National grain stocks have reached a historic high

Behind China's "eleven consecutive increases" in grain, agriculture and rural areas have accumulated unprecedented contradictions and problems. For example, because domestic and international grain prices are inverted, the strange phenomenon of "imports entering the market, purchases going into storage" has appeared. In some places, grain "cannot be sold, cannot be stored, cannot be purchased," and the new harvest season is under great pressure.

Since reform and opening up 36 years ago, China's agriculture has long achieved increased production, and grain output has even achieved "eleven consecutive increases." This certainly provides a solid foundation for food security, but China's peak grain consumption is far from arriving. On June 6, at the "High-end Forum on Deepening the Comprehensive Reform of Supply and Marketing Cooperatives," Ye Xingqing, director of the Rural Economy Research Department of the Development Research Center of the State Council, made this judgment.

The basis for this judgment lies in population growth, the advancement of urbanization, and especially the continued growth of per capita GDP. According to the experience of Japan, South Korea and the Taiwan region, when per capita GDP reaches 20,000 US dollars, the national dietary structure is basically set, but China's current per capita GDP is only 7,000 US dollars. Ye Xingqing said that China is still very far from this process. For a considerable period in the future, as urban and rural residents' incomes grow, the dietary structure will still change.

Although demand is growing strongly, the reality is still not optimistic.

At the forum, a relevant leader of the Office of the Central Rural Work Leading Group said that behind China's "eleven consecutive increases" in grain output, agriculture and rural areas have accumulated unprecedented contradictions and problems. For example, because domestic and international grain prices are inverted, the strange phenomenon of "imports entering the market, purchases going into storage" has appeared.

Specifically, imported grain entered the market because of its low price, and as a result domestically purchased grain became inventory because of its high price. The leader said that current national grain stocks have already reached a historic high, and in some places grain "cannot be sold, cannot be stored, cannot be purchased." The new harvest season is under great pressure.

As for the increase in imports caused by the inversion of grain prices, Ye Xingqing said that this is not a temporary phenomenon and will probably be the norm in the future. Because of the national condition of many people and little land, the cost of agricultural products, especially labor costs, as well as land costs in recent years, have all risen significantly.

The above-mentioned leader of the Central Rural Work Leading Group said that from years of practice, whenever there is a bumper grain harvest and an oversupply of agricultural products, calls to adjust the structure and transform the model become louder and actions become bigger; conversely, when problems appear in the supply of agricultural products, especially grain, there is a return to focusing on grain and prioritizing grain production. This cyclical pattern should be broken. "If we still protect grain at all costs and focus solely on output, the development model cannot be transformed."

Starting in 2004, China's comparative advantage in agriculture began to weaken. China has had an agricultural trade deficit for 11 consecutive years, exceeding 50 billion US dollars last year. Among these, rice, wheat and corn all achieved net imports. Among livestock products, pork, beef and mutton are now all trending toward net imports, and last year net imports of milk powder reached 1.05 million tons.

Under the new situation, the central government established the new food security strategy of "taking ourselves as the mainstay, basing ourselves on domestic production, ensuring production capacity, importing appropriately, and relying on scientific and technological support, ensuring basic self-sufficiency in grains and absolute security of staple foods." But the above-mentioned leader of the Central Rural Work Leading Group also stressed that "taking ourselves as the mainstay, basing ourselves on domestic production" does not mean excluding imports from abroad. He believes that ensuring food security entirely by relying on our own resources is unnecessary and impossible. In the context of economic globalization, ensuring food security must also take cost into account and consider cost-effectiveness. Excessively emphasizing a high self-sufficiency rate, making grain a rigid requirement for agriculture, and disregarding the consequences for so-called absolute security is not worth the loss.

Ye Xingqing said that the "13th Five-Year Plan" currently being planned must reflect on China's agricultural policy system for the next stage and also reconstruct it. The core is to reform from a policy orientation to a competitiveness orientation, and this should be done in five directions.

First, the issue of operating norms. The government issues documents to guide land transfer and focus support on large-scale operations. The Shandong Supply and Marketing Cooperative's land trusteeship plus agricultural socialized services will be an important path for building agricultural modernization with Chinese characteristics.

Second, it is necessary to establish a competitiveness-oriented agricultural construction system and restructure the institutional mechanisms for the formation of agricultural product prices.

Third, the issue of agricultural subsidies. In 2015, the government began to adjust and improve the agricultural "three subsidies" policy. Specifically, since 2004, the state has successively implemented three subsidy policies: subsidies for improved crop seeds, direct subsidies to grain farmers, and comprehensive subsidies for agricultural inputs. The adjustment measures are to use 20% of the existing comprehensive agricultural input subsidy funds, the pilot funds for subsidies to major grain growers, and the incremental funds of the agricultural "three subsidies" to focus support on moderately scaled grain operations in accordance with the requirements of unified adjustment and improvement of the policy. And to use 80% of the existing comprehensive agricultural input subsidy funds, direct subsidies to grain farmers, and improved crop seed subsidy funds for the protection of cultivated land fertility.

Fourth, the issue of structural adjustment. Optimize the structure and improve agricultural competitiveness.

Fifth, rationally utilize both domestic and international markets.