.First, the government is recommended to introduce relevent policies to prohibit building citrus groves by ruining grainfield. The strict approval system and quote system should be used on the new-built citrus groves, making every effort to control the planting area to less than3million hectares or so.Second, the industry should continue to increase investment in science and technology to improve the yield per unit and quality of citrus. Research on raw material and technology of processing should be encouraged to increase the additional value and advance market competition capability. The ability of resisting plant diseases, insect pests, congealment, cold and drought ought to be enhanced to improve the yield per unit of citrus.Third, government policy makers is suggested to select proper breeds to exit domestic cultivation and be passed on to the Southeast Asian countries. These countries should be offered technology support and assistance, and be built stable base for imports. In this way, the balance of domestic supply and demand can be adjusted, market risk can be transfered, domestic resources can be saved, land utilization ratio can be improved, and a sound international environment can be established for China.Fourth, the industry is advised to grasp the national urbanization policy to improve the traffic condition in the citrus planting area and raise the level of marketization. The industry should strengthen the integration of mountain area producing citrus and modern developed regions, and should attract technology talents, marketing talents and management talents of high level. Also, it is suggested to strengthen the industrialization of agricultural information, pay attention to the development of new marketing patterns such as network marketing, tourism marketing and leisure agricultural, and improve the ability of demand and supply.Fifth, the government is recommended to improve the trading environment, formulate relevent policies, regulate the construction of the citrus specialized cooperatives and encourage the establishment of a variety of marketing organization. Under the premise of increasing RMB exchange rate, means such as RMB settlement can be used to minimize the effects of exchange rate fluctuations and establish a sound marketing environment both domestically and internationally.Sixth, propaganda system should be used to promote the processing ability of citrus products. The government should encourage research on proprietary citrus varieties for orange juice processing, foster the development of citrus juice processing enterprises, strengthen the brand construction of citrus products, encourage research on breed improvement and cultivation techniques, make efforts to achieve seamless joint of sales season to sale all year round, and increase the demand of citrus.Last, the citrus early-warning platform should be established to forecast information on citrus production, supply, consumption, import and export. Also, a feedback system of early-warning platform should be established to form the efficient and accurate early-warning mechanism. The market information service system should be strengthened to promote the cohesion of the production and marketing. Probable innovations of the paper can be summarized to the following three aspects:First, this paper creatively introduces many macroeconomic factors such as urbanization, marketization and agricultural financial support into the early-warning model, affirms the role of government in citrus market early warning system, enrich the theory of market early warning.Second,this paper uses relevent economic theories, expectation theory and partial adjustment model to deduce the expression forms of nine sub-models with residual information. The explanatory variables are screened out, using the Spearman rank correlation coefficient and the economic laws. Also, this paper applies the principal component analysis into simultaneous equation model to enrich the constructing idea of simultaneous equation.Third, this paper associates early-warning theory with the development of citrus industry, combines supply, domestic consumption, processing, import, export and price by using simultaneous equation model to establish the Chinese citrus market early-warning model and provide suggestions for the development of citrus industry.