Over the past year or so, the international and domestic prices rose rapidly, especially agricultural products and agricultural capital goods prices rose even faster. In the first half of this year, consumer prices rose to 7.9% in June. Factory price of industrial products rose 8.8 percent from the same time last year. In the second half of year, agricultural materials costs are still facing the pressure of increase. The following case study takes vegetable cultivation at Shouguang City, Shandong as an example to analyze the high cost of vegetables cultivation.
Increase in Cultivation Cost
The vegetables cultivation area in Shouguang is nearly 70,000 hectares. Although large-scale and intensive cultivation makes operating costs relatively low, the price increase in agricultural capital and industrial goods swept through the country, making Shouguang vegetable farmers feel very difficult.
Currently, Shouguang yield 5 million tons of vegetables annually, mainly sold to Jiangsu and Zhejiang Province, northeast China, Beijing, Tianjin, Inner Mongolia and other places. It mainly adopted greenhouse cultivation technology, including the general-winter greenhouses and winter-covered sheds. The latter produced vegetables of better quality, higher price, and impressive output, but it also incurred high construction costs which lead to jack up the entire cost of planting vegetables.
At present, it requires 80,000 yuan to build a brand new winter-covered greenhouse, coupled with annual maintenance expenses, but it only cost 50,000 yuan at the same period last year. Although the wholesale price of cucumber and other crops early this year could be sold at six yuan / kg (to the vegetable vendors), the revenue still can’t recover the cost of 80,000 yuan. In order to recover the one-year cost, cucumber has to be sold at eight yuan / kg.
Currently, a general greenhouse will now cost about 7,000 yuan, but a winter greenhouse needs reinforcement, cement, steel and other building materials. In 2007, repairing a 1-meter-high cement needs 4.3 yuan. This year, it was up to seven yuan; cement last year was 11 yuan / 50 kilograms , this year up to 27 yuan. Last year wire was 2.4 yuan / kg, this year up to 7.4 yuan / kg; agricultural film was 10 yuan / kg last year, 13 yuan / kg this year. A winter greenhouse can be used for six to seven years, and two to three years for general greenhouse. All the greenhouses need constant reconstruction.
In addition to infrastructure costs, fertilizer costs have increased substantially. Fertilizer prices last year was 90 yuan / bag, now is up to 148 yuan / bag. As a result, farmers can only minimize the use of fertilizers, but even chicken manure and other "farmyard manure" is also bullish market. Last year, the price of chicken manure was 120 yuan / cubic meters, has gone up to 180 yuan / cubic meters.
Short Term Impact on Vegetables Price by Oil Price Increase
The rise in oil prices imposed less impact on transportation costs, so the possibility of vegetable price spiked in a short period time is unlikely. However, because farmers can not pass on the costs, they bear more losses.
Despite the current price of vegetables compared to previous months is much lower, overall Shouguang vegetable wholesale price is still higher than the same period time last year. It is hoping to see the price to stay high at the second half of this year.
In July, average price of four leafy vegetables including Chinese cabbage, celery, spinach, rape was 1.77 yuan per kg, up 39.08 percent from last month, up by 7.56 percent from the same period last year. The price of vegetables was influenced by multiple factors and still showed upward trend. If the price of vegetables drops continually, farmers will gradually lose their enthusiasm for planting vegetables, and as a result, the vegetable supply will be substantially reduced, which in turn will exacerbate the price of vegetables. If the price of vegetables remains high, it will keep China's overall price level in a higher level, imposing impact on the overall standard of living, increasing the national consumption expenditure. Therefore, it requires the joint efforts of all levels of government and relevant enterprises to ensure the stable and healthy development of China's vegetable cultivation.
