Fight inflation with targeted subsidies
Updated: 2008-01-05 10:09
It seems inconceivable that in a year when inflation spiked because of food prices, Chinese farmers would become relatively poorer when compared to their urban cousins.
The most recent forecast of the annual per capita growth in the net income of farmers placed it at 7 or 8 percent last year. Meanwhile, the disposable income of urbanites grew by 13 percent.
Consequently, the already huge urban-rural income gap appears to have widened in 2007, to the dismay of policymakers.
The disappointing results should spur a re-examination of the government's approach to combating inflation.
Recent reports on the challenges farmers face in selling their produce have shed some light on this dilemma.
While the prices of most goods seem to have climbed last year, a local newspaper reported that farmers in the county of Xiayiy, Henan Province, were having trouble selling some 15,000 mu (1,000 hectares) of Chinese cabbage. They had even cut the price of the vegetable to only 0.18 yuan per kilogram, but still could not find a buyer.
Chinese cabbage, a staple vegetable in North China, sells for about 0.4 yuan per kilogram at the wholesale market in Zhengzhou, the provincial capital. But it is not unusual nowadays to hear urban consumers complain that the price has risen too much. At supermarkets in major cities, the cabbage can be found for 2 yuan per kilogram. So why are vegetable growers having such a hard time?
Rising fuel costs are the main culprit. According to the local newspaper, the price of diesel climbed from 3.2 yuan per liter in 2005 to 5.2 yuan per liter last year. The increase in transportation costs has made it a profitless endeavor to sell Chinese cabbage for 0.18 yuan kilogram in Xiayi County as well as 0.40 yuan kilogram in Zhengzhou.
Cabbage growers in Xiayi are certainly not alone in suffering from soaring transportation costs.
A report by Nanfengchuang, a bi-weekly magazine, described the hardship facing orange farmers in Hubei Province who were struggling to sell oranges at the end of last year because of a shortage in the diesel supply. Oranges were selling for 1.2 yuan per kilogram in 2006 there. The price fell to less than 1 yuan per kilogram last year, but there were still no buyers.
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