For some farmers, grain-growing income is falling. How can grain sell well?

① At the drying yard of the Qixin Modern Agricultural Machinery Cooperative in Jiangqiao Township, Tailai County, Heilongjiang Province, more than 800 mu of freshly harvested corn is piled on the drying yard. The corn is currently hard to thresh, and with prices low, the cooperative plans to wait a while before looking into selling the corn. Photo by Xinhua News Agency reporter Wang Jianwei

② On November 10, in Xincun Village, Shilong Township, Guiping City, Guangxi, a villager was drying and processing autumn grain. At present, more than 1.23 million mu of autumn grain in Guiping City is being harvested one after another, and local grain processing enterprises are seizing the farming season to do a good job in drying, processing and storage.

In the autumn grain harvest season, looking at the golden rice and corn, some people are happy and some are worried. This year, affected by the cut in the temporary corn storage price, wheat and rice purchase prices in some places have fallen to varying degrees, and some farmers' grain-growing income has declined somewhat. So how should we view this phenomenon?

Price fluctuations are very normal

In late autumn, in the vast fields of Yushu City, Jilin Province, some unharvested corn stalks sway in the bleak autumn wind. The reporter followed the “Bringing Grain Prosperity and Benefits to Farmers into Ten Thousand Homes” working group into the yard of villager Zhao Mingbiao in Anle Village, Wukeshu Town, Yushu City, where the two elderly people were sitting on a pile of corn sorting the corn they had just brought back. Zhao Mingbiao, 67, told the reporter that the two of them planted 24 mu of corn this year, of which 9 mu was their own land, and they also contracted 15 mu of land for 8,000 yuan. Zhao Mingbiao had originally hoped to make more money from farming this year, but unexpectedly the weather was dry, corn yields fell, and purchase prices dropped. After deducting contracting fees, agricultural machinery operation fees, pesticides, seeds, chemical fertilizers and other costs, they would be doing well to earn seven or eight thousand yuan.

Unlike Zhao Mingbiao, whose grain-growing income fell, Zhang Shuyuan, a villager in Fulin Tun, Yuanjing Village, Wuchang Town, Wuchang City, Heilongjiang, did fairly well growing rice. Zhang Shuyuan said he planted 60 mu of organic rice this year, of which 15 mu was his own land, and he also contracted 45 mu of land at 1,000 yuan per mu. “The village's planting and breeding cooperative uniformly provides seeds, chemical fertilizers and pesticides, manages the fields uniformly, and purchases rice uniformly. This year the agreed purchase price for rice was 2.4 yuan per jin. After deducting land rent, labor costs and so on, the income is very good.” Zhang Shuyuan said.

Being able to sell grain for a good price after a bumper harvest is farmers' hope. After grain purchase prices rose for many consecutive years, this year the state no longer raised the minimum purchase prices for wheat and rice, and lowered the temporary storage price for corn. Among the three major staple grains, corn growers were hit relatively hard. It is understood that farmers' income from growing corn in Northeast China has generally fallen by 20% to 30%. Fluctuations in grain prices have had a certain impact on some farmers' confidence in growing grain. Some farmers say that farming is still their main source of income, and falling or stagnant prices directly affect their income.

How should the current fluctuations in grain prices be viewed? Experts believe that lowering grain purchase prices or no longer raising them leaves some room for the market to regulate grain prices, and market fluctuations are normal. Judging from the current situation, China's three major staple grains are still subject to market-support purchases, and there is no possibility of a cliff-like drop in grain prices. It is worth noting that under the current severe inversion of domestic and international grain prices, it is necessary to grasp the “degree” of grain imports and prevent large inflows of low-priced grain imports from hitting the domestic market.

A grain expert told the reporter that the current grain price fluctuations are the result of multiple factors superimposed, such as large grain imports and the lack of competitiveness of domestic grain. Regulating the grain market requires comprehensive measures and coordinated efforts, for example, handling the relationship between producing areas and sales areas well, establishing a long-term and stable production-sales balance relationship, and establishing a benefit compensation mechanism for sales areas toward producing areas; and handling the relationship between the central and local governments well, and strengthening the provincial governor responsibility system for food security.

Multiple entities participate in purchasing

At present, China's grain purchasing is still led by state-owned enterprises, and most grain flows into state grain depots, with the market clearly characterized by “policy grain.” Experts believe that a major measure to escape the current dilemma of policy-based purchasing and storage is to promote the diversification of grain reserves, and while encouraging central and local reserves to become bigger and stronger, more farmers, farmer cooperatives, leading enterprises and other multiple entities should be encouraged to enter the grain purchasing and storage market.

This year's obvious grain price fluctuations help stimulate multiple entities to participate in grain purchasing. In the long run, full participation of multiple entities in grain purchasing and storage is conducive to stabilizing the grain market, straightening out the grain price system, and steadily raising farmers' income.

Yushu City in Jilin Province is China's largest grain-producing county. Zhao Chuncheng, deputy director of the city's Grain Bureau, told the reporter that this year it is expected to purchase about 2 million tons of corn, with existing empty warehouse capacity of 230 tons, which can meet the policy-based storage demand for autumn grain. In order to ensure the bottom line that farmers can sell their grain, while giving full play to the main-channel role of state-owned grain purchasing and storage enterprises such as Sinograin, COFCO, Chinatex and AVIC, Yushu City also actively encourages and guides circulation, processing and other types of enterprises to participate in grain warehouse capacity construction and grain purchasing and storage, and cultivates diversified market entities.

In Yushu City, grain purchasing points can be seen everywhere. At a purchasing station in Wukeshu Town, many farmers came to sell corn. Shi Rui, head of the purchasing station, told the reporter that this year's cut in the temporary corn storage price had little impact on them, and they planned to buy large quantities of corn and, after drying and cleaning it, sell it to corn processing enterprises or state grain depots.

As a major grain-producing city, Yushu City has a developed grain processing industry, and the processing capacity of two large corn processing enterprises has reached about 1 million tons. These two enterprises are also the main force in purchasing corn in Yushu City. This year's corn price cut has lowered processing enterprises' production costs and greatly stimulated these enterprises' motivation to purchase and store grain.

Changchun Tianyu Company is a corn deep-processing enterprise producing edible alcohol and feed, purchasing and storing about 400,000 tons of corn each year. Jia Jinglin, director of the company's storage department, told the reporter that this year the state gave certain subsidies to corn processing enterprises in Jilin, and the enterprise is now producing at full capacity and can basically break even.

Now some enterprises or cooperatives engaged in agricultural socialized services are also using their own channel advantages and storage advantages to provide grain purchasing and storage services for farmers. The Jilin Province Tianfeng Machinery Planting Professional Cooperative Union is a cooperative specializing in providing farmers with full-process services such as grain cultivation, harvesting, field management and grain purchasing and storage. It has established a long-term cooperative relationship with COFCO Group. Every year when new grain comes on the market, the cooperative uniformly purchases members' grain and hands it to COFCO Group for collection and storage on its behalf, with prices following the market. This both safeguards the interests of farmers selling grain and ensures that the enterprise has a stable grain source.

Production-sales cooperation needs deepening

Not long ago, the container grain liner routes of Jinzhou Port, Xiamen Port Authority Holding Group and Zhonggu Shipping Group were officially launched, enabling effective docking between Northeast China's major grain-producing areas and the major grain-selling areas of the West Taiwan Strait.

Nowadays, grain production regions are becoming increasingly concentrated, and the regional contradiction between producing areas and sales areas is becoming increasingly prominent. The inversion of grain prices hinders smooth docking between major grain-producing areas and major grain-selling areas. Deepening production-sales cooperation and giving full play to the grain resource advantages of major producing areas and the market advantages of major sales areas are conducive both to safeguarding farmers' grain-growing interests in major producing areas and to safeguarding food security in major sales areas.

As soon as this year's autumn grain came on the market, major grain-producing areas such as Liaoning and Jilin could hardly wait to carry out various promotional activities in major sales areas such as Beijing, Shanghai and Fujian. In late October, the Jilin Rice Industry Alliance held the 2015 Jilin Rice New Rice Launch Conference in Beijing. Han Fuchun, director of the Jilin Provincial Grain Bureau, said that through rice supply-demand docking, the grain production-sales cooperation relationship between Jilin and Beijing had been advanced one step further, building a bridge for resource sharing and mutual benefit between Jilin and Beijing.

Jilin Province Yushu City Guchuan Rice Industry Co., Ltd. is the first base project for purchasing rice from outside established by Beijing Grain Group to build the “Capital Rice Bag Project.” Zhu Haifeng, deputy general manager of the company, told the reporter that their company has formed a production scale of processing 200,000 tons of rice annually. From being completed and put into operation in 2012 to now, it has cumulatively produced more than 200,000 tons of rice, of which 80% is sold to Beijing, effectively ensuring the supply of high-quality rice in the Beijing market. It is understood that Beijing Grain Group has also built a major “North Grain Transported South” corridor, transporting grain from Northeast China to major sales areas such as Fujian, Guangdong and Sichuan, effectively promoting docking between major producing areas and major sales areas.

In order to deepen production-sales docking and ease warehouse capacity pressure, Jilin has also adopted a “bringing in” strategy, using preferential policies to attract grain enterprises from major sales areas such as Beijing, Fujian and Chongqing to build grain storage facilities in Jilin. All enterprises that meet the conditions for state policy-based grain purchasing are allowed to undertake state policy-based grain purchasing tasks. Now, some local reserve grain storage projects in other places are successively landing in Jilin.

Although cooperation between grain production and sales areas has to a certain extent promoted regional grain supply-demand balance, it is difficult to fundamentally solve the problem of large inventory backlogs of grain in major producing areas. At present, the grain market has seen phenomena such as the inversion of domestic and international grain prices, the inversion of grain prices between major producing areas and major sales areas, and the inversion of raw grain and finished grain prices. The deep-seated problems behind these phenomena have become major obstacles to deepening cooperation between production and sales areas, affecting the enthusiasm of enterprises in major sales areas to buy grain in major producing areas. Experts believe that in addition to deepening production-sales cooperation and improving the agricultural product price formation mechanism, it is also necessary to give full play to the government's responsibility for macro-control, handle the relationship between producing areas and sales areas, and explore the establishment of a long-term and stable production-sales purchase and sales mechanism.