Pilot Program for Target Prices of Agricultural Products Not to Be Expanded This Year, Policies to Be More Flexible
On January 10, Han Jun, deputy director of the Office of the Central Leading Group for Financial and Economic Affairs and deputy director of the Office of the Central Leading Group for Rural Affairs, revealed in a speech at the “State Research Think Tank Forum · New Year Forum 2015” that China's policy on target prices for agricultural products will continue to focus on doing well the pilot programs for soybeans and cotton. There is no plan to expand the pilot target price system in 2015, but the policy will be more flexible to prevent sharp fluctuations in agricultural product prices.
Last year, according to the central government's arrangements, the three northeastern provinces and Inner Mongolia launched a pilot target price program for soybeans, and Xinjiang carried out a pilot target price program for cotton. Han Jun explained that after the pilots began, evaluation and tracking of the pilots have been ongoing. The problems encountered in the pilots now were all anticipated when the plans were designed, and there are contingency plans to solve these problems. For example, for cotton, the market price is 13,000 yuan to 14,000 yuan per ton, while the target price is 19,800 yuan per ton, equivalent to a fiscal subsidy of about 6,000 yuan per ton of cotton.
“The biggest change brought by the target price reform pilot is that the prices of cotton and soybeans are returning to the market equilibrium price, and the market has truly begun to play a decisive role in price formation.” Han Jun analyzed that the target price pilot is conducive to controlling the excessive growth of inventories and avoiding huge potential losses. Statistics show that in 2013 China's cotton inventory reached 11.48 million tons, accounting for 60% of global cotton inventory, placing a very heavy burden on public finances.
Han Jun further pointed out that the ceiling on agricultural product prices is not a steel plate; this ceiling can be regulated and can be lowered, and now the cotton ceiling has been lowered.
When discussing the next direction of the target price policy, Han Jun revealed that the target price pilots for soybeans and cotton have been running for only one year and need to continue to be done well. There is no plan to expand the pilots in 2015. Wheat will still implement the minimum purchase price, and some products will implement a temporary purchase and storage policy. The policies will be more flexible.