China's grain sees simultaneous increases in three quantities, experts say overall supply exceeds demand
Currently China's grain is experiencing the phenomenon of simultaneous increases in three quantities - rising output, rising imports and rising inventories - which has aroused widespread public concern. Experts believe that to solve the problem of high grain inventories, one cannot treat only the symptom and not the root cause. If only consideration is given to digesting the high
Currently China's grain is experiencing the phenomenon of simultaneous increases in three quantities“rising output, rising imports and rising inventories”, which has aroused widespread public concern. Experts believe that to solve the problem of high grain inventories, one cannot treat only the symptom and not the root cause. If only consideration is given to digesting the high inventory of a certain grain variety without considering how to resolve the mechanism by which high inventories are formed, the grain problem will recur again and again
At the “2015 China Grain and Oil Wealth Forum” held in Beijing on December 5, some experts judged that China's grain production is now facing another situation of overall supply exceeding demand since reform and opening up, causing grain inventories to increase and supply pressure to grow, and that market mechanisms must be used to resolve the current predicament.
Currently, China's high grain inventories and growing supply pressure have been formed by the combined effect of multiple factors: first, domestic grain has had consecutive years of bumper harvests; second, the inversion of domestic and international grain prices has led to large-scale grain imports, with grain imports this year expected to reach 125 million tons, severely impacting the domestic market; third, the domestic and international macroeconomic downturn, sluggish consumption, blocked exports and low effective demand for grain.
Against this background, the State Council recently held an executive meeting and proposed a series of strategic measures to stabilize grain production, increase farmers' incomes and ensure national food security. Liu Jian, a counsellor of the State Council, believes that grain is a special commodity that has both economic attributes and the nature of a quasi-public product. As a quasi-public product, the state should increase its support for the grain industry.
Relevant departments have also tried to solve problems such as insufficient warehouse capacity and difficulties for farmers in selling grain through measures such as building storage facilities and inter-provincial warehouse transfers. However, against the background of consecutive years of bumper harvests in domestic grain and under conditions of market globalization, solving the problems of high inventories and heavy supply pressure remains a major issue currently facing China's grain sector. Controlling grain imports is not an effective method, and forcing a balance in domestic supply through export subsidies is very difficult. Some experts believe that adjusting the planting structure is currently a relatively good way to solve high grain inventories. While stabilizing the planting area of rice, wheat and corn, fallow farming should be implemented in the groundwater funnel area of Hebei and areas in the south with excessive heavy metals, fallow and crop rotation should be promoted in the “sickle bend” region, the pilot scope of “grain-to-feed” should be expanded, and the corn planting area should be reduced.
Cheng Guoqiang, secretary-general of the Academic Committee of the Development Research Center of the State Council, believes that to solve high inventories, one cannot treat only the symptom and not the root cause. If only the approach of digesting the high inventory of a certain grain variety is considered without considering how to resolve the mechanism by which high inventories are formed, the grain problem will recur again and again. China's current grain price policy must both ensure supply and promote grain production, and also ensure returns and mobilize farmers' enthusiasm for growing grain. When grain supply is relatively tight, this kind of policy can mobilize farmers' enthusiasm for growing grain, but when grain supply is relatively abundant, contradictions arise.
This year is the final year of the “12th Five-Year Plan” and also a year in which the state launched important reforms of grain policy. In fact, since last year the state began reforming the existing grain price policy. Last year it began piloting the target price reform for soybeans and cotton. This year it no longer raised the minimum purchase prices for wheat and rice, adjusted the temporary storage purchase policy for rapeseed, and lowered the temporary storage purchase price for corn. However, because grain price support policies have been implemented continuously for many years, the market has already formed path dependence on the existing grain price support policy. This year's lowering of the corn temporary storage purchase price triggered a strong reaction in the grain market and caused brief fluctuations in grain prices. Cheng Guoqiang believes that if the state implements grain price policy reform without corresponding supporting measures, it may cause grain production capacity to shift to varieties that have not been adjusted, resulting in surpluses of other grain varieties.
Therefore, the current grain price policy reform still needs to be further deepened, with targeted measures and the separation of price and subsidy, adopting different policies for different targets. To promote the reform of grain price support policies, supporting policies must be established and a benefit compensation mechanism for grain price reform must be set up so that the interests of grain-growing farmers are not harmed in the reform. It is necessary to innovate the grain regulation mechanism and system, and to promote the shift of policy from the current “production increase orientation” dominated by direct intervention through price support to a basic balance of supply and demand based on price separation and market mechanisms, forming a new regulation system based on policy subsidies and combining tools such as expectation guidance, risk management, reserve regulation and trade supplements.
Liu Jian believes that in grain production and circulation, the accuracy of grain production and circulation information forecasting must be improved, and a national food security safeguard mechanism must be established, mobilizing farmers' enthusiasm for growing grain by establishing a relatively stable price formation mechanism, and mobilizing the enthusiasm of governments in major producing areas for grain production by establishing a benefit compensation mechanism for major grain-producing areas. (Economic Daily reporter Liu Hui)
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“Sickle Bend” region
The “sickle bend” region is a regional division first proposed by the Ministry of Agriculture. On the one hand, it draws on a professional term in steel processing, and on the other hand, it is also a vivid description of the region.
The “sickle bend” region includes the cold and cool region of Northeast China, the farming-pastoral ecotone of the north, the wind-sand arid region of the northwest, the area along the Taihang Mountains, and the rocky desertification area of the southwest. On the topographic map it presents a sickle-bend-shaped distribution from the northeast to north China—southwest—northwest. Its perennial corn planting area accounts for about one third of the national total, and it is also a key area for corn structure adjustment.
At the “2015 China Grain and Oil Wealth Forum” held in Beijing on December 5, some experts judged that China's grain production is now facing another situation of overall supply exceeding demand since reform and opening up, causing grain inventories to increase and supply pressure to grow, and that market mechanisms must be used to resolve the current predicament.
Currently, China's high grain inventories and growing supply pressure have been formed by the combined effect of multiple factors: first, domestic grain has had consecutive years of bumper harvests; second, the inversion of domestic and international grain prices has led to large-scale grain imports, with grain imports this year expected to reach 125 million tons, severely impacting the domestic market; third, the domestic and international macroeconomic downturn, sluggish consumption, blocked exports and low effective demand for grain.
Against this background, the State Council recently held an executive meeting and proposed a series of strategic measures to stabilize grain production, increase farmers' incomes and ensure national food security. Liu Jian, a counsellor of the State Council, believes that grain is a special commodity that has both economic attributes and the nature of a quasi-public product. As a quasi-public product, the state should increase its support for the grain industry.
Relevant departments have also tried to solve problems such as insufficient warehouse capacity and difficulties for farmers in selling grain through measures such as building storage facilities and inter-provincial warehouse transfers. However, against the background of consecutive years of bumper harvests in domestic grain and under conditions of market globalization, solving the problems of high inventories and heavy supply pressure remains a major issue currently facing China's grain sector. Controlling grain imports is not an effective method, and forcing a balance in domestic supply through export subsidies is very difficult. Some experts believe that adjusting the planting structure is currently a relatively good way to solve high grain inventories. While stabilizing the planting area of rice, wheat and corn, fallow farming should be implemented in the groundwater funnel area of Hebei and areas in the south with excessive heavy metals, fallow and crop rotation should be promoted in the “sickle bend” region, the pilot scope of “grain-to-feed” should be expanded, and the corn planting area should be reduced.
Cheng Guoqiang, secretary-general of the Academic Committee of the Development Research Center of the State Council, believes that to solve high inventories, one cannot treat only the symptom and not the root cause. If only the approach of digesting the high inventory of a certain grain variety is considered without considering how to resolve the mechanism by which high inventories are formed, the grain problem will recur again and again. China's current grain price policy must both ensure supply and promote grain production, and also ensure returns and mobilize farmers' enthusiasm for growing grain. When grain supply is relatively tight, this kind of policy can mobilize farmers' enthusiasm for growing grain, but when grain supply is relatively abundant, contradictions arise.
This year is the final year of the “12th Five-Year Plan” and also a year in which the state launched important reforms of grain policy. In fact, since last year the state began reforming the existing grain price policy. Last year it began piloting the target price reform for soybeans and cotton. This year it no longer raised the minimum purchase prices for wheat and rice, adjusted the temporary storage purchase policy for rapeseed, and lowered the temporary storage purchase price for corn. However, because grain price support policies have been implemented continuously for many years, the market has already formed path dependence on the existing grain price support policy. This year's lowering of the corn temporary storage purchase price triggered a strong reaction in the grain market and caused brief fluctuations in grain prices. Cheng Guoqiang believes that if the state implements grain price policy reform without corresponding supporting measures, it may cause grain production capacity to shift to varieties that have not been adjusted, resulting in surpluses of other grain varieties.
Therefore, the current grain price policy reform still needs to be further deepened, with targeted measures and the separation of price and subsidy, adopting different policies for different targets. To promote the reform of grain price support policies, supporting policies must be established and a benefit compensation mechanism for grain price reform must be set up so that the interests of grain-growing farmers are not harmed in the reform. It is necessary to innovate the grain regulation mechanism and system, and to promote the shift of policy from the current “production increase orientation” dominated by direct intervention through price support to a basic balance of supply and demand based on price separation and market mechanisms, forming a new regulation system based on policy subsidies and combining tools such as expectation guidance, risk management, reserve regulation and trade supplements.
Liu Jian believes that in grain production and circulation, the accuracy of grain production and circulation information forecasting must be improved, and a national food security safeguard mechanism must be established, mobilizing farmers' enthusiasm for growing grain by establishing a relatively stable price formation mechanism, and mobilizing the enthusiasm of governments in major producing areas for grain production by establishing a benefit compensation mechanism for major grain-producing areas. (Economic Daily reporter Liu Hui)
Link:
“Sickle Bend” region
The “sickle bend” region is a regional division first proposed by the Ministry of Agriculture. On the one hand, it draws on a professional term in steel processing, and on the other hand, it is also a vivid description of the region.
The “sickle bend” region includes the cold and cool region of Northeast China, the farming-pastoral ecotone of the north, the wind-sand arid region of the northwest, the area along the Taihang Mountains, and the rocky desertification area of the southwest. On the topographic map it presents a sickle-bend-shaped distribution from the northeast to north China—southwest—northwest. Its perennial corn planting area accounts for about one third of the national total, and it is also a key area for corn structure adjustment.