Minimum Purchase Price Policy for Rice and Wheat to Continue
The Summary of Replies to Recommendation No. 1480 of the Third Session of the Twelfth National People's Congress (hereinafter referred to as the Summary) recently published by the Ministry of Agriculture shows that the minimum purchase price should continue to be maintained for the two staple grain varieties, rice and wheat, while for varieties such as corn, soybeans, cotton and rapeseed, emphasis should be placed on giving play to the decisive role of the market in price formation.
The Summary shows that next, the National Development and Reform Commission will, in accordance with the relevant requirements of the Third Plenary Session of the Eighteenth Central Committee on improving the price formation mechanism for agricultural products, base itself on China's national conditions and agricultural conditions, and follow the principle of “highlighting key points and providing support where it is effective” to implement differentiated support policies for different varieties. For the two staple grain varieties, rice and wheat, the minimum purchase price should continue to be maintained, but the market expectation of rigid upward price adjustments must be changed, so as to better give play to the role of the market mechanism, weaken the “income protection” function of the minimum purchase price policy, and reduce farmers' excessive dependence on rising grain market prices for income growth, while making coordinated use of both price support and subsidies to protect farmers' interests. For varieties such as corn, soybeans, cotton and rapeseed, which have high demand elasticity, long industrial chains and a high degree of linkage with domestic and international markets, emphasis should be placed on giving play to the decisive role of the market in price formation, guiding production through market price signals, regulating supply and demand, and promoting the sustainable and healthy development of the industry.
Based on the reporter's analysis of continuous research on the domestic agricultural product market in recent years, with the support of the government's minimum purchase price policy for agricultural products over many years, domestic agricultural product output has remained stable and market supply has remained abundant, but this has also caused an imbalance in the crop planting structure and market supply structure, and has distorted the market prices of some agricultural products. In particular, the rapid growth in imports of some agricultural products has severely impacted related domestic industries. For example, the huge quantities of imported sugar, cotton, soybeans and other products have already caused serious damage to related domestic industries, which is not conducive to ensuring the security of China's agricultural product supply. In addition, excessive stockpiling has also resulted in extremely large inventories of some agricultural products, placing a heavy burden on government finances. For example, the current temporary reserve inventories of corn, rice, rapeseed oil and cotton in China have seriously exceeded normal inventory levels, hindering the normal circulation of the market and preventing the market mechanism from functioning.
Some agricultural product market experts said that the Summary holds that the minimum purchase price should continue to be maintained for the two main staple grain varieties, rice and wheat, but the market expectation of rigid upward price adjustments must be changed, and that for varieties such as corn, soybeans, cotton and rapeseed, which have high demand elasticity, long industrial chains and a high degree of linkage with domestic and international markets, emphasis should be placed on giving play to the decisive role of the market in price formation. This will change the previous odd phenomenon of a one-size-fits-all policy in the agricultural product market. In the future, differentiated and effectively implemented agricultural product policies will be very conducive to the stable development of the domestic agricultural product market, to enriching the variety of market supply, and to eliminating abnormal phenomena such as excessively large price gaps between similar domestic and foreign agricultural products.
Market participants believe that, in accordance with the spirit of the Summary, the domestic agricultural product market will undergo a process of de-policyization in the future. The minimum purchase price policy will withdraw from markets such as corn, and new changes will appear in the markets for agricultural products such as rapeseed and corn, and a new market pattern will also take shape.