Beware of New Grain-Selling Difficulties Undermining Farmers' Enthusiasm

At a time when policy-based purchasing and storage still bears heavy responsibility, we must do everything possible to handle this matter well and prevent any grain-selling difficulties for farmers caused by human factors. But at the same time, there must be full anticipation and preparation for reform, for only in this way can we better protect farmers' interests in growing grain and better embrace this era of reform and innovation.

As the largest province in rice output, Hunan welcomed a bumper early rice harvest this year, the best in the past three years, yet unexpectedly, some grain farmers, after a brief joy over the bumper harvest, encountered “grain-selling difficulties”. Recently, our newspaper's reporter reported on the grain-selling difficulties encountered by farmers in major grain-producing counties such as Xinshao, Longhui, Wugang and Dongkou in Hunan.

At the end of July, four provinces in China - Anhui, Jiangxi, Hunan and Hubei - successively launched the 2015 minimum purchase price scheme for early indica rice. But as of August 11, the reporter visited multiple purchasing and storage points in Shaoyang and Chenzhou in Hunan, and found that because some procedures such as entrusted purchasing contracts and pledge deposits had not been completed, or because inspection and impurity-removal machines were not yet in place, plus the need to do some preparatory work such as online banking settlement, multiple purchasing and storage warehouses had still not launched the minimum purchase price scheme. Similar situations existed to varying degrees in Jiangxi, Anhui and other places in China. Farmers simply could not wait any longer and had no choice but to sell their grain to grain traders at low prices.

It is worth noting that this situation is not unique to this year. A careful review of media reports over the past two years reveals that “grain-selling difficulties” in some areas have frequently appeared in newspapers. Apart from special reasons such as grain quality problems, most “grain-selling difficulties” basically share similar backgrounds: high grain production costs lead to farmers' relatively high price expectations, and there is a reluctance to sell; imported rice hits the domestic market, processing enterprises suffer serious losses, market purchasing entities are insufficient, “farmers won't sell at low prices, enterprises can't buy at high prices”, and a new “grain-selling difficulty” is locked in a stalemate...... Ultimately, all these problems are resolved by launching the minimum purchase price scheme, and the minimum purchase price and temporary storage policies have become the “last straw” for solving farmers' grain-selling difficulties.

⟦NL> Maintaining farmers' enthusiasm for growing grain is of great strategic significance for safeguarding national food security, and the bottom line for maintaining farmers' enthusiasm is that their grain can be sold and a certain profit can be maintained. In recent years, farmers' grain-selling rhythm has changed significantly along with the minimum purchase price policy, because domestic and international rice prices are severely inverted, various processing enterprises are not enthusiastic about buying grain, and farmers are also unwilling to sell through market channels, generally hoping to sell more for a bit more money through the minimum purchase price scheme. Taking this Hunan survey as an example, the price difference between selling to grain traders and selling to state grain depots reached 10 yuan per 100 jin, and calculated at a yield of 800 jin per mu, that is 80 yuan, which is quite considerable profit for large-scale growers. Against the background that policy-based purchasing and storage has become the main channel for farmers to sell grain, if the minimum purchase price scheme cannot be effectively implemented in place, the blow to farmers' enthusiasm for growing grain can be imagined.

The deeper worry is that, as China's grain output has increased for many consecutive years, can this purchasing and storage method of “thousands of troops and horses crowding onto a single-plank bridge” really shoulder the heavy responsibility of being the main channel for China's grain sales? When other market entities are increasingly weak and withdrawing one after another, can this single-support guarantee method really support farmers' hopes for a bumper harvest and increased income? A careful review of “grain-selling difficulty” incidents caused by inadequate implementation of the minimum purchase price scheme in various places in recent years shows that although there are factors of slow work and low efficiency in relevant departments, it also exposes the predicament that under the new situation the minimum purchase price scheme policy is too weak to support alone and difficult to sustain.

Looking back, since 2004, the implementation of the minimum purchase price policy and the temporary storage policy has played an important role in raising farmers' income, maintaining the stability of the grain and oil market, and ensuring national food security. However, state purchasing and storage of some varieties has also caused a relatively large impact on the processing industry. The grain price formation mechanism and market price signals have been distorted, and to a certain extent the grain market has shown a “policy-oriented” trend. The minimum purchase price scheme has become the main sales channel in the market, and the minimum purchase price has become the “maximum” protective price, distorting the original intention of the policy.

In particular, international grain prices are currently low, foreign grain is imported in large quantities, and combined with domestic bumper harvests, domestic grain inventories are abundant. Under this double squeeze, the predicament is even more prominent. At the recent “High-Level Seminar on China's Food Security and Supply Guarantee” held by the Rural Economy Research Center of the Ministry of Agriculture, experts pointed out that current domestic corn and rice inventories are at the highest level in history, and the grain in the granaries is enough for the whole nation to eat for more than half a year. Such inventory reserves show that China's overall food security situation is in a relatively good period. But at the same time, the grain already in storage is difficult to digest, and in the future the domestic and international price gap may further widen. Given China's low degree of tariff protection, with “domestic grain entering storage and foreign grain entering the market”, the minimum purchase price and temporary storage policies will certainly be difficult to sustain.

Under such realistic pressure, we must view farmers' “grain-selling difficulties” more rationally. To emphasize protecting grain farmers' enthusiasm and enabling farmers to sell the grain they worked hard to grow and sell it well, without again encountering the embarrassment of “harvesting three to five dou more”, fundamentally this must be built on a sustainable, diversified, market-oriented grain purchasing and marketing system full of competition and vitality. The 2014 No. 1 Central Document proposed “continue to adhere to the principle of market pricing, explore and advance reform to decouple the agricultural product price formation mechanism from government subsidies, gradually establish a target price system for agricultural products, and when market prices are lower than target prices, subsidize producers according to the price difference, effectively guaranteeing farmers' income”. Last year, pilot target price subsidies for soybeans in Northeast China and Inner Mongolia and for cotton in Xinjiang were also launched. All this confirms that reform of the minimum purchase price policy and temporary storage policy is an inevitable move.

Of course, reform is not accomplished overnight. Right now, at a time when policy-based purchasing and storage still bears heavy responsibility, we must do everything possible to handle this matter well and solidly, innovate mechanisms, secure funds, guarantee storage capacity, launch on time, and prevent any grain-selling difficulties caused by human factors. But at the same time, there must be full anticipation and preparation for reform; we must be firm in confidence and also ensure a smooth transition. Only in this way can we better protect farmers' interests in growing grain and better embrace this era of reform and innovation.