How are soybean target price subsidies paid out?
In early 2014, China began piloting target price subsidies for soybeans in Northeast China and Inner Mongolia and for cotton in Xinjiang, which meant the end of the temporary state reserve policy for soybeans that had been in place since 2008. Whether the soybean target price reform pilot succeeds bears on the success or failure of the target price reform for agricultural products.
So what exactly has been the effect of implementing the soybean target price policy? According to state regulations, the subsidies are about to be paid out, yet many farmers are still unclear about the specific details. This newspaper will sort out the soybean target price subsidy policy for you in detail.
Low prices leave soybean farmers holding back their crops
Since the soybean target price subsidy policy was piloted last year in Inner Mongolia and the 3 provinces of Northeast China, the soybean market has not seen the brisk trading that was expected. Moreover, since soybean prices opened in the autumn of 2014, soybean prices have fallen all the way, and soybean farmers have been holding back their beans from sale one after another.
According to estimates by the Heilongjiang Soybean Association, both soybean planting area and output increased in a recovery last year. However, the soybean market has not seen the brisk trading that was expected, and the situation of “strong production, weak sales” for soybeans has not been fundamentally reversed.
Liu Min, president of the Sunwu Soybean Association in Heilongjiang Province, told reporters that because soybean prices kept falling, farmers could not make money by selling, but the market price has now fallen to around 2 yuan/jin, down 0.3~0.4 yuan/jin from the same time last year, and farmers' endurance is close to giving out. “This year, as long as they do not plant soybeans and plant corn instead, the returns all exceed those from soybeans.” Soybean farmers in Shangmachang Township, Heihe, Heilongjiang, reported that villagers in many townships said that no matter what, they could not continue planting soybeans this year. Right now, as the spring planting period begins, plots in forests newly reclaimed in recent years have successively been planted with corn.
Wang Xiaoyu, deputy secretary-general of the Heilongjiang Soybean Association, said that soybean farmers are holding back their crops because they think they can “force out” a high price, or out of inertia, mistakenly believing that the state temporary reserve will continue to purchase soybeans. On the one hand, this is because soybean farmers have a biased understanding of the new policy; on the other hand, it is because they have overlooked that the collection period runs until March. That is to say, if the average soybean price across the province during the collection period is 1.7 yuan per jin, then soybean farmers who sell their soybeans will receive a differential subsidy of 0.7 yuan per jin based on the standard of 2.4 yuan/jin. But by April, even if the soybean sale price is even lower, it will not affect the average soybean price in Heilongjiang Province. If they lose money, only the soybean farmers themselves bear it.
The association said that at present the Northeast China soy[Weibo]bean target price subsidy is in its pilot cycle, the measurement of soybean planting area has been completed, and the pilot areas are in the price collection period (October last year to March this year), and the target price subsidy has not yet been paid out.
As a new policy form, the soybean target price is much more complex to operate than the previous market-supporting purchases. Right now, as farmers prepare for spring plowing and urgently need funds, the subsidies have still not been paid out. If soybean farmers cannot fully understand the policy, they will not feel secure, and choosing to wait and see and hold back sales naturally becomes the only way to protect their own interests.
Subsidies struggle to “quench thirst”; support needs to be increased
Liu Min, president of the Sunwu Soybean Association in Heilongjiang Province, has always been an advocate for protecting domestically produced soybeans. When he first heard that the state would give direct subsidies to soybean farmers, he felt very gratified. In his view, this was an opportunity for domestically produced soybeans and soybean farmers. But as the subsidy rules were announced, he visited various surrounding townships and found that the effect of the subsidy policy on the market was far less than imagined. “The subsidy price of 2.4 yuan/jin simply cannot mobilize farmers' enthusiasm for planting.” Liu Min did the math for reporters: in terms of production costs, one hectare of soybeans requires an input of 5,000 yuan, and the autumn harvest is 4,000 jin of soybeans. According to the state subsidy standard, 2.4 yuan/jin is equivalent to 9,600 yuan, but for farmers, there is basically no profit unless the soybean price reaches 3 yuan/jin. Compared with corn, one hectare requires 10,000 yuan in production costs, and the autumn harvest is 30,000 jin. After deducting moisture and other factors, purchased at 0.8 yuan/jin, the net profit left is more than 10,000 yuan. “Because the benefits of corn are significant this year, land rent has also begun to rise, increasing by 1,000 yuan per hectare. In this way, farmers will be even less likely to plant soybeans.” Liu Min said helplessly.
According to the association's investigation and analysis, in 2015, soybeans in Sunwu County (China's largest soybean planting area, accounting for one third of Heilongjiang) will sharply decline from more than 10 million mu in 2014. “If soybeans are not protected, the precarious spark that remains may be extinguished.” This is what Liu Min worries about most.
On how to reverse the situation and make the policy effect stand out?
Wang Xiaoyu, deputy secretary-general of the Heilongjiang Soybean Association, said that the original intention of the soybean target price policy was very good and it was welcomed by farmers, but because it was implemented for the first time this year, many people did not understand the situation clearly, resulting in only 50 percent of the province's soybeans being sold so far. To achieve the expected effect, an appropriate extension is a good approach. Second, according to the original plan, the time to announce the 2015 soybean target price was in May, but because the downward trend in soybean prices is obvious this year, many farmers in the province have already abandoned soybeans for corn. Heilongjiang enters the soybean sowing season in April, so this year's soybean target price should be announced as soon as possible to stabilize farmers' confidence in planting. Otherwise, once spring plowing has passed, the effect of the soybean target price will no longer be obvious.
In addition, Wang Xiaoyu also called for the 2014 soybean target price, which is already low, to be appropriately raised, since planting corn on the same land yields 200 yuan more per mu than soybeans.
Liu Min also particularly pointed out that in order to pursue high yields, farmers have thrown soybean seeds into confusion, so protecting China's traditional high-quality, high-protein food soybeans is also an important task for us at present.
In 2014, in order to protect soybean seeds, the association invested a large amount of funds to plant 15,000 mu of high-protein soybeans in the Sunwu area. These seeds can be used to plant more than 300,000 mu of soybeans.
According to Liu Min, they selected early-maturing, high-quality, high-protein soybeans. These soybeans are planted in areas where mountain forests, rivers and grasslands mix, where the terrain is uneven, the climate is on the cold side, and the frost-free period is mostly short (90~105) days, that is, in the lower limit of the local 5th accumulated temperature zone and the 6th accumulated temperature zone. This determines that farmers first choose early-maturing soybean varieties.