How can the current dilemma of national food security be resolved?
■The Central Rural Work Conference held at the end of 2014 continued to emphasize the need to uphold the guarantee of national food security as the primary task, ensuring basic self-sufficiency in grains and absolute security of staple foods.
The Central Rural Work Conference held at the end of 2014 continued to emphasize the need to uphold the guarantee of national food security as the primary task, ensuring basic self-sufficiency in grains and absolute security of staple foods. Does this mean that China's current food supply and demand are tight? Does it mean that the rice and wheat used to feed the nation's people are in short supply? Does it mean that corn, mainly used to feed livestock, is in too short supply?
The current emphasis on national food security is not because domestic supply is tight
Although there is some controversy over the current judgment of China's food supply and demand relationship and the level of national food security, the basis for claiming that China is short of food is insufficient.
In fact, China's current food market supply is not too little, but rather on the high side. China's grain production has increased for many consecutive years, achieving eleven consecutive years of growth in 2014, with total grain output exceeding 600 million tons for two consecutive years and exceeding 550 million tons for five consecutive years. Yet the amount of raw grain needed each year to satisfy residents' food consumption is only about 500 million tons. It can be seen that, overall, China's grain output is more than sufficient to meet residents' food consumption. Moreover, in recent years China's grain imports have exceeded 80 million tons.
Because food supply is extremely abundant, the domestic grain market has seen a pattern of strong rice but weak milled rice, and strong wheat but weak flour, making it difficult to sell finished grain, with market prices sluggish, and the domestic grain market being hit by the international market. Although the current level of China's grain inventory is still not public information and thus difficult to use as an important basis for judging China's current food security situation, from the situation of the executive meeting of the State Council in June 2014 specifically studying grain storage capacity construction and emphasizing grain outbound operations, it can basically be judged that China's grain inventory level is high, existing storage capacity is seriously insufficient, and some of the grain produced by farmers no longer has warehouses to hold it, all of which indicates that the national food security guarantee is in good shape.
Some people may say that since China is not short of food, why does the scale of grain imports still expand year by year? Indeed, China's annual grain import scale will soon exceed 100 million tons. Does this mean that China's food security guarantee situation is poor? Objectively speaking, the fundamental reason China's grain import scale continues to expand is that China's grain production lacks comparative advantage and is not competitive. If China's grain purchase prices were aligned with the international market, then once international grain market prices fell to a certain level, Chinese farmers would lose money producing grain, while farmers in major grain-exporting countries might still profit. If the impact of the international grain market were left unchecked, Chinese farmers would lose enthusiasm for grain production and abandon it. However, under the new circumstances, moderate grain imports are also a way to safeguard national food security. Constrained by resource conditions and taking into account consumer preferences, making full use of both international and domestic markets, China's small imports of staple grains such as rice, wheat and corn, and imports of a certain amount of soybeans and other edible agricultural products, not only do not harm national food security but also help improve the national food security situation.
The current emphasis on national food security is mainly out of consideration for risk prevention
⟦NL> Within a certain period, the state of national food security mainly depends on domestic grain production capacity, inventory levels and import capacity. At present, China's grain production capacity is significantly higher than residents' grain consumption needs, and surplus grain must be absorbed through deep processing; the inventory levels of surplus staple grains such as rice, wheat and corn set new historic highs year after year; the international grain market is oversupplied while China's foreign exchange reserves are ample, and international grain market prices are noticeably lower than domestic ones, increasing pressure for grain imports. That being so, why does the state still make safeguarding national food security the primary task of agricultural and rural work in 2015?
Reviewing the changes in China's food security situation since reform, it is not hard to find that whenever China's food supply is relatively abundant, lax attitudes very easily emerge. In the mid-1980s and the late 1990s, difficulties in selling grain appeared widely across the country, and farmers had to continuously reduce grain production, resulting in successive stagnation and declines in grain production, tight grain market supply, and even “grain grabbing” in some areas. People call this situation the grain cycle. Every period when the grain situation is good often also “breeds” the consequences of grain tightness. To eliminate the adverse effects of the grain cycle, we must always attach importance to grain work.
At present, China's actual food supply capacity can basically withstand any risk, including the risk of domestic grain production disasters and market risks, and the risk of severe fluctuations in the international market. However, this does not mean that China's food supply can permanently withstand various cumulative risks.
In recent years, although relatively serious natural disasters have occurred in some parts of China, overall natural disasters have been relatively mild. Besides “good policies” and “hard work by people,” “help from heaven” has also been indispensable to China's consecutive grain output increases. China's grain production still depends on the weather. The impact of natural disasters on grain production is uncertain. With the same grain planting area, grain output is relatively high when disasters are mild and relatively low when disasters are severe. We cannot place too much hope on heaven's help every year.
The risk of impact on domestic food security from long-term sluggish international grain market prices cannot be ignored. From the mid-to-late 1970s, world grain market prices went through a period of sluggishness lasting about 30 years. Some countries with insufficient agricultural competitiveness, believing that domestic grain production for self-sufficiency was not worth the cost, allowed their domestic grain production capacity to weaken. By 2008, international grain market prices suddenly soared, many countries banned grain exports, and many countries around the world experienced food shortages.
In recent years, sharp price fluctuations have become a basic feature of the operation of the international grain market. According to UN Food and Agriculture Organization data, the U.S. export price of corn reached 324 USD/ton in November 2012, but fell to 164 yuan/ton by September 2014, a drop of nearly 50%. China's corn prices, however, remained relatively stable under the effect of the market-support purchase policy. Currently, international market grain prices are sluggish, and grain-exporting countries are trying through various means to expand into China's market, and the impact of this on national food security cannot be underestimated. Food consumption is generally inelastic. When the scale of grain imports is too large, domestic grain production is bound to shrink. Therefore, grain imports can only be moderate overall and must not be overly relied upon. For staple foods, it is even more necessary to ensure absolute certainty and absolute security, and to hold our rice bowl firmly in our own hands. Our rice bowl should mainly contain grain we produce ourselves. Only in this way can China, under the new normal of its economy, have a solid foundation for adjusting structure, transforming the growth model, advancing reform and benefiting the people's livelihood. With grain in hand, there is no panic in the heart.
How to prevent national food security risks
To safeguard national food security under the new circumstances, the first thing is to eliminate misconceptions. We must change the notion that emphasizing the guarantee of national food security means achieving continuous increases in grain output. Too little grain is no good, but too much grain is not necessarily a good thing either. We must also change the understanding that equates national food security with domestic self-sufficiency in grain quantity; not rejecting grain imports is also one of the ways China safeguards national food security under the new circumstances.
The emergence of misconceptions about national food security is related to the frequent illusions in China regarding food issues. When farmers in some places have difficulty selling grain, people easily conclude that China has produced too much grain and that supply exceeds demand. And when in some places people rush to buy grain on the market within a short time, people easily conclude that China's grain supply is tight, and so grain-trading enterprises hoard grain and residents increase household reserves. Changes in people's expectations about the national food supply and demand relationship often lead to misjudgments of the grain market.
In 2015, transforming the agricultural development model and adjusting the agricultural structure are the central tasks of China's agricultural and rural work. This requires us to raise our level of understanding of grain work and make stabilizing grain production the core of the central task. We cannot drastically reduce grain production just because we want to transform the model and adjust the structure, still less abandon the process of raising grain production capacity, nor can we let the international market's impact on domestic grain production go unchecked just because we want to coordinate the use of both markets and both types of resources.
In view of China's many years of excessive use of chemical fertilizers in grain production, excessive depletion of soil fertility and groundwater, and blind reclamation of mountainous land, forest land, grassland and wetlands in some places, it is indeed necessary now to withdraw this part of grain production capacity. This requires that China's grain subsidies and market-support purchase policies, among others, be adjusted accordingly, and that methods for determining eligibility to enjoy preferential policies be explored. Anyone engaging in grain production in ecologically fragile areas must not enjoy preferential policies. Conversely, anyone who emphasizes grain quality and safety, emphasizes the protection and cultivation of grain production resources, and emphasizes agricultural ecological benefits should receive government rewards and subsidies.
In the long run, the foundation for safeguarding national food security is the enhancement of potential production capacity. This requires firmly upholding the farmland red line, advancing high-standard farmland construction, accelerating agricultural science and technology innovation, building a new type of agricultural operation system, cultivating a new generation of farmers, and developing appropriately scaled operations and grain industrialization.
To cope with the impact of sluggish international grain market prices, it is currently necessary to regulate the order of international grain trade, combat smuggling, and investigate and deal with illegal acts such as mixing imported low-quality grain with domestic high-quality grain for sale. In the long run, China must achieve diversification and contractualization of grain imports and reduce the transmission impact of sharp fluctuations in the international grain market on the domestic market.