Grain can't fetch a good price, where is the way out?
In Baijian Village, Jixian County, Tianjin, which has a population of more than 1,000, villager Liu Yong is figuring out whether to raise some pigs or do something else next year. The fall in grain prices is undoubtedly a huge blow to Liu Yong. But what he does not understand is why grain prices fell so sharply.
However, he has heard that the village may soon push forward a “grain-free zone”, and that in the future land not planted with grain will be given a subsidy of 2,000 yuan per mu. As for exactly how it will be implemented, Liu Yong cannot say. He hopes to earn more money to supplement the household income.
The confusion of farmers
This year should be the most difficult year for Liu Yong in recent years.
Looking at the corn harvested and piled up in front of and behind the house, Liu Yong was not as excited as in previous years. At this time last year, corn was 1.2 yuan per jin; this year it is only a bit more than 0.8 yuan per jin, and it is still not easy to sell. Although it sells cheaply, using it to feed sheep or pigs costs too much.
“Grain is so cheap. Adding in labor, seeds and chemical fertilizer, you basically do not earn much from one mu of land. But even if you cannot earn money, you still have to plant it. It would not be right to leave good land unplanted!” Compared with people of the same age, he, who has farmed at home since dropping out of middle school, has a deeper affection for the land than his peers. People of this age in the village have either tested out and left, or are doing something outside; there are not many left who simply farm. If relatives or friends had idle land and no time or energy to plant it, he planted grain on it.
“In previous years I did not rely solely on the little income from the land, but this year there is no work outside, and grain cannot fetch a good price.”
However, Liu Yong is not pessimistic. He believes the government will always find a way. A while ago, they were already counting how many mu of land each household has; perhaps some new policy will come down. Liu Yong is full of expectation.
“Why is grain so cheap?”
What has always puzzled Liu Yong is why good grain keeps getting cheaper. Is it because there is too much grain? Does the country not need that much grain, which is why this is happening? Will next year be better?
Foreign goods entering the market and domestic goods entering warehouses are especially obvious in corn. According to UN Food and Agriculture Organization data, the price of corn exported by the United States reached 324 US dollars per ton in November 2012, but by September 2014 it had fallen to 164 US dollars, a drop of nearly 50%. China's corn prices, however, remained relatively stable under the market-support policy. To protect farmers' interests, the corn harvested by domestic farmers was purchased into state-owned grain depots at a temporary storage price higher than the market price. The state paid a huge price difference and storage costs for this, while imported low-priced corn became a raw material entering the circulation and processing sector.
However, why are China's agricultural product prices higher than similar foreign products? Ke Bingsheng, president of China Agricultural University, believes that one important reason domestic agricultural products are not competitive is the high price of labor. International market agricultural product prices can rise and fall because their degree of mechanization is relatively high and labor costs account for a relatively small share. He gave examples, saying, “The harvesting cost of Guangxi sugarcane has already accounted for one third of the sugar crop price, and for Xinjiang cotton the picking cost alone accounts for about 40% of the cotton price. The above are all advantageous production areas for these agricultural products, and all have the problem of excessively high labor costs.” Data show that real wages of labor have grown at an average annual rate of about 8% in recent years.
Low agricultural labor productivity is another reason. At present, the per-unit yield of China's main crops is close to or even exceeds the world's advanced level, but agricultural labor productivity is far below the world's advanced level, appearing “long on one leg and short on the other.” A report by the China Modernization Research Center of the Chinese Academy of Sciences shows that China's rice and wheat per-unit yields have reached the level of developed countries, and corn per-unit yield has reached the level of moderately developed countries, but China's agricultural labor productivity is only 47% of the world average. In recent years, it is precisely in varieties with low labor productivity such as cotton that China's imports have increased greatly.
For many years, although the state has taken many measures, agriculture has never escaped the dilemma of rising costs and declining benefits. At present, China's average import tariff level on agricultural products is only 15.2%, one quarter of the world average, making it one of the countries with the highest degree of agricultural openness. As China advances the building of free trade areas with New Zealand, Australia and others, the degree of agricultural openness will increase further. In the future, China will face not only competition from developed countries with abundant agricultural resources and a high level of agricultural modernization, but also competition from developing countries with obvious labor advantages.
China applies quota management to imported grain: wheat 9.636 million tons, corn 7.2 million tons, and rice 5.32 million tons. The import tariff within the quota is only 1%, while outside the quota it is 65%. At present, grain imports are still within the tariff quota, but China is completely open to imports after the out-of-quota tariff is levied. If the tariff quota is broken through and, after levying the high 65% tariff, domestic and foreign agricultural product prices remain like this, then it will bring consequences such as reduced enthusiasm among farmers for growing grain and the withering of the agricultural industry. According to expert estimates, based on current production costs and price trends, in another 5 to 7 years, imports of the three major grains at the out-of-quota tariff rate will become a reality.
⟦NL> Exploring a new way out
Because grain prices have fallen and the cost of farming keeps rising, although there are government subsidies, most farmers are no longer willing to plant wheat. Of the more than 10,000 mu of land in Baijian Town, Jixian County, Tianjin, nearly 60% was left uncultivated and idle after the autumn harvest. For the land, not planting is an enormous waste, but for farmers, planting is also an enormous waste.
“Going on like this is definitely not a solution. We are now promoting the "one reduction, three increases" policy. The reduction is to reduce and eventually eliminate grain crops; the increases are to increase nursery stock, flowers and vegetables, and to promote grain-free zones.” said Shao Huanwei, a staff member of the Baijian Town government. He also said: “In order to promote the “one reduction, three increases” policy, the government also provides many subsidy policies. Facility agriculture involves the construction of facility sheds, which must be contiguous and over 100 mu. Each mu of land is subsidized with 2,000 yuan, subsidized for four years and paid out over four years. But in order to advance the project in an orderly way, farmers will be given training in infrastructure and in new varieties of nursery stock.”
According to Ou Xuesheng, secretary of the Baijian Village Party branch, the soil in Baijian Village was originally especially suitable for growing a new type of cauliflower, but because the agricultural chemical fertilizer content exceeded the standard, they had to give up such a project and switch to growing nursery stock and flowers.
It is understood that at present local farming income accounts for only a very small part of farmers' economic income. Although there are subsidies every year, it is still difficult to raise farmers' enthusiasm for growing grain, so they are now developing high-quality and efficient agriculture. Bangjun Town next to Baijian Town has already formed one of the largest nursery stock and flower trading markets in North China, while Baijian Town has not formed a scale. This is also a major reason they want to develop nursery stock. As for the sales issue, they do not seem very worried.
However, they also said that the “grain-free zone” plan may not necessarily be the only path suitable for Baijian Town's development, nor is it certain to produce immediate results. It is currently only at the exploratory stage.