The Lonesome Death of Han Jin

This post was originally published on Roubi's Global Economics.


For many of those following economic news from China, the suicide of Han Jin, a vegetable farmer from the Shandong province, was somewhat hard to wrap your head around. Han didn't kill himself because his land was being taken by the government, a common reason for protest suicide. He didn't kill himself because food prices were too high, or rains were too bad, and he couldn't feed his family.


He killed himself because food prices were too low, and no one was willing to buy his produce.

Almost daily in China, and in fact in Asia, we hear stories about out of control food inflation. Food prices officially rose 11.7% the month before Mr. Han killed himself. Chinese cabbage, the crop that Mr. Han found himself unable to sell, is in high demand just across the Binhai bay in South Korea. Which leaves one to wonder, what on earth is going on?


The Chinese press has found three culprits: pro-cyclical trends in agriculture (high prices lead to over production of specific goods and a rapid price drop), strange weather patterns (cabbage in northern and southern China ripened at the same time), and middle men. 


I'm going to go out on a limb here though, and say all three of those issues are in fact problems with trade.


Larger markets significantly ease the difficulty of dealing with pro-cyclical trends and strange weather patterns, for the simple reason that there are more trends to follow and more variation in weather in larger trading blocs. The article references this somewhat with seasonal variations in harvest time between the North and the South of China. The variations are likely to expand even further in Indonesia and Australia.


Dealing with middle men is significantly easier for farmers, the more middle men, from more markets, they have to deal with. Restrictions, meant to preserve "food security" i.e. prevent export, allows certain middle men to obtain near monopoly pricing power. If Mr. Han had been able to sell his cabbages to a South Korean firm, his situation might not have been so dire. Misguided attempts to maintain self-sufficiency, may be in fact accenting China's food problems, and difficulties for Chinese farmers.


With a small and shrinking store of arable land, China was unlikely to maintain self-sufficiency in agriculture forever, and the rapid approach of a breaking point in grain will be a good thing if it encourages more interaction with global markets. It still leaves the question open as to how global markets will adapt to an increasingly hungry China. After all, April also saw the Doha trade round call for last rights

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