Grain policy urgently needs adjustment to solve the "suspended river" price problem

Data from the National Bureau of Statistics on the 8th showed that China's total grain output in 2015 reached 621.435 million tons (124.287 billion jin), an increase of 14.408 million tons (2.882 billion jin) over 2014, or 2.4%. This was the twelfth consecutive year of national grain harvest since 2004.

The achievements of the “twelve consecutive years of bumper harvests” are encouraging, but the problems concealed behind the bumper harvests urgently need attention.

Grain “twelve consecutive years of bumper harvests” “This year's grain harvest was again bumper, first because the sown area increased, and second because the yield per unit area increased.” said Zeng Yande, director of the Planting Industry Department of the Ministry of Agriculture.

Data showed that this year's national grain sown area reached 1,700.107 million mu, an increase of more than 9 million mu over the previous year, or 0.5%. The average yield of national grain crops reached 365.5 kg per mu, an increase of 6.5 kg per mu over last year, or 1.8%.

Worry over falling grain prices

Although there was a bumper “twelve consecutive years of bumper harvests,” growers in some major producing areas could not feel happy. The reporter learned that, affected by factors such as the widening price gap between domestic and foreign grain and rising domestic grain inventories, China's corn market price has fallen considerably since the third quarter of this year, and the phenomenon of grain farmers in some places “increasing production without increasing income” has resurfaced.

Li Deming, chairman of the Zhenyu Corn Professional Cooperative in Lanxi County, Heilongjiang Province, told the reporter that because of last year's bumper harvest, this year's land transfer fee was 100 yuan per mu higher than last year, and adding the costs of seeds, chemical fertilizers, and planting and harvesting machinery, the cost of one mu of land was 1,000 yuan. “This year the average yield per mu was about 1,200 jin, and it was still wet grain, only a little more than 6 mao per jin. The money earned last year has all been lost this year.” Li Deming said.

On September 18 this year, the relevant department announced that the temporary purchase and storage price for corn in Northeast China was 2,000 yuan/ton. Compared with last year, the price was reduced by 240 yuan per ton. Experts estimated that this was equivalent to a reduction of 20 billion yuan in the income of farmers growing corn in Northeast China this year. “The profit margin in grain production was not large to begin with. If farmers' interests cannot be safeguarded, their enthusiasm for growing grain will drop sharply, which will inevitably threaten next year's grain output.” said Wang Xiaoguo, director of the Grain Bureau of Lanxi County, Heilongjiang Province.

Solving the “suspended river” price problem

In response to the decline in grain prices that has occurred for some time, departments including the Ministry of Finance, the National Food and Strategic Reserves Administration, and Sinograin have actively taken measures.

“By taking measures such as promptly launching purchase and storage, the domestic market and prices have now stabilized.” Zhou Guanhua, director of the Regulation Department of the National Food and Strategic Reserves Administration, said recently at a press briefing on grain-related policies.

To stimulate increased grain production and drive increases in farmers' incomes, the Chinese government has implemented the minimum purchase price and temporary purchase and storage price policies for 12 consecutive years. The continuous rise in purchase prices has made domestic grain prices far higher than foreign ones, becoming a “suspended river” of prices hanging above the global grain market.

In this regard, agricultural expert Chen Xiwen pointed out that the current temporary storage price of 2,000 yuan/ton is already far higher than the international market, which shows that China's grain policy has reached the time when adjustment is needed. He believed that the basic role of market supply and demand in price formation should be brought into play, and the government should give farmers necessary subsidies outside the market.

Chen Xiwen also pointed out that the government must be extremely cautious in adjusting grain policy, fully consider farmers' interests, and avoid a large decline in grain output.