low prices for grain hurt the peasants

low prices for grain hurt the peasants

It is a Chinese idiom, and its pinyin is g à Ji à NSH à NGN ó ng. It means low price and low income of farmers. It comes from the history of Han Dynasty.

essential information

"Cheap grain hurts farmers" refers to the existence of such an economic phenomenon in agricultural production activities: in the year of bumper harvest, farmers' income has decreased, which is vividly summarized as "cheap grain hurts people". It is a classic problem of economics that cheap grain hurts farmers. According to the traditional view, farmers' profit from selling grain depends on two factors: yield (q) and grain price (P), and profit is the product of the two. However, these two variables are not independent, but interrelated, and their correlation is determined by a downward sloping demand line for grain, and they are negatively correlated. In addition, the grain demand line lacks elasticity, that is to say, the demand is not very sensitive to price changes. When grain prices fall, the demand for grain will increase, but not much. The basic reason is that food is a necessity, and the demand for food is mainly determined by the physiological demand for food. However, there are different views in the field of economics.

Detailed explanation

The profit of farmers is affected by the relationship between grain supply and demand, but the grain demand lacks elasticity. When the grain harvest is good, the relationship between supply and demand changes greatly. The relative relationship between supply and demand (supply price and demand price) is different than before. The increase of supply is greater than that of demand, and the decrease of grain selling price is greater than that of demand (sales volume) As a result, the profit of grain farmers decreased. After realizing this characteristic of the grain market, it is not difficult to understand the following phenomenon: when the grain production is increased by a large margin, farmers can only compete to reduce the price in order to sell their grain. However, due to the lack of elasticity of grain demand, farmers can only sell their grain after they have greatly reduced the grain price, which means that when the grain harvest is good, the grain price often falls sharply. If the percentage of decline in grain prices exceeds the percentage of increase in grain production, there will be a situation of increase in production, no increase in income or even decrease in income, which is called "cheap grain hurts farmers". one view is that since food is the most basic means of living, and food is related to the power of international political struggle, the vast majority of countries attach importance to their own food production, especially countries with a certain population size, and adopt various policies to support agriculture to ensure food security and protect farmers' interests. This is the case in the United States, but generally speaking, the effect is not ideal. First, the cost is very high. In order to maintain the grain price, the government has to purchase the grain that can not be sold in the market according to the protection price. Therefore, taxpayers have to pay a considerable cost of grain inventory. Second, because the subsidies to farmers are based on the output, the big farmers get the most subsidies, but they are not the poor in the countryside. The small farmers who really need subsidies get less subsidies because of the low output. The most serious problem is that it slows down the adjustment of agricultural production, so that the labor force and other production factors put into agriculture are not transferred to other departments in time according to the price signal. However, another view is that the explanation of "cheap grain hurts farmers" does not carefully consider whether the factors behind the sudden increase in supply distort the market. One of the lessons is that a series of U.S. interventions in agriculture during the Great Depression made the surplus agricultural products face more serious surplus. Secondly, the premise of the lack of elasticity of grain demand is the simplification of grain quality, and the diversification of grain quality is not within the scope of this explanation. More importantly, even the production of a single variety of grain is strictly controlled by the rules of market economy. Farmers need to make loans, purchase raw materials, fertilizers and agricultural machinery during the production preparation period. If a large number of farmers enter the grain supply side, the price of relevant production materials will inevitably rise, and the farmers who can not afford the high cost will withdraw from the supply side and finally reach the goal of production The balance of supply and demand, profit changes will not be too big; if in the production preparation stage, there will be distorting the allocation of market resources, leading to the rush of farmers, "cheap grain hurts farmers" will really become a reality.

Countermeasures

The first is the government's support and protection. The current direct subsidies for grain, comprehensive subsidies for agricultural means, agricultural machinery subsidies, the minimum protective price of grain, and the development of agricultural policy insurance all belong to this category. The second is the development of characteristic agriculture. Generally speaking, the government's intervention in the grain market is the mainstream idea in China, but it is not conducive to the healthy development of China's grain industry in the long run. the real key problem is how to maintain the effective operation of the grain market. Only a perfect market can help to realize the interests of all parties, whether farmers, consumers or intermediate enterprises. In terms of protecting and Realizing Farmers' interests, organizing farmers' cooperatives is a feasible way. One of the essential differences between the cooperative and the company is that the profits obtained are returned to the farmers according to the transaction amount. Heilongjiang Nehe high protein soybean Union, which involves 9 towns, 66 villages, 7560 farmers, 28720 members, cultivated land area of 318000 mu. High protein soybean production accounts for 1 / 3 of the country. They have not only realized group purchase of chemical fertilizer, unified sales of products, created their own brand, obtained bank support, etc., but also gained considerable bargaining power, and enhanced the cooperation strength with large enterprises. For example, the relationship with the company is no longer a simple company plus farmers, but a shareholder form of cooperation with processing enterprises, and farmers' cooperatives are increasing The 20% shares of industrial enterprises can share the profits of processing and sales. In addition, the government also needs to do something to relax restrictions on grain import and export.

The origin of Idioms

In the book of the Han Dynasty, Shi Huo Zhi 1: "buying is very expensive, which hurts the people; being very cheap, which hurts the farmers. If the people are injured, they will be scattered; if the peasants are injured, the country will be poor. "

Idiom usage

The old saying of "～" has become a popular headline in city newspapers. (Ye Shengtao's more than three or five duels)