Imported grain enters the market while domestic grain goes into storage, with a huge price gap at home and abroad
This year China's summer grain achieved a “twelfth consecutive bumper harvest.” Last year, China's grain output remained stable above 1.2 trillion jin for two consecutive years. At the same time, grain imports exceeded the 100 million ton mark for the first time. In the first seven months of this year, 72.568 million tons of grain were imported, up 22.4% year on year. This has left many people puzzled: why, when grain output has increased year after year, do imports keep climbing?
China's grain sector shows a phenomenon of “simultaneous growth in three volumes”: output, inventory and imports. Why does this happen? Is there too much grain or too little? How can the adverse effects of the problem be resolved? A reporter interviewed a relevant official of the Ministry of Agriculture and related experts on this matter.
Variety adjustment and the huge price gap at home and abroad lead to increased imports
A relevant official of the Ministry of Agriculture said that variety adjustment and lower international grain prices are the main factors behind the climbing import volume. In recent years, the bulk of China's imports has been soybeans, which are in short supply domestically, mainly to meet the growing demand for edible vegetable oil and protein feed. Last year, soybean imports reached 71.4 million tons, up 12.7% year on year. At the same time, China also imported some cereal varieties, with net imports of more than 18.7 million tons, up 38% year on year, mainly barley and sorghum, used for brewing and feed.
“The increase in imports does not mean we do not have enough grain to eat; it is mainly caused by the huge price gap between domestic and international grain.” Ye Xingqing, director of the Rural Economy Research Department of the Development Research Center of the State Council, explained that since 2004, China has implemented the minimum purchase price and temporary storage policies, thereby raising farmers' enthusiasm for growing grain and stabilizing grain production. As purchase prices gradually rose, domestic grain market prices rose accordingly. But in recent years international grain market prices have turned downward, and the inversion of domestic and international agricultural product prices has become increasingly obvious. Since 2012, domestic grain prices have gradually risen above the international market.
At present, domestic prices of bulk agricultural products are comprehensively higher than those on the international market. By the first half of this year, the prices of staple grains such as rice, wheat and corn all exceeded international market levels by 50%. The duty-paid import price of bulk agricultural products such as grain, cotton, oil and sugar was generally 1000 yuan per ton lower than domestic prices, leading to continuous increases in imports of grain, cotton, oil and sugar, and giving rise to the phenomena of “importing while stockpiling” and “imported goods entering the market while domestic goods go into storage.”
“Simultaneous growth in three volumes” reflects the weak competitiveness of China's agriculture
“The ‘simultaneous growth in three volumes’ phenomenon is a new situation emerging under the new normal. Its emergence has its inevitability, and some varieties in domestic shortage do indeed need to be imported, but the fundamental reason is still that international competition is becoming increasingly fierce and China's agricultural competitiveness is weak.” A relevant official of the Ministry of Agriculture said that China's tariff level on agricultural products is only 1/4 of the world average, making it one of the countries with the highest degree of agricultural openness in the world. As opening up continues to deepen, especially with the construction and development of free trade areas between China and ASEAN, New Zealand, Australia and others, the domestic market and international market will further integrate, and the degree of agricultural openness will rise further.
“In the future we will face not only competition from developed countries with abundant agricultural resources and a very high level of agricultural modernization, but also competition from developing countries with obvious labor advantages. Meanwhile, the production cost of domestic agricultural products is still on an upward track, with land rent, labor costs and machinery operation fees continuously rising, and agricultural products such as grain lacking a price advantage.” the official said.
Li Guoxiang, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, said that falling international agricultural product prices and rising import volumes have increased the pressure on domestic grain inventories. This has dealt a huge shock to China's market, will directly narrow the room for domestic price increases, and will further expose domestic agricultural production to the double squeeze of a price “ceiling” and a cost “floor,” reducing comparative returns. If allowed to develop unchecked, farmers' enthusiasm for growing grain and national food security would be deeply affected, and it would have an adverse impact on the healthy development of China's agricultural industry, farmers' employment and farmers' income growth.
The fundamental way lies in accelerating the transformation of China's agricultural development model
“Is there a way to break the “simultaneous growth in three volumes”?
“The fundamental way is to unswervingly accelerate the transformation of the agricultural development model.” A relevant official of the Ministry of Agriculture said that the key is to achieve “three transformations” in direction, namely to push agricultural development from being mainly focused on quantity growth to placing equal emphasis on quantity, quality and efficiency; from relying mainly on input of material factors to relying on scientific and technological innovation and improving the quality of the labor force; and from extensive management dependent on resource consumption to sustainable development. The focus should be on making efforts in five areas: “expanding scale, adjusting structure, strengthening industry, sustainability, and improving quality.”
Expanding scale means cultivating new types of entities, improving the service system, and accelerating the development of appropriately scaled operations. Actively guide and support the growth and expansion of new types of operating entities such as large growers and breeders, family farms, farmer cooperatives and leading enterprises, strive to improve the agricultural socialized service system, and raise the scale efficiency of production.
Adjusting structure means orienting toward market demand, giving play to resource advantages, and accelerating the adjustment of the agricultural structure. Scientifically examine the potential of domestic agricultural resources and rationally arrange the priority order of agricultural product production. Resolutely protect cultivated land, ensure the level of self-sufficiency in staple rations, and achieve “storing grain in the land” and “storing grain in technology,” ensuring food security. Thereby, promote coordinated planning of grain, cash crops and feed, integration of planting, breeding and processing, and combination of agriculture, forestry, animal husbandry and fishery, achieving coordinated development.
Strengthening industry means improving the industrial chain, ensuring quality and safety, and accelerating the improvement of comprehensive agricultural benefits. With a view to promoting the integrated development of the primary, secondary and tertiary industries, we should vigorously advance industrialized agricultural operation, accelerate the development of deep processing of agricultural products, extend the industrial chain, and increase returns across the entire agricultural industrial chain.
Sustainability means strengthening resource protection, enhancing ecological construction, and accelerating the promotion of sustainable agricultural development. Increase protection of resources such as cultivated land and water; gradually reduce the use of chemical fertilizers and pesticides; develop ecological agriculture, green agriculture and circular agriculture, promote the resource utilization of agricultural waste such as straw, livestock and poultry manure and plastic film, and turn waste into treasure through comprehensive utilization.
Improving quality means advancing scientific and technological innovation and infrastructure construction, cultivating professional farmers, and accelerating innovation-driven agricultural development. Vigorously advance agricultural scientific and technological innovation and promote the transformation and application of agricultural scientific and technological achievements. Strengthen water conservancy construction, raise the effective irrigation rate of farmland, accelerate the transformation of medium- and low-yield fields, and continuously improve comprehensive grain and agricultural production capacity, among other things.
Li Guoxiang suggested that in response to the “simultaneous growth in three volumes,” agricultural support and protection policies should be adjusted to let the market play a greater role, minimize the distortion of the market by price support policies, and reverse the price inversion. At the same time, severely crack down on smuggling of agricultural products such as grain, better safeguard market stability and protect farmers' interests.