China's agricultural trade deficit may hit a record high

The reporter recently learned from a relevant person at the Ministry of Agriculture that there is little doubt this year's grain production will achieve a record eleventh consecutive increase, farmers' incomes are also expected to achieve an eleventh consecutive increase, and the income gap between urban and rural areas is very likely to narrow to within 3:1 for the first time. At the same time, due to strong domestic demand for agricultural products and low global agricultural product prices, the price inversion phenomenon has continued to intensify, and this year's agricultural trade deficit may hit a record high.

“In the second half of this year, summer grain achieved a huge increase in output, and autumn grain is expected to see another bumper harvest. Taking the whole year's grain production together, there should be no doubt about another bumper harvest this year.” Zhang Hongyu, Director of the Department of Rural Economic System and Operation Management of the Ministry of Agriculture, said recently at the Second China New Agricultural Industry Annual Conference and the National Agricultural Economy Summit Forum that China's grain production in 2014 is expected to achieve a record eleventh consecutive increase. In addition, in the first three quarters of this year, farmers' cash income grew by 9.7%, while urban residents' disposable income grew by 6.9%. Farmers' income was 2.8 percentage points higher than urban residents' income. Barring accidents, farmers' incomes this year are also expected to achieve an eleventh consecutive increase, and the income gap between urban and rural areas is very likely to narrow to within 3:1 for the first time.

Despite bumper harvests year after year and farmers' incomes also rising, grain imports have increased every year. In recent years, major bulk agricultural products such as grain, cotton, oil and sugar have shown comprehensive net imports. Data show that in 2013, China's total agricultural import and export trade reached 186.69 billion US dollars. Of this, exports were 67.83 billion US dollars, imports were 118.87 billion US dollars, and the trade deficit was 51.04 billion US dollars. In the first 10 months of this year, China's grain imports reached a new high of 15.65 million tons, a year-on-year surge of 46.4%. Multiple experts said in interviews with reporters that this year the proportion of agricultural exports continues to be far lower than the proportion of imports, export growth remains lower than import growth, and the deficit is showing positive growth. It is very likely to exceed the 2013 deficit and set a record high.

As for the reasons for the continuously increasing import volume, Zhang Hongyu said, first, China's national economy has grown very rapidly in recent years, and demand for agricultural products is extremely strong; second, the global economy is sluggish, and raw materials including agricultural products have remained at low prices. International grain prices have been sliding all the way in the past two years. This year, international grain prices have fallen 30% compared with the year before last and also fell 8% compared with last year. This has made the cost of imported agricultural products far lower than the cost of China's own production of resource-based agricultural products. With these two factors combined, the quantity and variety of China's agricultural imports are increasing. Chen Xiwen, Deputy Head of the Central Rural Work Leading Group and Director of its Office, previously told the Economic Information Daily that a large amount of low-priced agricultural products is hitting the Chinese market, making it increasingly difficult for Chinese farmers to make money from farming. Last year, farmers' per capita income was close to 9,000 yuan, but the income truly coming from crop cultivation was less than one quarter. Farmers cannot rely on land returns to support their families, their enthusiasm for farming is low, and the planted area of some important crops is continuously declining.

In order to truly implement the new grain security concept first proposed by the central government this year, “take our own as the mainstay and rationally utilize both international and domestic markets,” multiple interviewed experts believe that focus should be placed on two reforms: first, deepening reform of the rural land system; second, developing diversified agricultural operating entities to form a diversified modern agricultural management system with Chinese characteristics.