Some economic problems in pig industrialization in China

Introduction: the market is similar to the weather, they are always unpredictable, the storm appears and subsides from time to time, complex and charming What is the mechanism behind the sharp fluctuation of pig market price? We can use a very powerful tool in economics supply and demand theory to explain Figure 1: equilibrium price change of pig s and s' curve: supply curve D and d 'curve: demand curve ① when supply curve is s and demand curve is D, market reaches an equilibrium point E, price is p, quantity is Q; ② When the demand is constant and the supply increases, and the supply curve moves right to s', the market forms a new equilibrium point E1, with the price P1 and the quantity Q1; ③ when the supply is constant and the demand increases and the demand curve moves right to d ', the market forms a new equilibrium point E2, with the price P2 and the quantity Q2; ④ When the demand expands and the supply increases, that is, the demand curve moves right to d ', and the supply curve moves right to s', the market forms a new equilibrium point e', the price is p ', and the quantity is Q' 1 The factors that determine and influence the demand curve of pig are the per capita consumption of pork in China, which was 12.07 kg in 1980 and 34.07 kg in 2002, an increase of 182% However, the consumption structure of consumers and meat has changed, and the consumption of cattle, sheep and poultry has gradually increased Why does this happen? This is mainly caused by the cost (price) of meat production Of course, there are other factors such as income, eating habits (ethnic minorities, religious beliefs), etc In the past, there were subsidies for raising pigs, which distorted the price of pork Poultry was more expensive than pork Now it's according to the law of the market (the cost of making meat), pork is more expensive than poultry 1.1 common sense of price and demand curve and detailed scientific observation show that the quantity of a commodity people buy depends on its price Under the same conditions, the higher the price of an item, the less quantity people are willing to buy; and the lower the market price, the more quantity people buy When the conditions are the same, there is a certain relationship between the market price of an article and the quantity demanded This relationship between price and demand is called the demand curve (curve D in Figure 1) Quantity is inversely proportional to price When p decreases, Q increases The curve inclines from the top left to the bottom right, which is called "the law of demand inclining downward", which is applicable to almost all commodities Why does demand tend to fall when prices rise? There are two reasons The first is the substitution effect The substitution effect can be expressed as: when the price of an item rises, consumers tend to replace the more expensive item with other items, so as to obtain the cheapest satisfaction If the price of pork rises, and the price of other poultry, cattle and mutton remains the same, then pork will become relatively expensive When pork becomes expensive food, the purchase of pork will decrease, while the purchase of poultry, cattle and mutton will increase Generally speaking, the substitution effect of meat can be expressed as: when the price of a certain meat rises, consumers tend to replace the more expensive meat with other meat, so as to obtain the cheapest satisfaction Especially in food enterprises (such as ham sausage), when the price of pork rises, it tends to use poultry instead, reducing the proportion of pork When consumers use cheap meat to replace, enterprises can also use a smaller cost to obtain alternative satisfaction The second is the income effect That is to say, the price change affects the demand of goods through the impact on the actual income of consumers When your monetary income is fixed, the price rises just as your real income or purchasing power drops, so they are likely to reduce the number of purchases of almost all goods, which leads to an income effect Economics uses "income elasticity" to measure the income effect of a good Some items are of high income elasticity, such as air travel and automobiles, indicating that the demand for these items increases rapidly with the increase of income Some items are low-income elasticity, such as food and cigarettes, indicating that demand only responds weakly with the increase of income In addition, the income effect often strengthens the substitution effect Let's not forget that in food consumption, the substitution effect and income effect of pork are not small 1.2 the relationship between price elasticity and demand income effect and substitution effect determine the main characteristics of various commodities The demand curve of some goods is very price elastic For example, consumers spend a lot of money on a commodity, but there are many ready-made substitutes In this case, the income effect and substitution effect are very strong, and the demand will make a strong response to the price rise However, if a commodity, such as salt, only accounts for a small part of the consumer budget, salt can hardly be replaced by other commodities At the same time, its income effect and substitution effect are very small, and its demand tends to lack price elasticity In agricultural products, grain is the price comparison center of all agricultural products; in meat, pork is the price comparison center of all meat The price elasticity of different goods is very different When the price elasticity of one kind of goods is very high, it means that the demand of one kind of goods has a strong response to the change of price When the price elasticity is very low, it means that the response of demand to price change is weak Food and other necessities of life are generally inelastic These items are necessary for life Even if the price rises, it is difficult to abandon them If the price of all the food and shoes rises by 20% tomorrow, you can't imagine that people don't eat food and walk barefoot As a result, the demand for food and shoes lacks price elasticity On the other hand, the items with substitutes are more flexible than those without substitutes If the price of pork rises, people can turn to eating chicken, beef, mutton and so on to meet the demand for meat Therefore, the price elasticity of pork is relatively high Recently, the price of pork is high, and the profits of farmers and feed processing industry are also high, which is closely related to the overall rise of China's price index (the general environment) This year, the price index of 1-8 rose by 5.6%, of which the food price index rose by 35% The length of time people respond to price changes is also a factor affecting price elasticity Today's oil is a typical example The price of oil in the world goes up to more than $55 a barrel, so does the price of gasoline You are driving your car on the highway Will you sell your car and walk? Generally not Therefore, the demand for gasoline may be inelastic in the short term However, in the long run, you can adjust your behavior according to the higher price of gasoline You can buy small energy-saving cars or simply not use them temporarily; ride bicycles; take buses; take subways, etc For many goods, the possibility of adjusting consumption patterns means that demand elasticity is higher than in the short term In China, for families with a monthly income of more than 6000 yuan, the Engel coefficient (eat, wear, live, use and travel) is less than 25% People will choose according to their own preferences, and the price elasticity of food is relatively small But for families with a monthly income of less than 2000 yuan, the price elasticity of food is relatively large 1.3 what determines the market demand curve of various commodities influenced by many factors? Given a certain price, a series of factors will affect demand: average income of consumers, market size (population), price and availability of related goods, preference, special factors, etc The influence factor of pig demand curve average income when the income increases, people will increase the purchase of pork and pork products The increase of population has increased the consumption of pork The price of related goods, cattle, sheep and poultry, has increased, increasing the demand for pork The preference of Chinese people for pork is the most in the world The per capita consumption of pork rose from 12 kg in 1980 to 34 kg in 2002, an increase of 70%, while the per capita consumption of the world was 12 kg in 1980 and 15 kg in 2002, an increase of only 25% The R & D and popularization of convenience food with special factors, such as Chinese cuisine developed by Japanese Ham Company in Japanese market, such as preserved pork with preserved vegetables, Sichuan twice cooked pork, Dongpo pork and defatted pork, are deeply loved by the public and increase the consumption of pork This year's bird flu has led to a sharp decline in the consumption of poultry meat, and a sharp rise in pig, beef, mutton and aquatic products When one of the factors affecting the demand curve changes, the demand will change, which is shown as the movement of the demand curve (D → D in Figure 1) In the next 40 years of the 21st century, the world's population will increase by 50% (of which Asia will increase by about 800 million), and the demand for food will double Population expansion and the growth rate of personal purchasing power are the most important factors affecting the future meat demand This year's high price of pigs will increase farmers' enthusiasm for raising pigs In addition, this year's harvest will reduce the cost of meat production However, when supply has increased the income of 900 million farmers, especially in the western part of China, good years and good harvest have reduced their income Why? The answer lies in the lack of elasticity of people's demand for basic crops such as food and agricultural products such as wheat and corn In terms of these necessities, consumers are slow to respond to price changes, which means that when the harvest is good, the overall income of farmers is lower than when the harvest is bad A good agricultural harvest increases the supply of agricultural products, which in turn lowers prices However, the decrease of price will not increase the demand a lot, because of the lack of price elasticity of agricultural products Good harvest (high Q value) is often accompanied by low yield Therefore, the price of pigs next year will also depend on the total income of farmers and the income of urban residents Because China's per capita meat consumption (animal protein) is still at the world average level Animal proteins include meat, poultry, eggs, milk and aquatic products If the supply of agricultural products increases sharply and exceeds the limited increase of demand, the price of agricultural products will inevitably decline relative to the price of other goods in the economy In today's China, the reduction of agricultural tax, the subsidy of grain production, the prohibition of indiscriminate apportionment and charging to farmers, the real implementation of the policy of delaying the payment of migrant workers are strictly prohibited; at the same time, farmers have more opportunities to work in cities and their incomes increase; then the demand can remain strong, and the price of meat next year will continue to the good situation since the second half of this year Otherwise, the supply will exceed the demand, the price will fall and the industry will suffer 2 The factors that determine and influence the pig supply curve in 2003 were 46.047 million tons of pork production in mainland China, accounting for 46.74% of the world total of 98.507 million tons In 2002, China's per capita pork share was 4.12 times higher than that in 1976 In the first 10 years of reform and opening up (1979-1988), it increased by 110% In the following 10 years (1988-1998), although the total output increased, the per capita pork share increased by 68.9% because of the large population growth From 1979 to 1988, the output of pork accounted for more than 80% of the total output of meat Since then, it has continued to decline In 1995, it dropped below 70%, and in 2003, it dropped to the lowest level, 64.82% The total amount of pork is increased, but it accounts for the proportion of the total amount of meat