Grain farmers, rest assured: growing grain will never leave you worse off
We must do everything possible to transform the mode of agricultural development, raise the overall grain production capacity, and protect farmers' enthusiasm for growing grain.
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 have been basically stable, but in Northeast China and the Huang-Huai-Hai Plain grain market, 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 the sharp fluctuations in grain prices are complex. Taken together, they were driven by the “simultaneous increase in three quantities” of China's grain - production, inventory and imports - and by international grain prices being lower than domestic prices. There are many factors behind domestic grain prices being higher than foreign grain prices: first, China's agriculture is insufficiently competitive; second, some protective policies have pushed grain prices ever higher; 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 trend of domestic and international grain prices being inverted.
To respond rationally to grain price fluctuations, we must first do everything possible to protect farmers' interests and never let grain farmers suffer losses. In order to safeguard farmers' income from growing grain, and in view of the changes in the grain price situation, the National Development and Reform Commission, the State Administration of Grain, 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-grade quality standard) is 1 yuan per market jin, with the price difference between adjacent grades set at 0.02 yuan per market jin.
Many hands make light work. Because farmers have limited grain storage conditions, and given the current downward trend in grain prices, all parties should join the ranks of purchasing grain from farmers. 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, which would cause additional losses. In handling autumn grain purchases well, we must strictly investigate “IOUs” and the practice of downgrading quality and suppressing prices, and prevent “difficulty in selling grain”.
To respond rationally to grain price fluctuations, we must, while taking into account farmers' reasonable returns, make the formation of grain prices more market-based. At present, domestic grain prices, whether temporary storage prices or market prices, remain higher than international grain prices. Seizing this opportunity to advance grain price reform in line with the situation and ultimately create 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 the market price of grain and the subsidies to farmers for growing grain need to be separated. If the market price is too low, the government should adopt appropriate policies and directly subsidize farmers, but do so separately from prices. Separating prices from subsidies can invigorate the market: farmers sell grain at market prices, and market entities buy grain at market prices, thus enlivening the grain market.
To respond rationally to grain price fluctuations, we must do everything possible to protect grain farmers' enthusiasm. 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 raising grain production capacity and ensuring basic self-sufficiency in grains and absolute security of staple food. In a country with such a large population as ours, the rice bowl must be held firmly in our own hands; this is a basic experience of governance suited to 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 international grain harvests fail 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 them willing to grow grain can we consolidate the foundation of food security. At the same time, we must do everything possible to transform the mode of agricultural development, raise the overall grain production capacity, and push agricultural development from being mainly about quantity growth to placing equal emphasis on quantity, quality and efficiency, so as to store grain in the land, store grain in technology, and ensure grain security for the world.