Raw Milk Price Formation Mechanism In China

In recent years, with the China dairy industry developing rapidly, the formation mechanism of raw milk price is still deficient yet. Consequently, the income of the dairy farmers hardly guaranteed, raise enthusiasm damaged and the unstable supply-demand of the raw milk in a long-term, which seriously restrict the sustainable and healthy development of the China dairy industry. This paper uses certain methods, such as price ratio, price difference, econometric model and its like, to study the formation mechanism of raw milk price.The essay analyzing the changes of the price ratio of the raw milk and feed and the price difference of fresh milk and raw milk with the methods of price ratio and price difference, the results indicate that the price ratio of raw milk and feed fluctuates frequently with large amplitude, which states the unstable income of the dairy farmers, and that the price difference of fresh milk and raw milk changes smoothly, which reflects the strong ability to control for profit of dairy enterprises. Doing further research on raw milk supply and demand, this thesis finds that "small scale, big quantity" are the characteristics of the breed aquatics of dairy cows in China, the dairy enterprises are in the fierce market competition and the like, which lead to the disadvantage position in the forming process of raw milk price of dairy farmers, the state that raw milk price is below the average level in a long-term and the instability of the income of the dairy farmers. The paper building the econometric model of influencing factors of raw milk price by48months’panel data from2007to2010, the results show:the first-lagged raw milk price, the price of mixture, the first-lagged fresh milk price, urbanization rate and the level of income are the positive influence factors of raw milk price, and the second-lagged raw milk price, the first-lagged raw milk production and the second-lagged fresh milk price are the negative influence factors of raw milk price.By analyzing the raw milk price formation mechanism of China, this paper puts forward some policy suggestions that establishing the reasonable minimum purchase price system of raw milk, guiding and encouraging the dairy farmers to build the cooperation organization, and raising the dairy industry access requirements appropriately, perfects our country’s raw milk price formation mechanism, and promotes the healthy development of dairy industry of China.