Price controls hold China's farmers back
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Q: Food security has been put on the national strategic level, but some economists think this is a mistake because in terms of comparative advantage it would be more beneficial to import. Why don't we give up the weak industry and turn to importing grain?
Zhang: Food security includes two aspects. One is the supply of food. China produces 500 million tons of food every year to realize self-sufficiency. The other is the availability of food.
According to the comparative advantage theory, if the world supply and demand of grain is in balance, there will be no famine.
But one of the premises for the theory is that production factors must be in free flow. The reality is much more complicated.
The free flow of food is an ideal. It can decrease barriers and disputes and finally feed everyone around the world. In reality, the global food circulation always includes the gaming of national interests.
UNFAO is also doing work in this area, trying to change the twisted state of trade by dialogue and negotiation between grain-producing countries and grain-consuming countries.
Q: The global grain prices are fluctuating rapidly. One reason is that supply and demand are not effectively joined. China's measure against grain prices fluctuation is to establish a grain storage mechanism and try to stabilize food prices by buying food low and selling high. Is it possible to establish such a mechanism worldwide?
Zhang: It's a good idea, but also aspires to a kind of ideal state. ASEAN tried to establish such a mechanism, but later dropped the idea. Because the competition among different countries is too serious, it is rather difficult to establish such a mechanism in reality.
In order to avoid ups and downs in food prices, UNFAO is also trying to strengthen communication and dialogue between countries and calls upon the food exporters not to restrict and prohibit exports prematurely if food prices suddenly rise.
It is understandable that food exporters will ban on food exports in order to ensure domestic food security.
It helps balance their food supply and demand in the short run, but in the long run, the decision will have bad effects. It will seriously dampen farmers' enthusiasm to produce and cause damage to farmers interests.
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