Soybean Price Subsidies Soon to Be Paid Out, Soybean Farmers Hope for Premium Prices for Quality Beans
Editor's note: Right now, spring soybean planting is in full swing in Northeast China. The soybean target price reform piloted by the state in Heilongjiang, Liaoning, Jilin and the Inner Mongolia Autonomous Region in 2014 has now entered the subsidy payment stage. How well is the target price subsidy policy being implemented? How effective is its market guidance? How willing are soybean farmers to plant this spring? Our newspaper's reporters visited the main soybean-producing areas in Heilongjiang and Liaoning provinces to sense the “warmth and chill” of this spring's soybean production.
Target price has limited effect in spurring soybean farmers' enthusiasm
Heilongjiang: Farmers' willingness to plant soybeans is fading
Due to factors such as the poor comparative returns of soybeans, untimely payment of price subsidies and slow sales, farmers in Heilongjiang province have shown reduced willingness to plant soybeans this year, and cooperatives have begun to focus on growing food-grade soybeans, hoping to ensure sales and increase income by developing soybeans for specialized uses.
Jiamusi city has long enjoyed the reputation of “China's hometown of soybeans.” In 2009, the city's soybean planting area reached 7.84 million mu, accounting for almost half of the city's sown area of grain, soybeans and potatoes, and was the largest among the three major grain crops of rice, corn and soybeans.
In recent years, affected by domestic and international markets and the comparative returns of planting, Jiamusi's soybean planting area has decreased year by year, falling to 1.94 million mu by 2014, accounting for only 12% of the total area of grain, soybeans and potatoes, making it the crop type with the smallest planting area and the smallest share among the three major crops.
Although the state introduced the soybean target price subsidy policy in 2014, affected by factors such as the timing of its introduction, the speed of progress and the target price level, the payment of subsidies was relatively delayed. As things stand now, the implementation of the target price has not truly played a role in spurring soybean farmers' enthusiasm for production, nor has it effectively promoted the sales of commercial soybeans. According to preliminary surveys, about 30% of soybeans are still being held by farmers awaiting sale.
In early April, the Ministry of Agriculture's “Hundred Townships and Ten Thousand Households” survey team also noticed problems in soybean planting during its research in Keshan county. Keshan soybeans are a national agricultural product geographical indication product and a local advantage industry; the planting area once reached 3.02 million mu, accounting for 86% of the cultivated land area. However, as soybean prices continued to fall, farmers have been very pessimistic about planting soybeans in recent years. The actual soybean planting area in 2014 was 1.95 million mu, accounting for 65% of the cultivated land area; this year it will fall to below 1.2 million mu, less than 40% of the cultivated land area.
Wang Lixin, a large soybean grower in Bao'an village, Gubei township, Keshan county, planted 1,000 mu of soybeans last year and plans to reduce this to 300 mu this year, intending to plant corn on the 700 mu freed up. Guo Jin, a farmer in Yongsheng village of the same township, planted 105 mu of soybeans last year and plans to switch entirely to corn this year. Guo Jiancheng, chairman of the Zhuangsanhe Corn Planting Cooperative in Xicheng township, said the cooperative plans to reduce its soybean planting area from 7,000 mu in 2014 to 3,000 mu. Yang Yu, head of Xicheng township, said the township's soybean planting area was 200,000 mu, 180,000 mu and 100,000 mu in 2012-2014 respectively, and the intended planting area for 2015 has decreased to 80,000 mu, a drop of 60% from 2012. Tian Wenbo, Party secretary of Gubei township, said the township has 178,000 mu of cultivated land; in 2011 soybeans accounted for more than 85% of the total cultivated land area, but by 2014 this proportion was less than 70%, and in 2015 it will continue to fall to less than 50%.
It is understood that the reasons why Keshan farmers are unwilling to plant soybeans are:
First, the comparative returns of soybean planting are poor. Meng Deli, chairman of the Kunfeng Modern Agricultural Machinery Cooperative in Shuanghe township, Keshan county, did the following calculation: before 2007, the per-mu return for Keshan farmers growing corn was 1.5 to 2 times that of growing soybeans, but because soybean planting required low input, was easy to manage, saved labor and time, and was convenient to sell, farmers still had confidence in soybean production. After 2007, corn market prices rose and yield-increasing potential was unleashed; now the per-mu return for corn is equivalent to 3 to 3.5 times that of soybeans.
Second, the industrial chain is “thin” and short. Keshan county produces 300,000 tons of soybeans annually; apart from own use, the commercial volume is about 280,000 tons, but there are only 3 soybean processing enterprises in the county, which can only process primary soybean products, have limited processing capacity and are not highly competitive in the market.
Third, the soybean target price subsidy policy failed to guide market expectations well. Soybean market prices were sluggish and sales poor, with the market going down all the way; the soybean price in Keshan county fell from 2.2-2.3 yuan/jin when the new beans came onto the market to about 1.8 yuan/jin now. At present, half of the soybeans in the hands of farmers countywide have still not been sold.
These problems reflected in Keshan are common in main soybean-producing areas. According to agricultural situation statistics from Jiamusi city, the estimated soybean planting area this year is 2.39 million mu, an increase of 450,000 mu over last year, but according to analysis by the local agricultural department, the increase is mainly due to regional light and heat conditions and soil moisture conditions, rather than the effect of the introduction and implementation of the target price.
Faced with the problem of “having no choice but to plant,” cooperatives have begun to use the advantages of scale to grow food-grade soybeans, ensuring markets and increasing returns. On April 29, at a spring soybean production and sales matchmaking event organized in Heilongjiang, 110 soybean planting cooperatives and representative new-type business entities from 45 major soybean-producing counties across the province signed orders for 900,000 tons of soybeans before sowing. The buyers were basically food-grade soybean product processing enterprises, and this specialized planting has brought hope to cooperatives growing soybeans.
Li Fengyu, chairman of the Heilongjiang Longlian Farmers' Professional Cooperative Union, said that the high-protein soybeans they grow reach a protein content of 40% and can be supplied in bulk; such soybeans received a large number of orders through the production and sales matchmaking event. Through the unified large-scale operation of cooperatives, the “premium prices for quality beans” of soybeans has been demonstrated.
Liaoning: Soybean farmers hope the target price level will be higher
“I heard that if a jin of soybeans sells for less than 2.4 yuan, the government gives a subsidy, but so far it hasn't been given.” On April 23, Xi Liping, a villager in Taidi village, Gaotaizi office, Mingshan district, Benxi city, Liaoning province, told reporters that her family planted about 5 mu of soybeans last year, and she still had many questions about how much subsidy she could get and when it would be paid.
Judging from monitoring data in Liaoning province, the market price of soybeans in 2014 had not yet reached the target price level. According to the “Implementation Plan for the Pilot Work of Soybean Target Price Reform in Liaoning Province,” the soybean price subsidy mechanism will be launched.
The subsidized area is based on the soybean area recorded in the 2014 improved seed subsidy statistics
It is understood that soybean production in Liaoning is mainly concentrated in northern and western Liaoning. In 2003, Liaoning's soybean planting area was more than 4.5 million mu, then began to decline, and by 2007 was only 1.95 million mu. In 2008, when high-yield soybean creation began, it recovered to 2.715 million mu, then declined again, and in recent years has tended to stabilize at around 1.725 million mu.
According to the relevant person in charge of the Liaoning Provincial Price Bureau, the subsidy standard is the difference between the target price set by the state and the market price. The soybean market price is the provincewide average market purchase price during the price collection period, that is, the purchase price of soybeans collected from grain depots, processing enterprises or traders with permanent fixed purchasing points that have relatively large purchase volumes and strong price representativeness, and is the provincewide average purchase price of national standard medium-grade soybeans delivered to the depot (factory).
The basis for subsidies to farmers is the per-household soybean output calculated according to the verified actual soybean planting area and the unified subsidized per-mu output (subsidized normal output). The actual soybean planting area is the actual planting area of relatively concentrated and contiguous soybean planting on farmers' registered cultivated land. The actual planting area is determined according to the soybean subsidy area recorded in the 2014 improved seed subsidy work.
Subsidy funds to be paid in full to growers before the end of May
⟧ According to the “Guiding Opinions on Soybean Target Price Subsidies” published by the Ministry of Finance in 2014, before the end of April 2015, the central finance department will allocate subsidy funds to the pilot provinces (regions); before the end of May, the pilot provinces (regions) will pay the subsidy funds in full to actual growers.
It is understood that the Liaoning Provincial Department of Finance will allocate and disburse subsidy funds to each city according to the subsidy standard, the city-level soybean output provided by the statistics department and the scale of funds issued by the central finance department; the city finance bureaus will allocate and disburse subsidy funds to each county (city, district) according to the subsidy standard, the county-level soybean output provided by the statistics department and the scale of funds issued by the provincial finance department; the county (city, district) finance bureaus will, according to the actual soybean planting area of farmers verified level by level by the agricultural department at the same level, the scale of funds issued by the city-level finance department and the subsidy standard, calculate and determine the countywide unified subsidized per-mu output (subsidized normal output), and on this basis calculate the per-household soybean subsidy output and subsidy amount, and pay the subsidy funds to farmers according to prescribed procedures.
Liaoning has established a strict supervision mechanism. Subsidy funds are managed in a closed manner through a special account for the grain risk fund. Systems for public disclosure of subsidized areas and subsidy payments, archives management and supervision and inspection have been established, and supervision and reporting telephone numbers have been published.
Farmers hope to raise the target price level
The reporter learned from the Tieling City Agricultural Committee that this year the city's intended soybean planting area is 144,000 mu, a slight decrease from last year's actual planting area of 149,600 mu.
Zhao Jingxia of Taidi village, Gaotaizi office, Mingshan district, Benxi city, told the reporter: “If I could pull the corn cobs alone, I wouldn't plant soybeans either.” Zhao Jingxia's family planted 4 mu of soybeans. Last year, due to drought, one mu yielded less than 300 jin. The soybeans were all sold to people making tofu, at a maximum of only 2.3 yuan per jin, and some for less than 2 yuan, with returns clearly lower than growing corn. She hopes the government will set the target price higher.
Cao Zhenyun, Party secretary of Taidi village, Gaotaizi office, Mingshan district, Benxi city, said that not many households in the village grow soybeans; the net profit per mu of soybeans is only a few hundred yuan, while the net profit per mu of corn can reach as high as 700 to 800 yuan. If the target price were raised to 3 yuan per jin, everyone might consider planting more soybeans.
According to calculations by the Planting Industry Division of the Benxi City Agricultural Committee based on the 2014 soybean target price, with a citywide average yield of 140 kg, the per-mu output value is 672 yuan. According to statistics, the per-mu cost of soybeans is 410 yuan (mainly including 80 yuan for chemical fertilizer, 50 yuan for seeds, 10 yuan for pesticides, 100 yuan for machine plowing, 150 yuan for labor and 20 yuan for other items), and the per-mu profit is 262 yuan. The average corn yield is 500 kg, the per-mu output value is about 1,000 yuan, and the per-mu cost is 560 yuan (mainly including 150 yuan for chemical fertilizer, 50 yuan for seeds, 20 yuan for pesticides, 120 yuan for machine plowing, 200 yuan for labor and 20 yuan for other items), with a per-mu profit of 440 yuan, higher than that of soybeans.
Moreover, corn has strong drought resistance and disaster resistance, its price is relatively stable, and its sales channels are smooth, so most farmers choose to plant corn. This policy is not very strong in encouraging farmers to develop soybean production. Wang Limei, deputy director of the Planting Industry Division of the Benxi City Agricultural Committee, believes the target price should be raised. The “signal” should be timely and transparent
The original intention of the reform of the target price policy for agricultural products is to establish a market-based price formation mechanism for agricultural products, release price signals to guide market expectations, and protect producers' interests through differential subsidies. Since it is a price signal, it must be timely and transparent.
Generally speaking, the signal significance of the target price mainly lies in “what the target price is”; but considering the actual situation in the early pilot period, “what the average market price is” may be more critical, as this directly relates to how much subsidy farmers can get and directly affects their planting intentions. On April 28, the National Development and Reform Commission announced that the 2015 soybean target price is 4,800 yuan/ton. With the cotton target price lowered, keeping the soybean price unchanged is a positive signal, but it is still not specific enough for farmers' production choices. Some soybean farmers “holding back sales” during the sales period and waiting to see during the sowing period show that, with the “average market price” uncertain and unpublished, the “reassurance” effect of the target price is taking effect somewhat slowly.
As the reform deepens, the relevant parties should not only publish information related to the target price in a timely manner, but also strengthen market information services, guiding farmers to seize sales opportunities and enterprises to actively enter the market.