Cutting circulation costs

China's Cabinet has released documents twice in four months requiring distribution costs be reduced. The high costs of circulation and distribution have not only caused the prices of many products, farm products in particular, to rise, they have also resulted in rural goods producers not benefiting from the higher prices.

The fewer the links in the distribution chain and the lower the costs, the more profit rural producers will make. Their unwillingness to grow vegetables and grain or raise livestock is because of the shrinking profits they receive. When they do engage in production after prices rise, the unreasonable charges or unnecessary links in the distribution chain, again compromise what they should have earned.

This has become a vicious cycle. And as a result, the prices of rural products have been continually rising while the profit margin for growers has become thinner and thinner.