Selling Grain May Become Difficult Again, and Early Prevention Is Key

Thanks to the incentives of the state's agricultural benefit policies and the impetus of scientific and technological progress, China's grain production has already achieved “eleven consecutive years” of increase. This year's summer grain harvest increased again after overcoming natural disasters such as rainy weather and pests and diseases.

Increased grain production and a bumper harvest are cause for celebration, but judging from the current situation, the problem of tight warehouse capacity for this year's autumn grain purchase cannot be ignored.

The weekly auctions of China's policy-related grain have been unsatisfactory. Taking rice as an example, since the resumption of temporary storage rice auctions in May 2014, transactions have been relatively light. By the end of May 2015, cumulative auction transactions had reached less than 7 million tons, averaging more than 500,000 tons per month. By the same token, by the time new middle and late rice comes onto the market at the end of September, the cumulative outbound volume of temporary storage rice is expected to be around 10 million tons. With the start of a new round of market-support purchases, the scale of temporary storage rice is likely to continue expanding. At present, market-support purchases of wheat have already begun, and the grain stock in the state treasury will continue to increase.

⟦NL> History always has astonishing similarities. When we say to guard against “difficulties in selling grain,” we are not making alarmist remarks. In 1984, China's grain production achieved a bumper harvest, and “difficulties in selling grain” appeared across the country. The reason was that the state's grain warehouses were seriously insufficient. Many farmers carried or pulled their grain and queued in front of grain stations (grain depots) for days, or even more than a week, waiting to sell grain. As a result, some farmers took drastic measures and set fire to grain still growing in the fields.

In order to solve “difficulties in selling grain,” after 1984 the state began large-scale grain warehouse construction. Subsequently, “difficulties in selling grain” were alleviated.

This year's “difficulties in selling grain” are very likely to appear in autumn. Judging from the current summer grain purchase situation, warehouse shortages have already appeared in some places. Based on trends in domestic and international markets, it is highly likely that China will activate the minimum purchase price for rice this autumn. Therefore, it is urgent to start early and make preparations for warehouse capacity.

Swiftly Build New Warehouses

The fundamental way to solve the shortage of state grain warehouses is to build new warehouses.

Since last year, the state has arranged a plan to build 100 billion jin of grain warehouse capacity and has allocated it to various places.

According to current construction technology and conditions, as long as it is actively organized and progress is accelerated, the construction task can absolutely be completed before the autumn grain purchase.

In the past, when the level of science and technology was not high, generally after a warehouse was built, it needed to pass “June,” that is, it had to wait until the warehouse was dry before it could be used. Due to advances in science and technology, newly built warehouses can now be put into use immediately after construction is completed.

Because grain output and grain stocks differ from place to place, the state's plan to build 100 billion jin of new grain warehouse capacity cannot cover all places. In places where grain warehouses are in short supply, local governments should proceed from the overall situation and allocate funds to build a batch of warehouses.

For newly built warehouses, governments at all levels and grain administrative departments should strengthen supervision. Grain warehouses concern food security, and construction work must not be careless in the slightest. Personnel who understand technology, can manage, and have a strong sense of responsibility should be assigned to form a special team to supervise and manage the entire process from blueprint design to construction, ensuring that warehouse construction meets national standards.

Repair Old Warehouses in Time

China's grain warehouses have gone through the planned economy period and the market economy period. Construction standards differed in different periods, usage conditions varied, and warehouse conditions differ greatly.

For warehouses built during the planned economy period, as well as some warehouses built during the market economy period, problems such as roof leaks and wall cracks that appear during use should be repaired in a timely manner.

Warehouse repairs require considerable funds. A “three-point” approach can be adopted, with efforts from multiple sides to solve the problem.

Enterprises raise a little themselves. Warehouses are an important carrier for the survival and development of enterprises. Without standard, food-safe warehouses, an enterprise becomes water without a source and a tree without roots. Enterprises that need to repair warehouses should do everything possible to raise funds and repair the warehouses well.

Financial departments subsidize a little. In recent years, due to the sluggish grain market, most grain enterprises have faced operating difficulties. Enterprises that can maintain operations are already doing very well; many enterprises, despite struggling bitterly, remain on the edge of loss. For enterprises that truly have difficulties repairing grain warehouses, financial departments should allocate some funds to support them.

Collect a little from rental fees. Some places have idle warehouses that are rented out year-round. For grain warehouses used for rental, a portion of the funds can be collected in advance for warehouse repairs.

Use Social Warehouses

After China implemented market-oriented grain purchase and sales and diversified operating entities, in addition to state-owned and state-controlled grain enterprises, many grain warehouses have also been built in society.

Drawing on the experience of developed countries, social warehouses can be rented to give full play to the role of social resources. On the one hand, this greatly improves grain purchase and storage capacity and reduces state investment; on the other hand, it enables effective use of social grain warehouse resources; at the same time, it can also improve the level of grain inventory through competition.

When using social warehouses to purchase and store policy-related grain, attention should be paid to strengthening qualification certification and management. Grain administrative departments at all levels should, in accordance with the requirements of the State Administration of Grain, effectively carry out qualification certification for social warehouses for purchase and storage. Only those that meet the regulations of the State Administration of Grain can serve as warehouses for purchasing and storing policy-related grain. During the grain purchase and storage process, grain administrative departments at all levels should strengthen inspection and supervision to ensure that grain purchased and stored in social warehouses meets national standards, operates in a standardized manner, and safeguards national food security.