Society

Price fall means cruel harvest

By Duan Yan and Hu Yongqi (China Daily)
Updated: 2011-04-26 07:17

Who's responsible?

Li Guoxiang, a researcher with the Rural Development Institute of the Chinese Academy of Social Sciences, said that government measures to curb inflation have contributed to the plunge in prices paid to vegetable farmers and that they will affect more agricultural products later this year. For example, when the government limits price increases to consumers, it means that prices paid earlier in the production chain are limited too.

Lin Donghua, a researcher with the Economy Institute of Shandong Academy of Social Sciences, said this year's decrease in cabbage prices follows years of increase. In the past two years, Lin said, the rising price of Chinese cabbage drove farmers to grow more.

Sun Jixiang, secretary-general of the Shandong Vegetable Association, said acreage devoted to cabbage didn't increase that much in the province. Farmers there planted more than 233,300 hectares in cabbages in 2009 and about 246,700 hectares last year, roughly a 5.7 percent increase. He said farmers shouldn't be blamed for the price fluctuations.

Cabbage production in South Korea nose-dived 30 percent last year as a result of bad weather, which boosted cabbage exports from Shandong province. South Korea suspended a 30 percent tariff on Chinese cabbage from Oct 14 to Dec 31 to help maintain adequate supplies for kimchi, the national dish. It is made of cabbage fermented in white radish and chili paste seasoning.

The South Korean cabbage crisis also led to a sudden rise in the price of cabbage sold in China, and some vegetable dealers and speculators manipulated supply in anticipation of an even bigger increase. They pulled many cabbages from the market and put them into freezers.

Stinky losses

Now, the foul smell of rotten cabbage drifts from some freezers at Shouguang, prompting passers-by to cover their noses. Workers at Hualong Storage Co the other day were cleaning freezers and piling bags of cabbages outside the parking lot.

Lu Wenguo, the company's general manager, said a customer from the neighboring city of Zibo had abandoned 600 tons of cabbage without paying the balance of a 20,000 yuan storage fee. "Now his cell phone is turned off," the manager said.

The storage company itself stored 1,000 tons of cabbages bought for 0.7 yuan per kg, and managed to sell only one-third of them, at a loss. The price held steady, Lu said, but did not cover the added expenses of transportation and packaging and storage fees. Breaking even, he said, would have required an increase to at least 1.6 yuan per kg.

Then there is a 40 percent loss in the freezers, Lu said. "When you put two cabbages in, you can only take one out because the outside layers of the vegetables will be spoiled already."

Lu, who also is founder of shucai001.com, a vegetable industry website for Shouguang, said at least 40 to 50 freezers in the city had stored cabbages and all of them sustained loss to some degree.

Lin, the Economy Institute researcher, said private capital to speculate on agricultural products retreated from the market this year, leading to the burst of "bubbles in vegetable prices". Speculation last year pushed up prices on produce such as garlic, apples and mung beans.

Demand for some vegetables has been affected recently by the radiation leak at Fukushima Daiichi nuclear power plant in Japan, said Li, the rural development researcher. Some consumers fear contamination of leafy vegetables, including Chinese cabbage, rape and spinach, grown in China.

Just 150 km west of Dongxia town, farmers in Tangwang town of Jinan are throwing away their spinach or feeding it to chickens and pigs. Shandong Business Daily reported that spinach, which went for 1.2 yuan per kg 20 days ago, was selling at 0.12 yuan last week.

Suggestions, actions

Li said farmers don't know much about the market-regulating mechanism. Their inability to forecast the relation between demand and supply makes them more vulnerable to dramatic price fluctuations. For that, better information channels need to be built.

Yao Jian, spokesman for the Ministry of Commerce, said on Saturday that the ministry had issued an urgent notice requiring all commerce departments nationwide to take measures to maintain a stable vegetable market. He said commerce authorities would improve information services to help farmers find buyers.

In Shandong, some supermarkets, school canteens and company dining rooms were ordered to buy vegetables locally. The provincial government urged them to help relieve farmers of an oversupply of vegetables.

Li further explained that farmers need to unite to avoid risks. Sun, of the Shandong Vegetable Association, shared the same view and said associations can connect farmers with the market and guide them to avoid oversupplies.

Meanwhile, farmer Xu Yuguang encouraged his neighbor Li to talk to a China Daily reporter as well. Li's vegetables are still in the field waiting for buyers. "You should talk about it so people will know, so they will come to buy our vegetables," Xu said.

Li, who declined to give his full name, pointed at his vegetable greenhouse: "My celery is selling at less than 0.2 yuan per kg now."

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