Trends in the 2017 Layout Adjustments for Rice, Corn and Soybeans

For grain crops, rice and wheat production must be kept stable to ensure absolute food security, with priority given to developing high-quality rice and strong-gluten and weak-gluten wheat. Trends in the 2017 layout adjustments for rice, corn and soybeans.

1. Wheat and rice

First, the planting plan: for grain crops, rice and wheat production must be kept stable to ensure absolute food security, with priority given to developing high-quality rice and strong-gluten and weak-gluten wheat.

Direction of agricultural product price reform: uphold and improve the minimum purchase price policy for paddy rice and wheat, reasonably adjust the minimum purchase price level, and form a reasonable price ratio relationship.

This means that choosing to continue planting rice and wheat this year is still supported by the minimum purchase price; everyone can rest assured on this point, but there will be great uncertainty in paddy rice policy this year.

The No. 1 Central Document mentioned reasonably adjusting the minimum purchase price level and forming a reasonable price ratio relationship, and this point is crucial. The 2017 minimum purchase price for wheat has already been announced: third-grade wheat at 1.18 yuan/jin, unchanged from the 2016 level. This means that this year's paddy rice purchase price may see slight adjustments.

The state proposed continuing to implement and improve the minimum purchase price policy for paddy rice during the “13th Five-Year Plan” period, and, on the premise of continuing the minimum purchase price policy, reasonably adjusting the minimum purchase price level. In 2016, the early indica rice market had already taken the step of adjusting the minimum purchase price: the minimum purchase price for national standard third-grade early indica rice was 2660 yuan/ton, down 40 yuan/ton from the previous year, a decline of 1.48%.

The Central Economic Work Conference held not long ago has already made a clear determination: in 2017, China will continue to implement the minimum purchase price policy for paddy rice, but must enhance policy flexibility and change the rigid expectation that prices only rise and never fall. At the same time, it is understood that since the second half of 2016, relevant state departments and experts have conducted multiple surveys on the cost and returns of japonica rice, studying the room for lowering the market-support purchase price for japonica rice, so as to avoid the phenomenon of corn being switched to japonica rice on a large scale.

2. Corn

First, the planting plan: continue reducing grain corn in non-advantageous areas.

Direction of agricultural product price reform: firmly advance the reform of market-based pricing and the separation of price from subsidies for corn, improve the producer subsidy system, encourage diverse market entities to enter the market for purchases, and prevent difficulties in selling grain. Take comprehensive measures to promote conversion through livestock feeding and processing, expand consumer demand through multiple channels, and accelerate the digestion of corn and other inventories.

Regarding corn planting, the No. 1 Central Document has only one sentence, but the direction is clear; summed up, it is: reduce!

Han Jun, deputy director of the Office of the Central Rural Work Leading Group, said that in 2017, advancing the reform of the corn purchase and storage system will still be a tough battle. According to the Ministry of Agriculture's plan, in 2016 the national corn planting area was reduced by a total of 30 million mu, and in 2017, on this basis, another 10 million mu must be reduced. Why reduce the scale of corn planting by such a large margin?

Over the past twelve years, China's corn planting area increased by 210 million mu. From the perspective of supply and demand, the corn supply-demand relationship is unbalanced. Taking 2015 as an example, China's corn output reached a record 225 million tons, while domestic corn consumption that year was only about 175 million tons. The domestic supply-demand relationship shifted from insufficient production to meet demand to production exceeding demand, and the phased oversupply pattern intensified. The person in charge of the Ministry of Agriculture said that this year, agricultural structural adjustment remains a main line of agricultural and rural work.

Regarding the direction of corn price reform, we will persist in advancing and improving corn producer subsidies, but will introduce proactive response policies to prevent difficulties in selling grain. In addition, taking comprehensive measures to digest corn inventories also means that specific policies targeting deep processing will appear this year; the deep-processing sector may as well sit back and collect the policy dividends.

Han Jun, deputy director of the Office of the Central Rural Work Leading Group: If in the past grain was all purchased by the government, now that temporary purchase and storage is canceled and diverse market entities enter the market, difficulties in selling grain may appear in some areas. But our reform must strive to reduce the risks of reform. We should encourage this. The most important thing here is that grain production must not slide, the momentum of farmers' continued income growth must not reverse, and rural society must continue to remain stable and harmonious. These three bottom lines must be held.

3. Soybeans

First, the planting plan: increase high-quality food soybeans, tubers, miscellaneous grains and miscellaneous beans, etc.

Direction of agricultural product price reform: adjust the soybean target price policy.

Improve the agricultural subsidy system. Further improve the targeting and precision of agricultural subsidy policies, focusing on subsidies for main producing areas, appropriately scaled operations, farmers' incomes, and green ecology.

Regarding soybean planting, summed up in one word, it is: increase. The China Agricultural Outlook Report (2016-2025) pointed out that in the next 10 years, the temporary storage policy for corn is expected to be gradually adjusted in place, the target price subsidy policy for soybeans in the Northeast producing area will be further improved, and the “grain-soybean rotation” subsidy is expected to be piloted. The role of guiding a reasonable recovery in soybean planting area will gradually come into play. In addition, the steady development of the domestic soybean deep-processing industry will further increase soybean demand, and China's soybean planting area is expected to recover and grow. Driven by factors such as optimized field management and advances in breeding technology, soybean yields per unit area will increase somewhat. Area increases and higher yields per unit area will drive a steady increase in soybean output.

Regarding the direction of soybean price reform, the target price subsidy policy will still be implemented, but the targeting and precision of agricultural subsidy policies will be further improved.