Government Regulation Goes Bananas
This year banana producers in China suffered a disastrous loss, writes Dean Peng. Banana prices plummeted in Canton and Hainan, the two tropical provinces that provide almost all the domestic bananas. Tons of ripe bananas rotted in their plantations. Almost all planters lost money; some went bankrupt. It soon became clear that the real cause for the fall in banana prices was overproduction.
Bananas had been selling well in recent years, and many new producers moved to Hainan to open new plantations. The result was a serious over-supply. Thus arose calls for new regulations. For many people, the only reasonable resolution to imperfections in the market is more government regulation. In fact, the only problem with the market results from regulation against information sharing between producers. FULL ARTICLE
Comments (3)
At least, after 58 years of communism, the Chinese have an EXCUSE for not understanding markets. What's OUR (the US's) excuse?
The price of bananas WILL rise. Quantity and quality will suffer. That's not so hard, since the victims can't be identified nor their loss quantified, not even by themselves. We've been doing it in the US for longer than China was communist.
Yes, they'll have no bananas.
Published: August 27, 2007 2:21 PM
This is very interesting since in March 2006 Australia was experiencing a shortage due to a cyclone which virtually wiped out 90% of the banana production in Australia's state of Queensland. It would take 12 months for normal production to resume again. Prices of bananas soared to AUD15/kilo and remainded there until April 2007. Myself and other consumers stopped buying bananas during this time. Rather than allow imports from places like China which the article indicates was experiencing overproduction around this same time - the government (at the insistence of the Australian banana growers)allowed no imports to come into Australia. This is what we get when government manages international trade.
Published: August 27, 2007 5:31 PM
The price of bananas in Sydney is still around A$5 per kilo...
Currently food in general is very expensive in Australia. According to the government and their servile media it's "because of the drought"; however the truth is that it's because most food products cannot be easily imported, if at all.
Sadly the average Australian has been so indoctrinated with protectionist fallacies that they can't see anything wrong with this. Protecting the rural sector is viewed as a legitimate exercise in helping mates out when times are tough (they are always tough) and a small price to pay for "security" of food production. And what would Aussie farmers do if they were all sent broke by cheap imports from China...
Published: August 27, 2007 9:32 PM