How Is Food Security Guaranteed? The Governor Responsibility System Is Key
At the National Grain Circulation Work Conference held on January 8, 2015, senior officials from the National Development and Reform Commission and the State Administration of Grain proposed that under the new economic normal, it is necessary to accurately grasp the new trends in grain circulation development and seize the initiative in grain circulation reform.
For a long time, as the foundation of the national economy, China's grain industry has faced a complex situation. On the one hand, grain output has increased year after year, laying a solid foundation for the stability of the national economy and the central government's macroeconomic regulation. On the other hand, grain production and circulation have developed a dependence on policy, and market-oriented reform faces a difficult situation.
Especially under the new economic normal, the strategic adjustment of the economic structure is accelerating, the globalization of grain trade and the degree of marketization of grain purchase and sales are continuously deepening, and various contradictions in the operation of the domestic grain market are further interwoven and accumulated.
These problems are concentrated in the coexistence of a tight balance between total grain supply and demand and periodic oversupply of some varieties, the double squeeze faced by support prices alongside the protection of grain farmers' interests, and the prominent contradiction between the moderate use of international grain resources and the impact on the domestic market.
Under this situation, the next step of reform must not only break down the long-standing institutional and mechanism drawbacks in the grain sector, but also protect the interests of grain-growing farmers, stabilize grain production and the grain market, and ensure food security.
Five New Situations Force Grain Circulation Reform
Since 2004, with sustained policy support from the central government, grain production has entered a golden age. Not long ago, the National Bureau of Statistics released data showing that in the just-ended 2014, domestic grain output reached 607 million tons, achieving an unprecedented “eleven consecutive increases” in grain.
But in recent years, against the background of domestic economic transformation and structural adjustment and continued international economic downturn, China's grain production and circulation have gradually given rise to some new contradictions, and reform is urgently needed to solve the difficult problems. Xu Shaoshi, director of the National Development and Reform Commission, summarized them into five aspects:
From the perspective of grain supply, domestic grain production capacity has basically remained stable above the level of 1 trillion jin, bidding farewell to the era of grain shortage, but the situation in which grain production depends on the weather has not fundamentally changed. At present, the national effective irrigated area of farmland accounts for only 51.5% of cultivated land area, and nearly half of the cultivated land is “rain-fed land.”
Xu Shaoshi pointed out that against the background of increasingly intensified resource and environmental constraints, it is necessary to change the development mode of simply pursuing quantitative growth and pay more attention to sustainable development.
From the perspective of grain demand, with China's population growth, improvement in people's living standards and urbanization development, total grain consumption continues to maintain rigid growth. Grain is generally in a tight balance, high-quality grain varieties are becoming tighter, and soybean dependence on foreign sources is high.
At the same time, affected by factors such as declining economic growth, falling energy prices and import substitution, the growth rate of grain consumption has slowed somewhat, and varieties such as corn and indica rice have seen periodic oversupply. It is necessary to strengthen guidance for grain production and consumption and pay more attention to improving grain quality and market competitiveness.
As for the comparative advantage of international trade, due to rising prices of production factors such as domestic labor and land, domestic grain production costs have gradually increased, while international market prices of bulk agricultural products have shown a downward trend.
Data from the State Administration of Grain show that at present, each ton of domestic corn, rice and wheat at Guangdong port is about 750 yuan, 900 yuan and 500 yuan higher respectively than the duty-paid import price of the same variety, the corn price gap even exceeded 1000 yuan at one point, and the out-of-quota import prices of the three major grain varieties are approaching the “ceiling.” At the same time, the “floor” of domestic grain production costs continues to rise.
Ren Zhengxiao, director of the State Administration of Grain, analyzed: “Under this double squeeze, the space for relying solely on open-ended purchasing and raising support purchase prices to protect farmers' enthusiasm for growing grain is becoming smaller and smaller, and the effect is becoming weaker and weaker. The current grain purchase and storage policy system faces an unprecedented test.”
From the perspective of grain production and operation methods, new types of agricultural business entities such as large grain growers, family farms and farmer cooperatives are emerging. The trend of mergers and reorganizations of grain enterprises and relative concentration of production is accelerating. Advancing grain industrialization, developing various forms of appropriately scaled operations and promoting the optimization and upgrading of the industrial structure will become the direction of development.
From the perspective of resource allocation models and macroeconomic regulation methods, the marginal effect of relying on increased direct subsidies to stimulate grain production is clearly diminishing. “Excessive direct price intervention in the grain market may inhibit the role of market mechanisms or even distort the market. Too much grain inventory is concentrated in the hands of the government, especially the central government, and the grain price and market regulation mechanisms need to be improved more quickly.” Xu Shaoshi said.
Deepening Reform and Abandoning Policy Dependence
The fundamental goal and foundation of reform lie in ensuring national food security. At the Central Rural Work Conference that ended not long ago, the State Council required that China's agriculture fully enter a new stage of transforming its development mode and that ensuring national food security must be upheld as the primary task of agricultural modernization.
The urgent task is to increase local enthusiasm for grain production. A senior official of the State Administration of Grain said in a speech: “Grain production must never be relaxed. Once grain output collapses, it will take several years to recover.” Cadres in some local grain departments also pointed out that against the background of consecutive years of bumper grain harvests in China, food security awareness in some places has weakened, grain production has been relaxed, grain circulation has been neglected, and there is a phenomenon of excessive reliance on the central government.
Ren Zhengxiao pointed out that it is necessary to take the comprehensive implementation of the governor responsibility system for food security as the core and further enhance food security safeguard capacity. “The governor responsibility system for food security is a basic system for implementing the national food security strategy and safeguarding national food security.” He said that next, all localities should issue specific measures as soon as possible to comprehensively implement the food security responsibility system and truly put all food security responsibilities into effect. This magazine learned that in 2014, some provinces and regions including Shanxi, Yunnan and Guangdong had already fully incorporated food security responsibilities into the target responsibility assessment systems of governments at all levels.