Based on price Index of agricultural means of production,production price index and retail price index of agricultural products between january of 2003 and april of 2012,this paper,using VAR model and impulse response function,analyzes the vertical price transmission mechanism on industrial chain of agricultural products.The result shows that a long- term co- integration relationship exists in vertical price transmission on agricultural industrial chain and the price transmission mechanism is mainly demand pull orientated.The price transmission process is relatively smooth,but differences exist among price transmission efficiency of various links in agricultural industrial chain in a short term.Therefore,this paper puts forward several specific policy suggestions:in the short term,retail price of agricultural products should be stabilized to prevent abnormal fluctuation of agricultural products while in the long term,early warning system of agricultural products price fluctuation should be established to improve the prospect and predictability of agricultural products price supervision.