How to ensure grain farmers do not lose out when grain prices fall
Improve the comprehensive grain production capacity, push agricultural development from being mainly about quantity growth to placing equal emphasis on quantity, quality and efficiency, achieve grain storage in the land and grain storage in technology, and ensure grain security for the world.
Just as farmers were celebrating a bumper autumn grain harvest, they suddenly encountered rather sharp fluctuations in grain prices. Agricultural monitoring shows that domestic grain prices are basically stable, but in the grain markets of Northeast China and the Huang-Huai-Hai Plain, corn prices fell by 20%, and in some places in the south, corn prices fell by 30%. Moreover, the fall in corn prices created a crowding-out effect on rice and wheat prices.
The reasons for sharp fluctuations in grain prices are complex. Taken together, they are driven by the fact that China's grain has shown a “simultaneous increase in three volumes” - production, inventory and imports - and by the fact that international grain prices are lower than domestic prices. There are many factors behind domestic grain prices being higher than foreign grain prices: first, China's agriculture itself lacks competitiveness; second, some protection policies have kept grain prices rising; third, international grain prices are falling; in addition, changes in freight prices and exchange rates have caused external grain prices to keep declining, intensifying the inversion between domestic and international grain prices.
To respond rationally to fluctuations in grain prices, the first priority is to do everything possible to protect farmers' interests and never let grain farmers lose out. In order to safeguard farmers' income from grain growing, in view of changes in the grain price situation, the National Development and Reform Commission, the National Grain Administration, the Ministry of Finance and the Agricultural Development Bank of China recently issued the Notice on Issues Concerning the State Temporary Storage Corn Purchase in Northeast China in 2015, announcing that the 2015 state temporary storage corn listed purchase price (national standard third-class quality standard) is 1 yuan per market catty, with the price difference between adjacent grades set at 0.02 yuan per market catty.
Many hands make light work. Because farmers' grain storage conditions are limited, under the current downward trend in grain prices, all parties should join the ranks of purchasing grain from farmers' hands. In addition to state purchases, some rural specialized cooperatives with the necessary conditions, grain enterprises and some rural brokerage enterprises should all act actively to purchase the grain in farmers' hands, preventing the grain remaining in farmers' hands from sprouting or becoming moldy due to inadequate storage conditions, thereby causing additional losses. To do a good job in autumn grain purchasing, it is necessary to strictly investigate “IOUs” and the practice of downgrading quality and pressing down prices, and prevent “difficulty in selling grain”.
To respond rationally to fluctuations in grain prices, while taking into account farmers' reasonable returns, the formation of grain prices should be made more market-oriented. At present, domestic grain prices, whether temporary storage prices or market prices, are still higher than international grain prices. Seizing this opportunity and advancing grain price reform in line with the situation, ultimately forming a situation in which “prices and subsidies” are separated, is an important opportunity.
According to the top-level design of grain price reform, in the future it will be necessary to separate the market price of grain from subsidies to farmers for growing grain. If the market price is too low, the government should adopt appropriate policies and directly subsidize farmers, but do so separately from price. Separating price from subsidies can activate the market: farmers sell grain at market prices, and business entities buy grain at market prices, thus enlivening the grain market.
To respond rationally to fluctuations in grain prices, it is necessary to do everything possible to protect the enthusiasm of grain farmers. The Recommendations of the Central Committee of the Communist Party of China on Formulating the Thirteenth Five-Year Plan for National Economic and Social Development once again emphasized improving grain production capacity and ensuring basic self-sufficiency in grains and absolute security of staple food. In a large country with such a population as ours, the rice bowl must be held firmly in our own hands. This is basic experience in governing the country that suits China's national conditions. True, relying on international supply can solve some problems in the short term, but it is not sustainable in the long term. Once there is a poor harvest internationally and we need to import grain, then there will be “no one to turn to”.
Only by doing everything possible to protect farmers' enthusiasm for growing grain and making farmers willing to grow grain can the foundation of grain security be consolidated. At the same time, it is also necessary to do everything possible to transform the mode of agricultural development, improve the comprehensive grain production capacity, push agricultural development from being mainly about quantity growth to placing equal emphasis on quantity, quality and efficiency, achieve grain storage in the land and grain storage in technology, and ensure grain security for the world.