Why Golden Corn Cannot Fetch a Good Price
Corn production increased, yet farmers' incomes did not rise. Why is that? In the depths of winter, the reporter walked into Gongzhuling City, Jilin Province, long known as the “Hometown of Corn in China,” to explore why golden corn cannot fetch a “golden price.”
At the gate of the Taotunjiagou Grain Depot in Gongzhuling City, Jilin Province —— the Hometown of Corn in China —— the reporter saw a farmer rubbing his hands and waiting anxiously to sell grain in front of a red grain-selling vehicle. He was Ma Dejun from Hongxihe Village, Liufangzi Town. Ma Dejun told the reporter that last year he planted more than 300 mu of corn, and with careful management, his corn yield was higher than the previous year, yet his income barely increased.
The reporter's investigation found that this situation is very common in several nearby townships. Why can golden corn not fetch a “golden price”?
Corn Hit by a Market “Cold Snap”
A grain expert told the reporter that the corn market is currently suffering a severe “cold snap.” International corn prices have slid into a downward channel, and because domestic corn production has increased for many consecutive years, the domestic corn market is seeing consecutive production increases and continuously declining consumer demand appear simultaneously, with production and demand moving in opposite directions. The characteristics of periodic oversupply are very obvious, and corn is experiencing the “three highs” of high output, high purchase volume and high inventory at the same time.
In order to protect farmers' planting returns, since November last year, China has implemented a temporary corn storage policy in the 4 provinces and regions of Inner Mongolia, Jilin, Heilongjiang and Liaoning, with corn prices on par with 2013. However, supported by the corn market-support purchase price, domestic corn prices have long remained high, and the price inversion between domestic and international corn has become serious, leading to large-scale imports of corn and corn substitutes and intensifying the contradiction of corn supply exceeding demand.
At the same time, domestic corn production costs have continued to rise, farmers' planting returns have declined year by year, and the space for protecting farmers' enthusiasm for growing grain simply by relying on open-ended purchases and raising the market-support purchase price is becoming smaller and smaller, with weaker and weaker effects. “The economic situation is not very good now, and corn prices cannot go up. It is only because of the temporary corn storage policy that the current price exists, while labor costs, land rental costs and other farming costs keep rising, greatly offsetting the planting returns brought by increased corn production,” said Sun Zhonghui, chairman of the Tonghui Cooperative in Taotunjiagou, Gongzhuling City.
⟦NL> Raising Purchase Thresholds to Force Down Grain Loss
This year's temporary corn storage purchase did not raise the purchase price, but it did raise the purchase standards. According to this year's temporary storage policy, if moldy kernels exceed 2% to 3%, the price is reduced by 1%, equivalent to a price reduction of more than 20 yuan per ton of corn; if moldy kernels exceed 3% to 4%, the price is reduced by 3%, equivalent to a price reduction of more than 60 yuan per ton of corn; if moldy kernels exceed 4% to 5%, the price is reduced by 6%, equivalent to a price reduction of more than 120 yuan per ton of corn.
“Farmers attach importance to production and neglect scientific post-harvest management. The backward way of storing grain is the deep-seated reason for mold in corn. Raising purchase standards can force farmers to practice scientific grain storage and reduce grain loss,” said Han Fuchun, director of the Jilin Provincial Grain Bureau, in an interview with a reporter from Economic Daily.
It is understood that more than 80% of farming households in Jilin Province have now changed the “grain lying on the ground” storage method and adopted scientific grain storage warehouses, racks and baskets, achieving three-dimensional storage of corn off the ground and away from walls with ventilation.
Developing Deep Processing Is the Way Out
Gongzhuling City is a typical major grain-producing county and financially poor county. With consecutive years of bumper corn harvests, policy inventories have “rolled like a snowball” year after year, leaving Gongzhuling City, whose finances were already tight, bearing an increasingly heavy burden of grain purchase and storage.
“If Gongzhuling City's corn is to fetch a good price and its economy is to achieve better development, it must find a way out from the corn industry itself and truly transform the corn resource advantage into an economic advantage,” Wang Zilian, secretary of the Gongzhuling Municipal Party Committee of Jilin Province, told the reporter.
Gongzhuling City's corn deep-processing industry has always been relatively developed. The two leading local corn deep-processing enterprises —— COFCO Bioenergy (Gongzhuling) Co., Ltd. and Huanglong Food Industry Co., Ltd. —— could, if operating at full capacity, consume half of Gongzhuling City's corn output each year. Due to the economic downturn, these two enterprises are now basically in a state of semi-suspension of production. This is also one of the important reasons why corn inventories in Gongzhuling City remain high.
Mei Lina, deputy secretary of the Gongzhuling Municipal Party Committee, believes that there is great room for development in the corn industry, and many products have yet to be developed. At present, Gongzhuling City is planning and building an aerospace breeding base, a display base and a sales base, building the country's largest corn seed distribution base and logistics base, and turning Gongzhuling City into China's corn seed industry “Silicon Valley.” If these plans become reality, Gongzhuling City's corn industry is expected to emerge completely from its difficulties.