How will agricultural product prices be formed in the future? Improving the purchase and storage system is urgent
On the 11th, the State Council executive meeting again raised the reform of the grain price formation and purchase and storage mechanism. Just a few days earlier, the full text of 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" (hereinafter referred to as the "Recommendations") was published, which also mentioned “reforming the agricultural product price formation mechanism and improving the purchase and storage system for grain and other important agricultural products.”
The above meeting stated that grain output has increased for consecutive years and another bumper harvest was achieved this year, strongly supporting economic and social development and the improvement of people's livelihoods, but there are also problems such as a sharp increase in inventories and falling prices. It is necessary to strictly investigate “IOUs” and the practice of lowering grades and pressing down prices, and prevent “difficulty in selling grain.” Improve the subsidy policies for corn and soybeans, and continue to implement the minimum purchase price policy next year for ration varieties such as wheat and rice.
Last month, the "Several Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting Price Mechanism Reform" was issued, requiring that in the field of agricultural products, “the price formation mechanism be improved” and that “attention be paid to giving play to the role of the market in price formation, with agricultural product prices mainly determined by the market.”
At the beginning of this year, the National Development and Reform Commission issued a notice stating that the purchase price of tobacco leaves would be liberalized. Since the tobacco leaf purchase price was the last variety in the agricultural product field subject to government pricing, this move meant that after 38 years, since the national agricultural product price reform path began in 1978, government pricing of agricultural products in our country completely exited the stage of history.
The temporary purchase and storage system began in 2008, and corn, soybeans, rapeseed, sugar, and others successively joined this queue. In 2011, the temporary purchase and storage system for cotton was established. So far it has already been “temporary” for 8 years. But since the beginning of this year, after September, the corn purchase and storage price was lowered, until subsequent documents required “reforming and improving the corn purchase and storage system.” This is regarded as meaning that corn, which is still included in the grain statistical scope, has already stood at the forefront of the queue for adjustment of the temporary storage policy.
The purchase and storage system distorted the agricultural product price formation mechanism, and the role of the market could not be effectively brought into play, and it has been widely criticized for many years. Since the implementation of price support policies centered on the minimum purchase price and temporary purchase and storage policies for many years, all parties in the market have become increasingly dependent on the policy path. Since the launch of temporary purchase and storage, purchase and storage prices have shown a steadily upward trend, expectations of “only rising, never falling” have strengthened, and the grain market has shown a trend of becoming “policy-oriented.” With domestic and international agricultural product prices inverted, import pressure increasing day by day, and the fiscal burden brought by implementing this policy increasing, the purchase and storage policy faces adjustment.
Dr. Wang Yuxin of Guilin University of Aerospace Technology told "First Financial Daily" that, regarding the purchase and storage system, the "Recommendations" clearly refers to “important agricultural products,” not all agricultural products. Then which ones can be classified as “important agricultural products”? At least from the current situation, rice and wheat, as staple grains for which the minimum purchase price policy continues to be implemented and improved, can be regarded as “important agricultural products.” It is just that when implementing the purchase and storage policy in the future, the central government will need to determine purchase and storage prices by more prominently following the principles of staying close to the market and safeguarding farmers' reasonable returns. This can both reduce reserve costs and improve reserve efficiency.
The "Recommendations" also proposed cultivating new-type professional farmers. As early as the 2012 “Central Document No. 1,” it was proposed to “vigorously cultivate new-type professional farmers.” Minister of Agriculture Han Changfu once said that changing “farmer” from an identity title to an occupational title is a historic task.
Wang Yuxin believes that at present and for a period to come, special plans and practical policies should be formulated to attract more young people to engage in farming and to create a high-quality team of new-type agricultural production and operation operators. In particular, it is necessary to support migrant workers with skills and business capabilities to return to their hometowns to establish family farms, lead farmers' cooperatives, and establish agricultural product processing and marketing enterprises and agricultural socialized service organizations. This has far-reaching significance for advancing agricultural modernization and even economic and social development.