Why is adjusting the grain purchase and storage policy imperative?
The current inversion of domestic and international grain prices has led to massive grain imports, while domestic production costs remain high; the room for protecting farmers' enthusiasm for growing grain simply by raising the minimum purchase price is getting smaller and smaller.
Rationalizing the relationship between grain prices and the market has become a consensus, but the steps of adjustment should be active yet prudent, and must not dampen farmers' enthusiasm for growing grain; at the same time, policy-based agricultural insurance also needs to be improved.
Recently, autumn grain purchases have begun in various places. In past years, when new grain came onto the market in large concentrated volumes, grain prices would fluctuate periodically, but this year, because the temporary corn storage price was lowered, this customary grain price fluctuation has become particularly complex. So what exactly is the current situation with grain purchase prices? A reporter from Economic Daily conducted an in-depth investigation in major grain-producing areas.
⟦NL> Yushu City in Jilin is an important corn-producing area in China. At a corn purchasing station in Wukesong Town, Yushu City, farmer Lü Dongwei, who came to sell corn, told the reporter that his family planted 20 mu of corn this year, with a yield of about 2,000 jin per mu, and the drop in corn prices reduced this year's planting income by nearly 30%. However, Lü Dongwei said, “Corn price rises and falls are normal. In a few days, the state-owned grain depot will open to buy grain. Farmers with good storage conditions are in no hurry to sell grain, hoping to wait a little longer and see the price before selling.”
This year, many places launched the minimum purchase price policy, which played a stabilizing role in rice and wheat prices. In some major producing areas of high-quality wheat and rice, wheat and rice prices are far higher than the minimum purchase price. During this year's summer grain purchase period, when the reporter interviewed in Henan, the reporter learned that in some places in Henan, wheat was difficult to sell because of quality problems, while in some major high-quality wheat-producing areas, wheat prices once reached 1.4 yuan per jin. Wuchang City in Heilongjiang is a major producing area of high-quality rice in China; currently, the purchase price of ordinary high-quality rice in Wuchang City is more than 2 yuan per jin.
In recent years, supported by the minimum purchase price policy and the temporary storage policy, China's grain prices have maintained an upward trend for many consecutive years and have approached the upper limit of the “amber box” policy under WTO rules. The current inversion of domestic and international grain prices has led to massive grain imports, while domestic production costs remain high; the room for protecting farmers' enthusiasm for growing grain simply by raising the minimum purchase price is getting smaller and smaller, and its effect is getting weaker and weaker. The current grain purchase and storage system faces unprecedented challenges and tests, and adjusting the purchase and storage policy is imperative.
After announcing the cancellation of the temporary storage policies for soybeans and cotton in early last year, this year China no longer raised the minimum purchase prices for wheat and rice, and lowered the temporary storage price for corn. This series of policy adjustments actually reflects that the state is gradually rationalizing the relationship between the government and the market and reducing government intervention in the grain market. Moreover, the adjustment of the minimum purchase price policy helps change the expectation that grain prices can only rise and not fall, and guides farmers to adjust the grain planting structure according to local conditions.
Judging from this year's policy adjustments, among the three major staple grains, corn growers are the most affected. Zhang Miao, a family farm operator in Guchengbao Village, Babao Town, Kaiyuan City, Liaoning Province, told the reporter that he rented 455 mu of corn this year at a rent of 800 yuan per mu; drought caused a reduction in corn output, and prices also fell, so breaking even this year would already be good. Zhou Yanwu, a family farm operator at Dalan Family Farm in Halala Village, Zhuchengzi Town, Dehui City, Jilin, rented more than 2,000 mu of corn this year; at current corn prices, after deducting rent of 700 yuan per mu and the cost of production materials, he can only break even.
Experts believe that the short-term pain brought by policy adjustment is unavoidable, but in the long run it is conducive to rationalizing the agricultural product price formation mechanism. The problem is, after grain prices are liberalized, how should subsidies be carried out? Should subsidies go to land contract holders or to those who farm the land? Heilongjiang's target price subsidy for soybeans gives subsidies to land contract holders. Experts believe this is relatively consistent with China's national conditions. But some new agricultural business entities believe that the principle of “whoever farms gets the subsidy” should be implemented.
Modern agriculture cannot be formed in an environment detached from market competition and without market risk; rationalizing the relationship between grain prices and the market has become a consensus. But the steps of adjustment must be orderly and prudent, and must not dampen farmers' enthusiasm for growing grain. At the same time, policy-based agricultural insurance, the agricultural product futures market, and others still need further improvement, so that farmers can gradually use a variety of financial tools comprehensively to avoid market risks and truly become new-type professional farmers.