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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 188

China Business Intelligence No. 188

Samsung Economic Research Institute Beijing Office

Jan. 27, 2011

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Despite the efforts to stabilize the agricultural market, the prices of agricultural products are still high, leading the overall rise in prices. The main reasons are an enormous distribution margin and high cost caused by the lack of coordination between production and sales, technical limits, administrative obstacles. Every stage of production, processing and distribution in the agricultural industry is poorly organized, depriving the players of abilities such as adept response to the market and negotiation. In addition, "institutional cost" and "speculative demand" contribute to price hike. To ensure stable supply of agricultural products and stabilize the price, the government should nurture distributing companies, build necessary facilities, and make more investment.

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