Intensifying inflation highlights a traditional contradiction: those who support the suppression of agricultural product prices believe that this is a necessary measure to control inflation; those who oppose the suppression of agricultural product prices believe that the suppression of agricultural product prices is to deprive farmers of income and subsidize the society. It is not fair.

The Department of Agriculture of Shandong Province stepped forward to speak for the farmers. After a recent investigation and analysis of the price fluctuations in the major agricultural products markets, the Agency believes that Shandong's agricultural product prices have generally risen, but it has also “reflected the return of agricultural product values.” The society should rationally view and avoid “emergency suppression”.

There are many reasons why agricultural product prices have risen. Rising labor costs, climate disasters, and rising logistics costs are all reasons, but all reasons cannot conceal the fact that the rise in the prices of agricultural products is due to the excessive circulation of currencies.

In 2010, the prices of agricultural products such as mung beans rose as a result of rising prices of financial products. Since the beginning of 2009, the currency circulation has increased wildly. In 2010, the price of small varieties of agricultural products in the futures market increased, such as mung beans, ginger and other small varieties of agricultural products. Before the prices of agricultural products such as wheat and corn increased, the prices of small-scale agricultural products with financial attributes have risen sharply. Since then, with the global monetary easing expectation, the prices of large-scale agricultural products such as wheat have risen, which has pushed up inflation expectations in global emerging markets. . Whether it is the Chicago futures market or the Zhengzhou futures market in China, without exception, it shows the leading role of financial markets in agricultural product prices.

It can be concluded that the increase in the price of agricultural products is not the role of agriculture itself, but the result of too loose liquidity acting on the agricultural product market. Under the loose liquidity effect, we hope that the price of agricultural products can fall, which is tantamount to wishing to pull our hair out of the earth. Withdrawing from the monetary policy to keep the price of agricultural products at a low level is the performance of the planned economy in the new era.

Agriculture is an important part of the market economy. With the deepening of the market economy, the prices of human capital and agricultural resources have risen steadily. Under this background, it is impossible to expect that the price of agricultural products will remain at the low price in the era of planned economy scissors. Because, this means that the rural poverty continues, it means that agricultural production still maintains the pattern of the planned economy thirty years ago. If China's economic changes are bound by land, the industrial era will not be able to come.

Of course, under China's current CPI structure, unchecked increases in agricultural prices mean that inflation expectations have worsened. There are ready-made roads for solving the rise in the prices of agricultural products internationally. If the price of agricultural products is suppressed, farmers should be subsidized. If agricultural prices are not suppressed, agriculture should go on the road to marketization.

Judging from the situation of market economies such as the United States, Europe, and Japan, government subsidies are the only way to suppress the rise in the prices of agricultural products. For example, in order to maintain lower agricultural product prices and maintain international competitiveness, the United States artificially lowers the prices of agricultural products by means of government subsidies, which causes the prices of agricultural products to fall relative to those of other sectors. This will reduce the wage rate of agricultural workers. In order to maintain agricultural production, the government has to make large-scale subsidies. The situation in other economies is much the same. In order to maintain agriculture, all countries have large-scale subsidies, which is also the root cause of the inability of international trade negotiations to progress.

Only two roads solve the problem of marketization of agriculture. The first is to completely abandon agriculture and import crops from an advantageous agricultural economy. All major countries that consider economic security will not choose this path, so as to avoid being choked by other countries. The other way is to carry out large-scale government subsidies on the basis of reducing production costs and to take advantage of the global market.

It is impossible for China to abandon agriculture. Government subsidies and cost reductions and efficiency improvements are the only way out. As suggested by the Department of Agriculture of Shandong Province, measures should be taken to reduce the cost of agricultural logistics and keep the price of agricultural products above the rise of CPI. Finally, large-scale subsidies for agricultural production should be implemented so that those who still insist on the agricultural market can live in the middle class.