The value of grain brokers deserves respect

Grain brokers, commonly known as "grain peddlers," are a group that goes from village to village buying and selling grain; of course, calling them brokers makes them sound more high-end and fashionable. Grain brokers have been openly operating with a legal identity for only about ten years. Before China's grain circulation market was fully liberalized, that is, before 2004, non-state entities were not allowed to buy grain from farmers, and farmers' surplus grain could only be sold to the state. At that time, there were also some grain peddlers who secretly bought grain from farmers, but they had no legal identity. After 2004, the identity of grain peddlers became legalized, and they could openly go door to door to buy grain from farmers.

There is currently no clear definition of grain brokers. In the author's understanding, grain brokers themselves do not truly store or process grain; they merely help grain storage and processing enterprises buy grain from farmers, earning a hard-earned fee or errand fee in the process, and they cannot earn the price difference. Why is that? Because grain brokers generally have no storage facilities and will not buy grain, put it in a warehouse, wait for a suitable price, and then resell it to earn the price difference. In fact, if a grain broker has its own supporting storage facilities, then it cannot be called a broker either, but should instead be called a grain trader. Grain brokers generally buy grain from farmers' homes and sell it directly to state-owned grain depots or private trading and processing enterprises on the same day or after two or three days; grain enterprises have in effect outsourced grain procurement to them.

So here comes the question: why are farmers willing to sell grain to grain brokers rather than directly to grain enterprises? And why do grain enterprises not directly buy grain from farmers themselves? For farmers, grain brokers buying at their door saves worry, effort, and trouble; for grain enterprises, not having to face a huge number of "small scattered sellers" directly can also be said to save worry, effort, and trouble. This is the value of grain brokers: they do the dirty work and the hard work, and of course they are not Living Lei Fengs; they earn a meager intermediary fee. This fee is paid jointly by farmers and grain enterprises. If grain brokers were forcibly banned and prohibited from providing this service, letting farmers deliver grain directly to enterprises and letting enterprises face farming households directly, then the increased expenses incurred by farming households and enterprises would be significantly greater than the fees they pay to grain brokers. In other words, the existence of grain brokers improves the efficiency of grain circulation and saves social wealth. They do not live by earning price differences; their activity itself creates wealth for society.

In recent years, much of the grain storage of state-owned grain enterprises and the government's policy-based grain purchases have been completed through the intermediary role of grain brokers. Some people believe that grain brokers "eat" from farmers on one side and "eat" from the government on the other, and that part of the benefits of the policy has been taken away by them; this is simply a failure to understand the above reasoning. Reports are often seen of grain brokers suppressing prices to buy grain from farmers and then selling it at high prices to state-owned grain depots, saying that farmers have suffered losses and the government has suffered losses. In fact, rational readers should analyze it for themselves: if farmers really felt they were losing out, why would they not sell directly to the grain depot? If the state-owned grain depot felt the price was too high, why would it not go directly to farmers to buy low-priced grain? In modern society, news reports are hard to distinguish as true or false, and without one's own independent thinking and rational analysis, it is easy to be led by public opinion and even used as a gun by others. The fake news about "zombie meat" some time ago caused such a big reaction, and many people therefore developed an inexplicable fear of imported meat; this is a typical case of being duped. In fact, anyone with a little common sense in economics knows that no one in this world would deliberately store meat for decades to sell it, because meat is not fine wine that becomes more fragrant and valuable with age; on the contrary, the longer it is kept, the less valuable it becomes.

Let us return to the topic of grain brokers. The reason the media and society do not rate them highly is the long-standing neglect of the circulation link, believing that the circulation link only "exploits" producers and consumers, creates no value, and is a parasitic group. Based on this mistaken way of thinking, we always want to bypass the intermediate links and let consumers face producers directly, believing this can lower commodity prices. This is actually a completely wrong idea. For example, when we go to the vegetable market to buy vegetables, a considerable part of the vegetable price is actually paid to the vegetable vendors, and the proportion received by producers is very small; the cheaper the vegetables, the lower this proportion, and some are even less than one-tenth. Then, if farmers directly went into the city to sell vegetables, could that lower vegetable prices while raising farmers' incomes? Actually it would not; on the contrary, vegetable prices would rise and farmers' incomes would fall. Because selling vegetables is also a field of knowledge, from how to choose a selling location, how to choose and match vegetable varieties, how to set prices, to how to determine purchase volume and inventory, and so on, all require accumulated knowledge and experience; farmers who moonlight by selling vegetables in the city obviously do not have this knowledge, which means the efficiency of farmers selling vegetables directly would be significantly lower than that of vegetable vendors, and low efficiency means high costs, so their asking price would only be higher than that of vegetable vendors rather than lower, but the income that ends up in their own pockets would not increase because of it. In "The Charcoal Seller" by Bai Juyi, he describes the pitiable image of an old charcoal seller who "worries that the charcoal is cheap and wishes for cold weather"; this old charcoal seller is a part-timer who burns charcoal himself and transports it to the city to sell. In fact, if there were specialized "charcoal peddlers" buying charcoal at his door, the old charcoal seller would focus on burning charcoal and would not be helplessly hauling a cart of charcoal around the city in the bitter cold, relying on luck. But in ancient times, agriculture was valued and commerce was belittled, and livelihoods like those of "charcoal peddlers" were greatly suppressed, and commodity circulation was underdeveloped; this was a major loss for both producers and consumers.

In a self-sufficient economic society, production is largely for one's own consumption, so the circulation link is naturally dispensable; however, the modern economic society is a society of division of labor, and production and consumption are "disconnected": what is produced is often not what one consumes oneself, and what one consumes oneself is often not what one produces oneself. At this time, the importance of the circulation link becomes prominent. To some extent, circulation is even more important than production and can create more value. Where do economic crises under a market economy come from? Are they not caused by production and consumption failing to match well and by overproduction? If the efficiency of the circulation link were high enough, and signals from the consumption side were quickly transmitted to the production side through the circulation link, economic crises would not occur so easily. The reason Alibaba can be worth trillions of yuan is that it has greatly improved the efficiency of goods from the production side to the consumption side, and this itself creates enormous wealth. At present, China's grain circulation efficiency is still not high, and in the face of the extremely scattered current state of grain production, the value of grain brokers deserves respect.