New changes in the structure of grain imports deserve attention

Affected by factors such as the inversion of domestic and international prices and demand pull, China's grain (cereal) imports continued to maintain relatively rapid growth in 2014, with imports reaching 19.516 million tons, up 33.8% year on year, and net imports of 18.747 million tons, up 40% year on year. At the same time, the structure of grain imports showed two new features: a decrease in total imports of the three major staple grains and a sharp increase in imports of corn substitutes, which deserve follow-up analysis.

The total imports of the three major staple grains decreased markedly, and the positive role of import and export regulation should continue to be brought into play. In 2014, total imports of the three major staple grains - wheat, rice and corn - were 8.184 million tons, down 26.1% year on year, a sharp decline after remaining above 11 million tons for two consecutive years, which to some extent eased the contradiction of high domestic grain inventories and relatively large phased supply pressure. By variety, wheat imports were 3.004 million tons, down 45.7% year on year; corn imports were 2.599 million tons, down 20.4% year on year; rice imports were 2.579 million tons, up 13.6% year on year, but the growth rate fell back somewhat from 2011-2012. Experts analyzed that, with domestic prices clearly higher than the after-tax landed import price, the decline in total imports of the three major staple grains was partly due to China's grain output achieving an "eleven consecutive increases" and improved quality, but was more the result of import and export regulation, especially effective management of import quotas, indicating that China's grain import and export regulation measures still have some room for maneuver. Under the current situation of slowing economic growth and relatively weak grain demand in China, we should continue to adhere to the scope allowed by WTO rules, take the initiative in playing the trade regulation card well, and optimize the use of tools such as quota management, so as to win valuable time and space for stabilizing grain production, increasing income, adjusting structure, improving quality, increasing efficiency and transforming the development model, and ensure "basic self-sufficiency in grains and absolute security of staple rations" under the new normal.

Imports of corn substitute products increased sharply, and the price and market regulation mechanisms should be improved at a faster pace. Although total imports of the three major staple grains decreased in 2014, imports of corn substitute products such as sorghum and barley expanded severalfold, leading to an increase in total cereal imports and an obvious change in structure. Among them, barley imports were 5.413 million tons, up 131.8% year on year, and sorghum imports were 5.776 million tons, up 4.4 times year on year.

Traditionally, China's imports of barley and sorghum were mainly used for brewing, with total imports stable at around 3 million tons, but in 2014 imports surged to more than 11 million tons, with the newly added imports mainly used to replace corn as feed. According to experts' research on feed enterprises in Guangdong, because the average price of domestically produced corn delivered to Guangzhou Huangpu Port in 2014 was about 2,500 yuan per ton, clearly higher than the prices of imported sorghum and barley (about 1,700 yuan and 1,850 yuan respectively), and because imports of sorghum and barley are not subject to quota management and tariffs are only 2% and 3%, feed enterprises, driven by the huge price gap, rushed to use imported sorghum and barley to replace corn. Among them, the proportion of sorghum replacing corn in poultry feed ranged from 20% to 60%, and the proportion of barley replacing corn in finishing pig feed was about 8% to 10%. At the same time, imports of corn distillers dried grains (DDGs) for the full year were 5.42 million tons (up 35.3% year on year), and imports of tubers (mainly dried cassava) were 8.67 million tons (up 18.4% year on year). Together these two exceeded 14 million tons and also partly replaced the deep-processing demand for corn. According to preliminary estimates by experts, the large increase in imports of corn substitute products in 2014 caused at least an additional 10 million tons of domestic corn inventory. If major exporting countries such as Australia (accounting for 71.6% of China's total barley imports in 2014) and the United States (accounting for 93.8% of China's total sorghum imports in 2014) substantially expand planting in the new year, imports of substitute products such as sorghum and barley will further increase, intensifying pressure on China's corn storage capacity.

The new change of rapidly increasing corn substitute products shows that China's grain import and export management is a systematic task, and without supporting measures it is hard to avoid the problem of "pressing down the gourd only to have the ladle float up." Therefore, for corn, which has a relatively long industrial chain, while studying import regulation measures for substitute products, we should accelerate the improvement of price and market regulation mechanisms, and on the premise of ensuring that there is no "difficulty in selling grain" and stabilizing farmers' grain-growing returns, form a reasonable price ratio between domestically produced corn and substitute products, promote corn processing consumption, and prevent the market space for corn from being squeezed out.