To safeguard food security, what does it take to fortify the world's granary?
As the “world's granary,” Sinograin, on the grand scale, bears on national food security; on the small scale, it bears on the people's daily food supply. Operating safely and effectively is its first priority.
As the primary implementer of grain reserves, Sinograin has an enormous reserve scale, like a small horse pulling a big cart, making management extremely difficult.
In addition to leveraging Sinograin's powerful purchasing and storage capacity, local governments, enterprises and farmers should also be encouraged, through institutional mechanisms, to advance multiple reserve methods in a coordinated way.
Recently there have been two pieces of news about grain. One is that the first round of auctions for temporary state reserves of corn in Northeast China started on May 7, but the market was very cold and the transactions were unsatisfactory. The other is the “old grain passed off as new” incident in Liaoning and Jilin, which attracted widespread attention after media exposure. These two pieces of news may seem unrelated, but both involve grain purchasing and storage, both involve the Sinograin group, and both involve the common theme of Sinograin's operating mechanism.
The auction of temporary state reserves of corn is about Sinograin's operating mechanism. Sinograin first purchases and stores grain crops such as rice, wheat and corn into warehouses through policy support, then auctions them at selected times, channeling the grain into the market. In some years the auction sales went smoothly, in others not. On the whole, in recent years, because of consecutive grain harvests, the inversion of domestic and international grain prices, and the continuously rising costs of processing enterprises, Sinograin's warehouses are bursting at the seams and auction sales have performed poorly. This corn auction in Northeast China with unsatisfactory transactions is just such a case.
The “old grain passed off as new” incident is also about Sinograin's operating mechanism. Every year Sinograin must purchase and store new grain and sell old grain; this is the operating pattern of grain depots. In recent years, the process of releasing old and storing new has on the whole been safe and effective, but because the front line is too long, with many points and broad coverage, Sinograin operates with difficulty and supervision is weak, so problems have appeared such as “circulating grain,” passing off inferior goods as fine, substituting and swapping, and even “fires burning the linked camps.” This “old grain passed off as new” incident once again exposed problems in Sinograin's operating mechanism.
Therefore, this operating mechanism of Sinograin is very much a matter of concern. As the “world's granary,” Sinograin, on the grand scale, bears on national food security; on the small scale, it bears on the people's daily food supply, and operating safely and effectively is its first priority. From practice, Sinograin was first established in 1999 and is itself a product of the reform and innovation of our country's grain circulation and reserve management system. At that time, domestic grain supply had changed from long-term shortage to a general balance in total volume with surplus in good years, but structural contradictions were prominent, some grain varieties were overstocked, some state-owned grain enterprises were not actively selling and simply collected excessive storage subsidies, and the burden of fiscal subsidies was too heavy. Against this background, China Grain Reserves Corporation came into being.
Born in the course of reform, Sinograin has in recent years played a very obvious role in ensuring that the quantity of central grain reserves is true, the quality is good and storage is safe, as well as in protecting farmers' interests and maintaining the stable operation of the grain market. However, because it is “the single dominant player” in the grain reserve market, Sinograin has also shouldered an increasingly heavy burden and accumulated more and more contradictions. At the policy level, as the primary implementer of government grain reserves, Sinograin has an enormous reserve scale, like a small horse pulling a big cart, making management extremely difficult; in its operating mechanism, Sinograin implements “unified borrowing and unified repayment,” under which all loans needed by entrusted purchasing and storage depots to carry out policy-based purchasing and storage are uniformly borrowed from the Agricultural Development Bank by the Sinograin system. Sinograin bears all the risks, while the stick for the illegal operations of entrusted storage enterprises is first wielded against Sinograin itself.
As for Sinograin itself, its “single dominant” position has also bred the problem of being too big to control. Policy-based purchasing and storage gives it the advantage of profiting whether it buys or sells, so it lacks the drive for innovation and will also, consciously or unconsciously, use its policy advantages to constrain the development of other purchasing and storage entities. Coupled with the current mechanism dominated by government reserves, this has led Sinograin to control too much grain supply and to warehouses bursting at the seams. In the supervision of grain purchasing and storage, Sinograin is unable to do what it wants on the one hand, yet on the other hand is happy to enjoy the various conveniences and many benefits brought by monopoly. In recent years, although many of the strange phenomena in grain reserves occurred at Sinograin's entrusted enterprises, people within the Sinograin industry were actually all well aware of them.
As a product of reform, Sinograin's role is there for all to see; as the “world's granary,” the calls for Sinograin to continue reforming never cease. From the perspective of grain reserves, in addition to leveraging Sinograin's powerful purchasing and storage capacity, local governments, enterprises and farmers should also be encouraged, through institutional mechanisms, to advance multiple reserve methods in a coordinated way; from the perspective of grain purchasing, our country launched pilot reforms of target prices for cotton and soybeans last year, and this reform will continue to advance, with the market playing a greater role in the formation of grain prices. All grain enterprises, including Sinograin, will each show their talents under the premise of better leveraging the market's role in allocating resources. In the future, policy-based grain storage should be returned to policy, and market-oriented operations should return to the market, so that Sinograin becomes a truly nationally important granary and a major market grain merchant with strong market competitiveness.