Selling Grain Once Requires a 500-Yuan Kickback, Grain Production and Marketing Trapped in a Dilemma

Xinhua News Agency, Zhengzhou, Nov. 12 (Reporter Zhang Xingjun) A reporter's continuous tracking interviews along Henan and other places found that from the start of summer grain purchasing to the concentrated listing of autumn grain, due to consecutive years of bumper grain harvests, the continuous one-way rise in the minimum purchase price, and high state-owned inventories, the phenomenon of difficulty in selling grain has begun to emerge, with queuing to sell grain becoming the norm in some areas, and some purchasing points even seeing people “pull strings” in order to sell grain.

In the courtyard of the Huangchuan Directly Subordinate Depot of Sinograin, various grain-selling vehicles lined up in a queue stretching forward. Not far away, people who had finished weighing were busy unloading grain. Along the continuously rotating conveyor belt, golden rice slowly flowed into the warehouse.

⟦NL> A few days ago, standing in the queue in front of an agricultural three-wheeled vehicle, 51-year-old Guo Ruimin did not look conspicuous. This farmer from Sanbei Town, Huangchuan County, Henan, told the reporter that this was his first time selling grain after the mid-to-late rice harvest this year. “The whole family has 12 mu of land, with an average yield of nearly 1,000 jin per mu. The grain trader's purchase price is 1.18 yuan, but hauling it here can fetch more than 1.3 yuan.”

Unlike Guo Ruimin's attention to the grain price, Zhang Ming, deputy director of the Huangchuan Directly Subordinate Depot, was more concerned about the current storage capacity situation. He said that the Huangchuan Directly Subordinate Depot and entrusted depots in its jurisdiction stored a total of 2.64 million tons of grain and oil. Although located in a rice-growing area and not participating in the summer grain minimum purchase price acquisition, after taking inventory, only more than 400,000 tons of empty warehouse capacity remained. “Since the launch of autumn grain minimum purchase price acquisition on Oct. 1, more than 100,000 tons of rice have been purchased so far. Based on the minimum purchase price acquisition volume in previous years, the storage capacity gap is expected to possibly reach 500,000 tons.”

At the Magangji Township Grain Station in Gushi County under the Huangchuan Directly Subordinate Depot, the reporter saw that although the warehouses were both small and old, the 15,000-ton storage capacity was completely full. On the gate of each warehouse hung a “Grain Rights Notice Board” uniformly produced by Sinograin. In neighboring Guangshan County, Guo Caiyuan, director of the grain bureau, also admitted that the county's total rice output was more than 600,000 tons, but the state-owned grain system had only more than 6,000 tons of empty warehouse capacity, making storage capacity for autumn grain minimum purchase price acquisition very tight.

As grain output increased for consecutive years while storage capacity remained tight, under this double squeeze, queuing to sell grain has become normalized.

The reporter noted that as the pressure of queuing to sell grain increased, at some depot points with limited storage capacity, the phenomenon of “pulling strings” to cut in line to sell grain even appeared. Zhang Zhenhai, a grain broker from Fudian Town, Huangchuan County, introduced that this year, within a 30-kilometer radius, only one Sinograin entrusted depot point in Baidian Town was still open to purchase grain, with more than 100 vehicles queuing, but fewer than 10 vehicles could be unloaded in a day.

“I hauled more than 50,000 jin of grain and have already waited a week without selling it. Some have queued even longer, waiting more than 10 days. But some people can unload as soon as they arrive. Upon asking, it turned out they were selling ‘favor grain.’ Each time they have to give the quality inspector about 500 yuan as a kickback, and then they can have their quality checked without queuing, and after inspection go directly to weighing and storage.”

Through the transmission of the grain chain, capital chain, and land chain, the ongoing difficulty in selling grain has already put pressure on large grain growers, family farms, and other new agricultural operating entities: after buying large amounts of grain, it became unsalable, and some grain brokers were pressed by debt; large grain growers struggled to keep going, borrowing money or lacking funds to invest in reproduction; agricultural input dealers faced severe credit sales and operating difficulties……

Xing Changyin, vice chairman of the Tushengjin Planting Cooperative in Tanghe County, Henan, introduced that since the cooperative was established, it has subcontracted more than 800 mu of land and managed more than 2,000 mu. This year, total wheat output was 720,000 jin. Because of poor quality and a low selling price, it had originally hoped to turn things around after the autumn grain harvest, but unexpectedly encountered the same difficulty in selling grain. “When the cooperative was founded, it was named ‘Tushengjin’ for good luck, but now it has become ‘Tusheng troubles.’”

Yang Jun, a professor at the University of International Business and Economics, said that judging from China's grain fluctuations from 1978 to 2013, whenever the planting profit margin was relatively high, grain output increased; if the grain profit margin was too low, it easily led to sustained production declines. He suggested that relevant parties closely monitor changes in grain production profitability to ensure that farmers' grain-growing profit margin remains at a reasonable level and to stabilize grain production.

A relevant person in charge of the Zhengzhou Grain Wholesale Market believed that as inventories remain high and domestic and international grain prices are severely inverted, the grain policy-based purchase and storage system implemented for many years is facing a window period for adjustment. Striving to realize the “separation of price and subsidy” and letting grain prices return to the market is the general direction for the future, but under circumstances where reform cannot be fully carried out in the short term, all localities should especially crack down hard on phenomena such as “pulling strings” to sell grain that harm farmers' interests.