Grain harvests have been abundant for years, but strategic resolve must still be maintained

As China's grain harvests have been abundant for many consecutive years, major changes have taken place in the pattern of grain production and marketing, with phenomena such as high grain output, high procurement volumes and high stockpiles becoming prominent, and problems such as difficulties in operating grain enterprises and difficulties for farmers in selling grain emerging in some places. Domestic grain security is facing new tests, and there are some constraining factors. To this end, our reporter interviewed Ding Shengjun, executive director of the China Grain Economy Association.

Reporter: How do you view the current situation of China's grain security?

Ding Shengjun: China's grain production has broken the cycle of “two good years, two average years, one poor year,” attracting global attention. However, China's grain security still faces many contradictions and problems. For example, a medium- and long-term overall balance between grain supply and demand coexists with stage-specific surpluses of individual varieties; the grain support price faces a “squeeze between two boards” while there is also a need to protect the interests of grain farmers; the issue of protecting the “two enthusiasms” - those of major grain-producing areas and of farmers in those areas for growing grain - has not been fundamentally resolved; and the international competitiveness of the grain industry and grain enterprises is relatively weak.

In particular, China's grain security still faces risks at present, and the greatest risk lies in the tendency for understanding of grain's “dual foundation” status to weaken, with the thinking of “valuing industry over agriculture” and “valuing cities over villages” being widespread. Therefore, while enjoying the joy of consecutive years of abundant grain harvests, we must not be blindly optimistic; we must keep the “string” of grain security taut and firmly grasp the initiative in grain.

Reporter: At present, domestic and international grain prices are inverted, leading to high grain stockpiles in China and increasing imports year by year. Some enterprises and industry insiders even believe that “growing grain is not as good as buying grain” and “low-priced grain is not to be missed.” How do you view these phenomena?

⟦NL> Ding Shengjun: Grain is a quasi-public good and is related to people's survival. For grain production, it is necessary to calculate both the security account and the economic account. The assessment of grain security cannot simply calculate the economic account of costs and prices. No government can ever allow a failure in grain security. It is understood that South Korea and Japan, in a globalized environment, both strongly resist the temptation and pressure of low-priced grain and give special protection to their own agricultural production; they would rather produce grain at high cost than fail to ensure the interests of their own farmers and their own agriculture. At present, some enterprises and industry insiders believe that “growing grain is not as good as buying grain” and “low-priced grain is not to be missed.” When they short-sightedly see periodic low prices of foreign grain, they cannot restrain the impulse to seek small advantages and rush to expand imports of low-priced grain, planting hidden dangers for grain security.

We actively advocate daring and being good at using both markets and both types of resources, but we must comprehensively and accurately implement the new strategy for grain security and import grain moderately. The so-called moderate import not only means that the quantity imported should be appropriate, but also that the time and space should be appropriate and the varieties should be appropriate, that is, at the appropriate time for domestic market demand, import appropriate varieties and appropriate quantities of agricultural products from appropriate places, rather than considering only price single-mindedly and, disregarding the needs of the domestic market and agricultural production, buying everything cheap in large quantities. Moreover, grain prices are changeable in an instant, and domestic and international grain market prices and their price differences are highly variable. If low-priced grain can be imported this year, next year or the year after, when circumstances have changed, it may not necessarily be possible to buy grain at a low price.

Reporter: Faced with the grain “three highs” problem, some people believe that the structure of grain production should be adjusted and the area planted to grain reduced. How do you think the structure of grain production should be adjusted? How can China's strategic resolve on grain be maintained?

Ding Shengjun: Reasonably adjusting the structure of grain production according to the time and local conditions conforms to objective laws. Especially at present, in order to escape the dilemma of the “three highs” of high grain output, high stockpiles and high imports, transforming the mode of grain production and implementing grain structural adjustment are even more necessary. However, adjusting the grain structure, including adjustment of variety structure and layout structure, is in essence also about regulating the mode of agricultural development. Regulating the mode of agricultural development must respect objective economic laws; otherwise, it will repeat the detours that have been taken more than once. Past adjustments or regulations adopted a mandatory approach, leading to excessively rapid and drastic reductions in grain area and sharp declines in output. In the mid-1980s, during the adjustment of the grain structure, the area planted to grain was reduced too much, causing a “saddle-shaped” downturn in grain production, bringing losses to farmers' interests and causing fluctuations in market supply and demand. Therefore, adjusting the grain structure must give play to the decisive role of the market mechanism in allocating resources and the effective safeguarding role of the government, adopt precise governance measures, and realize the transformation from a traditional grain industry to a modern high-end grain industry.

At present, various contradictions in China's grain market are intertwined. Under complex circumstances, we should not understand and handle the grain “three highs” problem in a simplified way. We must proceed from China's basic national conditions and the macroeconomic environment, accurately grasp the agricultural situation and grain situation, and always maintain strategic resolve on grain. We must enhance confidence in development, persist in seeking novelty, progress and breakthroughs amid change, and embark on a new path of development with higher quality, better benefits and a more optimal structure.