Vegetable price high and rising, people can not afford, yet farmers make a loss?

Vegetable prices continuously increase. The price of common mushrooms increased from 2 yuan [0.29 USD] to 8 yuan [1.16 USD] per 0.5 kg. People complain that they can no longer afford to buy vegetables. This is not a recent phenomenon, however, as prices of vegetables and fruit have not seen a sustained decrease in the last two years. Farmers, however, complain that they are unable to make a profit. Why does their profit not increase when vegetable prices are this high?

The main reason for the difference between purchase price and retail price is the added cost of distribution. Every additional step along the supply chain increases the product price. The purchase price is not that high when farmers sell to buyers, and sometimes farmers are forced to accept even lower prices. Vegetables and fruit accumulate additional value in the hands of traders and consumers end up paying the difference.

Farmers say that the way to deal with this phenomenon is to first understand what is happening, and second, to produce high-quality vegetables and keep the the cost price low. Only then are farmers able to maintain a profit margin. This is one choice. Another option is to expand into vegetable distribution and seize the profit margin in other segments of the supply chain.




Source: Nongcun Naxieren Baijiahao