Where is the grain market heading in 2016? Storage pressure remains considerable
After the bumper harvest: grain storage pressure remains considerable
At present, China has achieved twelve consecutive increases in the summer grain harvest and eleven consecutive years of bumper annual grain harvests, but after the bumper harvests, the pressure on grain purchase and storage is considerable.
Yan Bo, spokesperson for the State Administration of Grain and director of the Department of Policies and Regulations, introduced that China's grain purchase and storage system mainly consists of four parts: first, state reserves; second, local reserves; third, enterprise storage; and fourth, farm household grain storage. In recent years, grain stored by farm households has accounted for about 50% of the country's total annual grain output. Therefore, promoting scientific grain-saving and loss-reduction measures among the broad masses of farm households is of great significance.
According to sample surveys by the State Administration of Grain, the grain storage loss rate of farm households nationwide is about 8%, with an annual loss of 40 billion jin of grain. Because farm households have poor grain storage conditions and insufficient knowledge and technology for scientific grain storage, this poses a threat to grain purchase and storage and creates hidden dangers for China's grain quality and safety.
To promote grain saving and loss reduction, over the past 7 years China has implemented the project of building scientific grain storage facilities for farm households, promoting the use of new-type scientific grain storage bins, so that the average grain storage loss rate of farm households can be reduced from 8% to about 1.5%. The 8.17 million sets of grain storage bins already promoted can reduce farm household grain storage losses by 1.8 billion jin each year.
Ren Zhengxiao, director of the State Administration of Grain, introduced that by the end of 2015, the grain system will have cumulatively allocated nearly 10 million sets of scientific grain storage bins for farm households, which can help farmers reduce grain storage losses by more than 2.5 billion jin each year. "However, the mechanism for compensating the interests of major grain-producing areas still needs to be comprehensively established, post-harvest grain losses among the broad masses of farm households are still occurring, and the task of helping farmers increase income and reduce losses remains arduous," said Ren Zhengxiao.
Triple high叠加: grain purchase and storage faces three major contradictions
As the mid-to-late rice and corn produced in 2015 are gradually harvested and marketed, the autumn grain purchase has already begun. At present, the state has launched the market-support purchase of mid-to-late rice in Anhui, Sichuan, Hubei, Henan and other places, and the autumn grain purchase in Northeast China is also about to be launched and implemented.
Ren Zhengxiao said that against the background of the accelerated advancement of the strategic adjustment of China's economic structure and the continuously deepening globalization of grain trade and marketization of grain purchasing and marketing, various contradictions in the operation of the domestic grain market are intertwined and accumulating, concentrated in three aspects: the tight balance between total grain supply and demand alongside stage-specific oversupply of some varieties; market-support prices facing a double squeeze alongside protecting the interests of grain farmers; and appropriately utilizing international grain resources alongside imported grain impacting the domestic market.
What is the impact of these "three great mountains" on China's grain purchase and storage? Ren Zhengxiao pointed out in his analysis that at present, China's high grain output, high purchase volume and high inventory volume are superimposed, and in particular, continuous increases in corn output and continuously declining consumer demand are occurring simultaneously. Feed processing enterprises frequently use imported barley, sorghum, distillers' grains and other substitutes, and the stage-specific oversupply characteristics of corn are very obvious. In addition, because imported grain prices are low, the "floor" of domestic grain production costs keeps rising, forming a squeezing trend. Under such a double squeeze, the space for relying solely on open-ended purchasing and raising market-support purchase prices to protect farmers' enthusiasm for growing grain is becoming smaller and smaller, and the effect is becoming weaker and weaker. The current grain purchase and storage policy system faces unprecedented challenges and tests.
According to customs statistics, in 2014 China's grain output was 607.1 million tons, while grain imports also hit a new high, reaching 106 million tons.
In the future, what pressure will grain purchase and storage face? Ren Zhengxiao pointed out in his analysis that in recent years, although imports within quota of the three major grain varieties have been managed in an orderly manner, imports of non-quota varieties such as distillers' grains and dried cassava have increased rapidly, squeezing the domestic corn market share and intensifying the contradiction of output exceeding demand. In addition, grain production and inventory distribution are gradually concentrating in core producing areas, the purchase and storage pressure in major producing areas is enormous, the market-support purchase policy will continue, policy-related grain inventories have been "snowballing" year after year, and the fiscal burden is becoming heavier and heavier.
Deepening reform: improving the price and market regulation mechanism for agricultural products
Faced with the problems and challenges in grain purchase and storage, experts point out that against the background of consecutive years of bumper grain harvests, reforming and improving the grain purchase and storage system and doing a good job in modern grain circulation so that farmers earn more from growing grain and the enthusiasm for growing grain in major grain-producing areas does not diminish is the key to developing modern agriculture, reforming the grain purchase and storage system and invigorating circulation.
Since 2006, the state has continuously implemented the minimum grain purchase price policy to protect grain production and increase farmers' income. This policy measure has played an important role in safeguarding the grain market and protecting the interests of grain farmers, but some problems have also been exposed in its operation. The grain market has mainly shown a government-led trend, policy-related inventories have increased, and reform of the grain purchase, storage and circulation system is imperative.
Hu Hengyang, inspector of the Department of Rural Economy of the National Development and Reform Commission, pointed out that in deepening the reform of the grain circulation system, it is necessary to improve the grain price and market regulation mechanism, promote the transformation of reserve regulation from "price intervention type" to "supply and demand regulation type", and promote the transformation of grain import and export regulation from "mainly controlling imports" to "effectively utilizing the international market".
Ren Zhengxiao said that in order to deepen reform, in the future it is necessary to establish a mechanism in which central reserves and local reserves each perform their own duties and complement each other in coordination, forming a joint force for reserve regulation. It is necessary to strengthen the construction of the government grain reserve supervision system, improve the government grain reserve throughput regulation mechanism, and promote openness and transparency in business links such as the purchase, sale and rotation of reserve grain, so that reserve grain can better serve grain macro-control.
Experts suggest that in deepening the reform of the grain purchase and storage system, it is also necessary to give full play to the enthusiasm of both the central and local governments, actively explore encouraging and guiding leading enterprises in agricultural industrialization to develop order-based purchasing, establish a close interest linkage mechanism with grain producers, and turn the pressure of government purchase and storage into momentum for promoting the healthy development of the grain purchase market.