Northeast China opens granaries across the board to solve the difficulty of selling grain; storage capacity can generally meet demand
Recently, due to oversupply and rising inventories, corn market prices have fallen considerably, and difficulties in selling have appeared in some localities. How is the current corn purchase and storage work progressing? What adjustments will be made to grain policy? Will next year's grain production be affected? At the press briefing on current grain-related policies held by the National Development and Reform Commission on the 19th, officials from relevant departments including the Ministry of Finance, the Ministry of Agriculture, and the State Administration of Grain answered these questions.
Northeast storage capacity can generally meet demand
Statistics from the State Administration of Grain show that in mid-September 2015, newly harvested corn from Hebei, Shandong, and Henan gradually came onto the market, and corn purchase prices underwent a seasonal correction. In late October, the average purchase prices of corn per 100 jin in Hebei, Shandong, and Henan fell to 84 yuan, 89 yuan, and 75 yuan respectively, down 27%, 22.6%, and 34.2% from the same period the previous year. After the state launched temporary corn storage purchases in the Northeast on November 1, corn prices within the passes stopped falling and rebounded, showing a recovery increase. On November 17, the average corn purchase prices in Hebei, Shandong, and Henan were 91 yuan, 94 yuan, and 88 yuan respectively, up 8.3%, 5.6%, and 17.3% from late October.
⟦NL> Zhou Guanhua, director of the Regulation Department of the State Administration of Grain, said that at present, domestic and international grain supply and demand are generally loose, international grain prices are running at low levels, and the price gap between domestic and international grain remains relatively large. Affected by supply-demand relationships and the macroeconomic situation, the corn market has continued to weaken since the beginning of this year. Through timely policy measures such as launching temporary purchases and storage, the state has guided market expectations toward stability, and the domestic grain market and prices are now tending toward stability.
It is understood that this year the state adjusted the listed purchase price for temporary corn storage in the Northeast (national standard third-grade quality standard) to 1 yuan/jin. The period for the state's temporary corn storage is from November 1, 2015 to April 30, 2016, earlier than the start of purchases the previous year.
Sun Zhi, deputy director of the Economic Construction Department of the Ministry of Finance, introduced that the Ministry of Finance actively supports the autumn grain purchase. This year the central finance allocated about 15 billion yuan to support the construction of grain storage facilities and the maintenance and renovation of “dangerous warehouses and old depots”; it clarified fiscal subsidy policies for cross-provincial warehouse transfers and the construction of simple storage facilities, intensified efforts to free up warehouses and reduce inventories, and effectively eased warehouse capacity pressure in the Northeast. Interest and expense subsidies for central reserve grain and oil, minimum purchase price grain and oil, and temporary reserve grain and oil were allocated in full and on time, supporting Sinograin and other entities in fully opening purchase outlets so that all grain that should be purchased is purchased.
Suo Xuejun, deputy director of the Purchase and Sales Planning Department of Sinograin, said that as the main body entrusted by the state to implement the temporary corn purchase and storage policy, Sinograin launched temporary purchase and storage of 2015-produced corn in the Northeast starting November 1. “As of November 15, a total of 6.11 million tons of temporary storage corn had been purchased. Current storage capacity is around 80 million tons, which can generally meet the needs of this year's state temporary corn purchase and storage.”
By 2020, planting area in non-advantageous production areas will be reduced by 50 million mu compared with now
In response to the current situation of corn oversupply and sharply increased inventories, Pan Wenbo, deputy director of the Planting Industry Department of the Ministry of Agriculture, said that since the beginning of this year the Ministry of Agriculture has actively promoted agricultural structural adjustment, and the future approach is to consolidate and upgrade advantageous production areas and appropriately reduce non-advantageous production areas.
“We recently formulated guiding opinions on corn structural adjustment in the ‘Sickle Bend’ region. In China's topographic map, this area appears in a sickle-bend distribution from the Northeast to North China—Southwest—Northwest, hence it is called the ‘Sickle Bend’ region.” Pan Wenbo said, “The ‘Sickle Bend’ region is a non-advantageous production area for corn. This region is both a typical dryland farming area and an ecologically fragile area, and much of it is also an agro-pastoral transition zone with strong demand for high-quality feed. Therefore, the Ministry of Agriculture will accelerate the construction of a modern agricultural industrial system in the ‘Sickle Bend’ region featuring coordinated grain, cash crop, and feed production, integration of agriculture and animal husbandry, integration of planting, breeding, and processing, and industrial convergence. The plan is that by 2020, the corn planting area in this region will be stabilized at around 100 million mu, a reduction of more than 50 million mu compared with now.
“As for the Northeast Golden Corn Belt, it is definitely a core corn production area that must be stabilized. The state will continuously increase investment in major grain-producing areas and strengthen production capacity building.” Pan Wenbo said.
It is understood that in 2015 the central finance arranged 37.2 billion yuan in reward funds for major grain (oil) producing counties, an increase of 2.1 billion yuan over the previous year, of which 11.45 billion yuan was arranged for the three Northeast provinces and one region, accounting for 30.8% of all reward funds. Support for risk funds in major grain-producing areas was stabilized. For 13 major production areas including the three Northeast provinces and one region, grain risk funds are fully borne by the central finance. Recently, the central finance subsidy for the 2016 grain risk fund was fully issued to localities in advance, of which 6.22 billion yuan was issued to the three Northeast provinces and one region.
It is understood that the state will continue to support the implementation of the minimum purchase price policy for wheat and rice, so as to stabilize grain production and promote increases in farmers' incomes.