NDRC official: Adhere to the principle of market pricing to resolve 400 billion jin of corn

Statistics show that corn inventories held by various enterprises nationwide currently exceed 400 billion jin, far above a reasonable level, with the characteristics of a stage of supply exceeding demand being obvious. In some main producing areas, an awkward situation has emerged in which the crop cannot be purchased, stored, or sold, and there is even the “trouble after a bumper harvest” that fiscal subsidies cannot cover. Faced with this predicament, the pace of reform of state subsidies toward “separating price from subsidy” is accelerating, and the positive role of the deep processing industry in grain conversion will be further amplified.

Hu Hengyang, an inspector of the Department of Rural Economy of the National Development and Reform Commission, explained the basic thinking behind the current grain price reform at yesterday's “Eighth International Corn Industry Conference”: on the basis of drawing on past experience in the price formation mechanism and market regulation mechanism for agricultural products, and on the premise of protecting farmers' interests, the role of the market mechanism should be better brought into play, domestic and international markets should be coordinated and utilized, and pilot trials of a “target price” policy that separates the price form of agricultural products from government subsidies should be carried out. When prices are low, farmers are subsidized; when prices are high, consumers are subsidized. International trade and outbound investment policies should be adjusted accordingly, the reserve purchase and release regulation mechanism should be improved, and the approach of differentiating by variety and regulating by category should be adhered to, as should the approach of clarifying responsibilities and assigning responsibility by level, and the approach of piloting first and promoting later. A price and market regulation mechanism for agricultural products that suits China's national conditions and the development requirements of the current stage should be gradually established and improved.

Hu Hengyang stressed that national food security should be expanded to an international perspective, and that the focus of future policy should be to do a good job in both internal and external resources. The import and export strategy for agricultural products should be actively adjusted, the import scale of major agricultural products should be reasonably determined, and a diversified import strategy should be actively implemented. In terms of opening markets and access, it is necessary to be more pragmatic and flexible, strengthen the combination of imports and reserves, strengthen the inspection of bulk agricultural product imports, and improve the import reporting system.

At the same time, domestically, signals of domestic demand should be released to the international market through various means, research and forecasting on foreign market and price drivers should be strengthened, and the foresight and stability of imports should be improved. The management of agricultural product imports should be improved, as should the trade management system, so as to better grasp the supervision of grain exports, and simple agreements should be signed with agricultural product exporting countries.

Wang Xiaohui, deputy director of the China National Grain and Oils Information Center, said at the meeting that the principle of market pricing must be adhered to unswervingly. Let the market play a decisive role in the process of resource allocation. But it must also be gradual, continuously advancing the share of marketization. The interest demands of all parties must be comprehensively considered. Differentiated implementation policies must be adopted to reduce farmers' excessive reliance on grain market prices for income growth. The current predicament faced by the corn market is the result of the combined effect of the economic situation and the grain situation, and is the squeezing effect of slowing economic growth and rapid output growth. The increase in inventories is a result of growth in upstream production and slow downstream consumption.

Wang Xiaohui believes that in the next five years, grain will be in a new plateau period, and supply exceeding demand may become long-term, while corn prices will also face long-term downward pressure. China should bring into play the positive role of the deep processing industry in grain conversion and guide and expand consumption through various means.