Passing Off Old Grain as New Highlights the Predicament of Grain Reserve Supervision

Where there is “delicious” lamp oil, there are “bold rats” that dare to steal it; where there are loopholes in the system, there is room for rent-seeking. Fulfilling shared supervisory responsibilities and clarifying the subjects of power and responsibility is a major issue that grain storage cannot avoid. It is necessary to strengthen, institutionally, coordinated supervision over storage enterprises at all levels and of all types, so as to ensure grain security for the nation.

Recently, according to multiple media reports, some grain depots of Sinograin in Liaoning, Jilin and other places actually engaged in power-for-money deals and subterfuge with grain merchants, using old grain to substitute for new grain to fraudulently obtain state subsidies and siphon off the huge price difference that should have gone to farmers. From the reports, the means by which the grain depots violated regulations to defraud state subsidies and damage storage quality were not sophisticated, but the harm they caused cannot be underestimated. Defrauding state subsidies and seeking private gain at public expense affects the production enthusiasm of the broad masses of farmers; allowing old sesame and rotten millet to circulate onto the dining table concerns the “safety on the tip of the tongue” of every consumer. Either kind of harm could shake the foundation of the national food security strategy.

“Of all matters, eating is the greatest.” Chinese people have a deep and mellow attachment to and feeling for land and grain. In order to keep “the rice bowl of the Chinese people firmly in their own hands,” agricultural workers at all levels across all regions have kept their nerves taut: “protecting grain with high prices,” snatching grain from the mouths of insects, “rather shed a thousand drops of sweat than let a single grain spoil,” the provincial governor responsibility system for food security... Through the determined efforts of many parties, grain production increased for the eleventh consecutive year, which can truly be called a feat in the history of human food, laying a solid foundation for comprehensive economic and social development. But when the drive for painstaking production and the sentiment of treasuring grain as if it were gold encounter the “bold rats” who pass off old grain as new to swindle state subsidies, how can people not be indignant?

⟦NL> According to industry insiders, turning old grain into new grain is no longer a secret in the industry. Then the question arises: among the 19,000 storage enterprises nationwide and the total storage capacity of 300 million tons, how many grain depots have similar problems? How many such “bold rats” are there still? One must know that where there is delicious lamp oil, there are “bold rats” that dare to steal it; where there are loopholes in the system, there is room for rent-seeking.

After the incident occurred, the relevant departments took decisive measures, sealing the grain depots and controlling the persons responsible. In addition to thoroughly investigating this incident, the National Food Administration further decided to make policy-related grain depots for purchase and storage in the three provinces and one region of Northeast China key targets for inventory inspection and to supervise them strictly. But if “passing off old grain as new” really is as common in the industry as the reports say, or is merely the tip of the iceberg, then it is clearly necessary to carry out screening on a larger scale. It is necessary both to carry out severe investigation and handling and special screening of illegal and disciplinary acts in grain storage in the short term, and to resolutely plug the loopholes in the system from a long-term perspective.

In order to ensure food security, China has established a powerful national reserve system to allocate resources and stabilize the market, while also protecting the interests of grain farmers and promoting grain production through protective-price purchasing. Sinograin is an important implementing body of the national grain storage policy. It not only undertakes specific tasks of policy-related grain and oil purchase and storage, but also jointly performs grain purchase and storage supervision duties with the grain administration system and the Agricultural Development Bank. However, the current process of grain purchase, storage and supervision faces multiple awkward predicaments.

Predicament one: among Sinograin's total annual grain purchase and storage volume of 125 million tons, the capacity of grain depots of its directly affiliated enterprises is only 1/5, a typical case of “a small horse pulling a big cart,” lacking effective supervision over the vast number of entrusted purchase-and-storage points and leased warehouses. In this incident, the Qingyunbao Central Grain Depot in Kaiyuan City was a private depot leased by the Sinograin Kaiyuan Directly Affiliated Depot, while the Qianguo Bayilaga Purchase and Storage Depot in Songyuan City was a local state-owned grain depot entrusted by the Sinograin Songyuan Directly Affiliated Depot. Predicament two: Sinograin is both a “big granary” and a “big grain merchant.” This dual policy-related and market-oriented character and function of Sinograin are very difficult to distinguish clearly in practice, and instead create some opportunities for arbitrage and rent-seeking. Predicament three: in terms of administrative rank, the director of a Sinograin central depot is generally at the full county level, and a sub-depot director may be at the deputy county level, while many county-level grain bureau directors are only at the full section level. In terms of administrative rank, county-level grain departments find it difficult to form effective supervision over grain depots.

Against the background of consecutive bumper harvests and on the basis of existing grain storage capacity, it can be expected that problems such as large purchase volumes and large storage volumes will continue to plague the grain storage system. How to further fulfill shared supervisory responsibilities and clarify the subjects of power and responsibility is undoubtedly a major issue that grain storage work cannot avoid. To strengthen effective supervision over the grain storage system, especially local state-owned grain depots and private grain depots, one may refer to the provincial governor responsibility system for food security by establishing a territorial government responsibility system in key grain purchase and storage areas, while increasing the supervisory capacity building of local government grain supervision departments over grain storage, and consider introducing a third-party supervision mechanism to supervise various types of grain storage enterprises.

At present, the contradiction between the volume of grain purchases and the demand of qualified enterprises is still very obvious. Introducing private enterprises to participate in national grain purchase and storage is both an important supplement to safeguarding national food security and in line with the reform direction of giving the market a decisive role in resource allocation. However, unhealthy market behavior of “passing off inferior goods as fine” must not be allowed to go unchecked, and still less should illegal acts of “passing off old grain as new” to defraud state subsidies be tolerated. It is necessary to institutionally plug the supervisory loopholes over storage enterprises at all levels, strengthen coordinated supervision among the grain administration system, Sinograin, the Agricultural Development Bank and other departments, and jointly crack down on the “bold rats” that steal from the national granary, so as to ensure grain security for the nation.