The grain bank model is good, but promoting and applying it is not easy
“Grain in Ear is busy, with three or two rounds of work.” It is again the wheat harvest season, threshing grain and collecting grain have once more become important matters for farmer friends. How to store the grain once it is brought home is even the most important matter among important matters. Because some farmers store it poorly, some of the grain they have obtained becomes moldy, and some sprouts, causing no small loss. Some other farmers are not accurate in judging market conditions, and often cannot sell when prices are high and are unwilling to sell when prices are low. Now, the “grain banks” gradually emerging in the rural areas of Shenqiu County have, in practice, fairly well resolved this contradiction.
An exploration with win-win results
On May 30, when this reporter went to the countryside for an interview, farmer Li Chuanyong of Li'anzhuang Village, Dongcheng Office, Shenqiu County, holding the wheat purchase settlement slip issued to him in December 2014 by local grain broker Tao Yumin, was delighted from the bottom of his heart: “Just like making a deposit, grain can also be stored in a ‘bank’ and earn ‘interest.’ After more than half a year, 1 kg of wheat sold for one or two mao more, which is much better than keeping the grain at home.”
For “grain banks” opened by grain brokers like Tao Yumin, there are mainly three business models: the first is the fixed-term deposit and storage type. Farmers deposit their surplus grain at a grain purchasing outlet, that is, a “grain bank,” for a term of half a year or one year. For a half-year term, cash is withdrawn upon maturity, with 0.10 yuan added per kg; for a one-year term, cash is withdrawn upon maturity, with 0.20 yuan added per kg. The second is the demand deposit and storage type. Grain-selling farmers can settle in cash immediately; if settlement cannot be made at the time, the purchasing outlet writes the farmer a receipt at the market price agreed that day. Farmers can, according to the trend of grain market prices, settle the grain payment at any time within the following year by presenting the receipt. The third is the grain storage exchange transaction type. That is, farmers can exchange their raw grain for finished grain products.
At a three rural services cooperative in Zhidian Town, Shenqiu County, this reporter casually opened villager Lu Yanli's “raw grain deposit book,” on which was written neatly: “100 jin wheat = 70 jin standard No. 1 flour + 27 jin wheat bran, 100 jin wheat = 60 jin noodles……” The first page of the book records the depositor's basic information and exchange instructions, and the following pages record information such as deposit date, quantity, withdrawal and exchange date, and balance. Many local farmers aptly call this kind of “raw grain deposit book” a “grain passbook,” and call this kind of “three rural services cooperative” a “grain bank.”
“I store my grain in the ‘grain bank,’ and I can sell it at market price at any time, or take back the same variety and same quantity of grain, or exchange it for finished grain products. Unlike before, when I stored grain at home, it took up space and suffered losses, and I also had to dry it often to prevent mildew.” Several farmers who stored raw grain at this three rural services cooperative said that after harvesting their wheat, corn and other grains, they handed them to the three rural services cooperative for storage, saving money, worry and effort, which can be called three benefits in one.
It is understood that in the 22 townships (offices) of Shenqiu County, there are currently more than 300 such grain purchasing outlets, and about 106,000 farming households have participated in grain deposit and storage. Zhoukou Xuerong Flour Co., Ltd. is an industrialization-leading enterprise mainly supported by the Agricultural Development Bank of Shenqiu County. In recent years, it has stored and sold on behalf of many farmers in 11 townships of the county. The processed flour, instant noodles and other finished grain products not only meet the needs of local farmers, but are also sold to large cities such as Beijing, Wuhan and Chongqing, with annual sales reaching 180 million yuan. The company has developed, farmers have gained real benefits, and win-win results have been achieved.
There are risks in operation
After gradual development in recent years, the role of “grain banks” is obvious to all. But with changes in the social and economic environment, the hidden risks in the operation of “grain banks” have also gradually emerged.
In order to maintain their own operation and expand business, some “grain banks” absorb large amounts of farmers' grain. When grain processing profits are sufficient to maintain interest and various expenses, these “grain banks” can all promptly honor their promises to farmers. But when grain processing profits are insufficient to maintain interest and various expenses, they will be unable to honor their promises to farmers promptly or even at all because of losses.
Some township officials told this reporter that since reform and opening up, especially in recent years, rural grain harvesting and storage methods have undergone great changes. After collective production changed to household production, some production facilities and equipment, such as grain drying yards, decreased greatly, and in some places drying yards even disappeared. Therefore farmers need to be equipped with dryers in good time, but for various reasons, mainly economic ones, individual households are unwilling to buy them, and the number of dryers in rural areas can be described as rare, with far from sufficient popularization.
Under conditions of labor shortage, many farming households use combine harvesters to harvest grain and then sell it directly to “grain banks.” Because this grain has not been fully dried, it generally has high moisture and large impurities. For “grain banks” with good ventilation and drying conditions, they still have the ability to handle it, but the expenses are very large; while for “grain banks” with poor ventilation and drying conditions, grain mildew problems easily occur, and the losses caused by this are by no means small.
Compared with other processing enterprises, the operating profit of “grain banks” is very low, so during periods when grain market prices are sluggish, those that can survive are very few. Under such circumstances, it is generally very difficult for “grain banks” to smoothly honor the grain or grain payments stored by farmers, which will inevitably affect the vital interests of many farming households.
Some relatively large “grain banks” store a very large amount of grain and involve thousands of households. Once problems arise in the storage link or the capital chain, they will affect a large area, easily trigger social contradictions, and affect social stability.
Urgent need for regulation and guidance
From practice, “grain banks” are beneficial to grain storage and processing enterprises, to the broad masses of farmers, and to social development. The government and relevant departments, including financial departments, certainly need to strengthen market regulation and correct guidance for “grain banks,” give policy preferences and funding support, and promote their sustained, healthy and sound development.
Judging from the exploration of “grain banks” in Shenqiu County, many “grain banks” are basically still in the initial or primary stage, basically established spontaneously by some enterprises or individuals, and lack standardized management, active guidance, policy support and funding support from the government and relevant departments.
For example, how the social credibility of “grain banks” stands needs strict review and checking by departments such as industry and commerce, taxation and pricing. For processing enterprises and individuals that meet the requirements for opening “grain banks,” the industry and commerce department should issue licenses, provide authentication and conduct supervision.
The competent grain department should strengthen business guidance, help them carry out management training, and inspect in good time their implementation of grain purchase quality, grain storage safety and performance of grain storage agreements. For those violating grain purchase management regulations and rules, corresponding warnings and penalties should be given, and even their purchasing qualifications should be canceled according to law. Thus, “grain banks” can operate scientifically, function in a standardized way and develop healthily, and the “grain passbooks” in the hands of the broad masses of farmers can truly become convenient and beneficial “credit cards.”