The impact of excessively low grain prices hurting farmers should not be underestimated

Grain bumper harvest, grain prices fall, farmers' income declines. According to media reports, since the beginning of autumn this year, corn and wheat prices in China's main grain-producing areas have all declined to varying degrees. The drop in corn prices is obvious, with farmers' prices falling by an average of more than 20%, and the highest drop compared with last year reaching 30%, while wheat also experienced a cliff-like drop before National Day. At present, the rice purchase price is generally stable, but some areas have also seen small declines compared with previous years.

A bumper grain harvest, with volume and price declining in a short period in some local areas, is originally a market rule and does not need to cause alarm. But if grain is abundant and all staple grains show nationwide sharp declines, it cannot simply be regarded as market behavior. If farmers achieve a bumper harvest but not a bumper income, it will inevitably seriously damage farmers' enthusiasm for growing grain. In particular, the income from working away from home has long been far greater than that from growing grain, and the farmers who truly know how to grow grain are already “caught in the gap between generations”. In many places, the elderly, weak, and women have become the “main force” in grain cultivation, and even land abandonment has appeared. Although the state and local governments have repeatedly increased grain-growing subsidies and introduced protective policies for grain purchases, the actual income from grain growing is not only difficult to be proportional to the input, but also still far behind the income from working away from home. With this comprehensive sharp drop in grain prices this autumn, farmers' enthusiasm for growing grain will inevitably be greatly affected.

China's high input and high subsidies for grain growing appear on the surface to increase farmers' income, but in fact, including government subsidies, a large part is converted back into input for grain growing. Experts estimate that last year the net profit per mu of wheat was 87 yuan. This year, wheat had a bumper harvest and grain prices fell sharply. Although the yield per mu was higher than last year, the net income per mu of wheat was only 33 yuan, a decrease of 54 yuan per mu. Even based on last year's net income per mu of wheat, grain growing is obviously one of the least profitable industries. If some natural disasters are encountered again, losing money on grain growing is even more likely.

On the other hand, apart from the bumper harvest factor, the main reason for this year's comprehensive sharp drop in grain prices is that imported grain prices are lower than domestic ones, causing many grain processing enterprises to prefer imports rather than domestic purchases. The “inversion” between imported and domestic grain prices is enough to show the low cost of grain growing abroad. The year-by-year decline in farmers' grain-growing income caused by multiple factors will inevitably force more farmers to give up grain growing and choose other trades.

Since ancient times, China has had the iron law that “without agriculture, there is no stability.” Imported grain prices are lower than domestic ones, but this low price is based on the market behavior of sufficient domestic grain supply and is not sustainable. Once domestic grain production falls sharply and the initiative in pricing shifts, imported grain prices are destined to rise sharply and may even lead to price monopoly. If we do not take corresponding measures to maintain farmers' increased production and income, and farmers' transfer out of agriculture exceeds the limit, this will bring about food security problems.

Faced with the current comprehensive decline in grain prices and the situation where imported grain prices are lower than domestic ones, governments at all levels across the country should act quickly, further accelerate land circulation and improve supporting policies and measures, promote the transfer from the household contract responsibility system to large-scale agricultural planting, and transfer land to family farms and large grain growers. This will not only help farmers increase income and reduce the cost of grain growing, but also realize the professionalization of grain-growing farmers. This is a feasible path that suits national conditions and has Chinese characteristics, and it helps ensure China's food security.