Study On Effects Of Relatively Rising Of Agricultural Price On Farmers’ Income

With the rapid economic development of our country, the distribution of nationalincome is starting to polarize apparently. In recent years, when the income ratio ofurban and rural residents remains high, the income gap among rural residents is alsoexpanding increasingly and the income of farmers is in a seriously low position. Theappearance of such awkward situation on path of rapid economic development issignificantly unfavorable to economic and social development in future. Many factorslead to the low income of farmers, such as the industrial character of agriculture, theunreasonable regimen and policy and so on. However, with the perfection andmaturing of market-oriented economy in China, market mechanism andcorresponding price mechanism will play a more important role affecting the incomeof farmers, the price of agricultural products and the labor price of farmers willbecome the vital or fundamental factor in affecting farmers’ income.Starting from the theory, this paper firstly combs the related theory of price andincome both domestic and abroad, and reviews the theory of agricultural price andfarmers’ income. Second, we descriptively analyze the development path, the currentsituation and characteristic of the agricultural price and farmers’ income based ontheir historical data. Third, based on equilibrium price theory, this paper discusses thecorrelation between rising price of agricultural products and the income growth offarmers. Then we do a lateral comparison of agricultural price and farmers’ incomeamong six countries: the United States, Australia, China, the Philippines, Kenya andBurkina Faso. And longitudinally compares the changes of agricultural price andfarmers’ income of our country in different periods. Furthermore, take grain as anexample, analyze quantitatively the actual effects of price fluctuation on farmers’income by using cointegration and error correction model. Therefore, we verifyrigorously and deeply that rising price of agricultural products and income growth offarmers are positively related from the theory and demonstration. Meanwhile, wemake forecast on the growing trend between agricultural price and farmers’ income according to their status quo, and find out that in the short run farmers’ income wouldincrease as the absolute price of agricultural products rise and the speed is expandingperiodically, while in the long run, farmers might face decreasing income as therelative rising speed of the agricultural price descends. Finally, based on the researchresults, this paper offers some policy suggestions to promote the reasonableincreasing of agricultural products relatively, which include ensuring the stablesupply of agricultural products and keeping the price at a reasonable level toprevent "Low grain price hurts the farmers", reducing the agricultural production costto promote the relative rise of agricultural price and improving the supply structure ofagricultural products to accomplish "A thing is valued if it is rare".