Solving the difficulty of selling grain requires a coordinated consideration of industrial chain issues

Although many regions in China had a bumper grain harvest this autumn, farmers could hardly feel joyful during the autumn grain purchasing season. Recently, supply pressure in the grain market has increased, and combined with previously low market grain prices and persistently high domestic inventories, farmers' profit margins have been squeezed. Jiangsu, Henan and other places have once again seen the phenomenon of “difficulty in selling grain”.

In fact, this is only a surface phenomenon; the problems behind it are very complex. In addition to being affected by production, sales and reserves, it also involves reasons such as grain purchasing policies and changes in the market situation.

It is reported that at present, domestic grain supply and demand are generally loose, international grain prices are running at a low level, and the price gap between domestic and international grain remains relatively large. Data show that in mid-November this year, the domestic and international price gaps for wheat, corn and rice were 700 yuan, 630 yuan and 760 yuan per ton respectively. After the state launched temporary storage corn purchasing in Northeast China on November 1, corn prices inside Shanhaiguan stopped falling and rebounded, showing an increase. On November 17, the average purchasing prices of corn in Hebei, Shandong and Henan were 91 yuan, 94 yuan and 88 yuan respectively, up 8.3%, 5.6% and 17.3% from late October.

At the same time, although China's grain production has had bumper harvests for many consecutive years, consumption growth has slowed markedly. The structural contradiction among grain varieties has intensified, corn is experiencing phased oversupply, rice supply exceeds demand, imports of corn substitutes such as sorghum and barley have increased substantially, and domestic grain prices face considerable downward pressure.

In fact, similar problems have troubled China's grain market for a long time. To this end, the Fifth Plenary Session of the 18th Central Committee also clearly put forward the concept of “storing grain in the land and storing grain in technology”, supplementing and adjusting the previous strategy of “storing grain in warehouses, storing grain among the people, and making up for shortages with bumper harvests”. At the same time, in order to deal with storage issues, the central finance allocated about 15 billion yuan this year to support the construction of grain storage facilities and the repair and renovation of “dangerous warehouses and old depots”, and clarified fiscal subsidy policies for cross-provincial warehouse transfers and the construction of simple storage facilities.

However, such adjustments seem somewhat slow, especially in the face of the current autumn grain market scene of “unable to sell, unable to store, unable to consume it all”. Compared with the previous simple situation of tight grain supply and demand, current grain production faces many unfavorable factors at the same time, including structural oversupply, insufficient warehouse capacity, low quality, and inverted domestic and international prices.

It should be noted that, under the current circumstances, relying solely on expanding purchasing and storage or market-support purchasing can no longer solve the problems facing the grain market. On the basis of increasing purchasing efforts, how to digest existing inventories is worth considering, and this will become an effective way to expand storage capacity and increase the value of grain output. Benefiting from sufficient supply of grain raw materials, relevant departments should lay a good foundation for expanding processing capacity in industries such as food and beverages, feed processing, and livestock breeding, so that they can extend the industrial value chain, thereby enabling the agricultural product processing industry to achieve substantial development, promoting an increase in the level of grain consumption, and thus easing the pressure of grain storage.

At the same time, the central finance might as well increase fiscal subsidies for agricultural machinery purchases, agricultural technology promotion and services, and other related aspects, thereby guiding the development of moderately scaled operations in various forms, raising the level of agricultural mechanization and the supporting capacity of agricultural science and technology, and further building an enhanced agricultural product industrial chain.