Pilot Expansion Plan for Agricultural Product Price Reform Under Study, May Become a Key Focus of the No. 1 Central Document
The pilot reform of the agricultural product price system is expected to be further expanded. Reporters from Economic Information Daily recently learned from multiple authoritative sources that, in addition to the continuation of existing trial varieties and regions, relevant departments are studying the launch of a target price subsidy for sugar in Guangxi. If it passes deliberation,
The pilot reform of the agricultural product price system is expected to be further expanded. Reporters from Economic Information Daily recently learned from multiple authoritative sources that, in addition to the continuation of existing trial varieties and regions, relevant departments are studying the launch of a target price subsidy for sugar in Guangxi. If it passes deliberation, it will be written into next year's No. 1 Central Document. In addition, reform of the land system will be further deepened, and heavyweight policies including allowing collective land to enter the market may be introduced next year.
According to the deployment of this year's No. 1 Central Document, the cotton and soybean target price pilots successively carried out in Xinjiang, Northeast China and Inner Mongolia have attracted much market attention. According to relevant sources, the pilot reform of the agricultural product price formation mechanism is only a beginning this year, and relevant departments are actively studying the 2015 price reform plan. Because the existing pilot agricultural products will take at least until the spring of 2015 from production to harvest before the trial situation can be basically understood, and it is difficult for price reform to form relatively complete policies and methods without going through two cycles, the preliminary idea is to continue implementing the target price reform pilots for cotton in Xinjiang and soybeans in Northeast China and Inner Mongolia in 2015, so that the overall plan for future price reform will be more complete, more scientific and more operable.
As to whether the varieties and scope of the agricultural product price reform pilots that the market had previously cared about will increase, reporters from Economic Information Daily learned that because the impact on CPI is too obvious, it has now been basically decided to continue implementing the minimum purchase price policy for wheat, rice and corn. Whether there will ultimately be changes must depend on the situation of this year's soybean target price pilot.“The earlier widely circulated claim that the temporary storage policy would be abolished during the ‘13th Five-Year Plan’ period is not accurate. This must be a major decision that can only be made after the experience of the price reform pilots has accumulated to a certain extent.” An informed source said. In addition, because the situation of sugar is very similar to that of cotton, relevant departments are now studying carrying out a target price subsidy pilot in Guangxi. It is said that the above reform plans targeting the agricultural product price formation mechanism will all become important components of the 2015 No. 1 Central Document.
The target price reform pilot first proposed in this year's No. 1 Central Document is an important measure to improve China's agricultural product price formation mechanism. The so-called target price system means that the government sets a target price for agricultural products. When the actual market price is higher than the target price, low-income consumers are subsidized; when the market price is lower than the target price, producers are subsidized according to the price difference.
The formation of the target price is entirely determined by market supply relations. This not only gives play to the decisive role of the market mechanism in resource allocation, but also clarifies the government's responsibility for agricultural and rural development.
Chen Xiwen, deputy head of the Central Rural Work Leading Group and director of its office, previously said in an interview with reporters from Economic Information Daily that carrying out the target price pilot is in accordance with the requirements of the decision of the Third Plenary Session of the 18th Central Committee, allowing supply and demand relations to be reflected in the market so as to form product prices. This is also the general mechanism of price formation under market economy conditions.
It is understood that at present the prices of the vast majority of China's agricultural products are formed according to market mechanisms, and the government mainly intervenes in the prices of six important varieties, namely wheat, rice, corn, soybeans, cotton and sugar. In 2004, while fully liberalizing the grain market, the central government proposed the main means of price regulation. At first, the minimum purchase price system was implemented for wheat and rice, and later four varieties were gradually added, with a “temporary storage price” set. This adjustment of the target price pilot mainly has two meanings: first, to let the market play a decisive role in resource allocation while the government also plays a good role; second, to solve some problems that actually exist at present. In addition to the overall return on land still being relatively low and farmers' enthusiasm for growing grain not being high, these problems also include the fact that since 2010, the import volume of some agricultural products has been relatively large, even showing a trend of net imports. The import prices of some agricultural products are obviously lower than domestic ones, creating a price inversion, so operators and processors are more willing to choose imported agricultural products. Because the increase in import volume is not entirely caused by supply and demand relations, after domestic agricultural products are harvested they are instead harder to sell, causing inventory backlogs and dealing a huge blow to the market.
Chen Xiwen believes that the most important problem currently facing agricultural product price reform is the mechanism. Since this is a socialist market economy, the role of the market mechanism should be brought into greater play, yet grain is also related to the national economy and people's livelihood, so the government cannot completely refrain from intervening.“In the past, the minimum price and temporary storage both had the government supporting the market and providing a fallback, but after the implementation of the target price, to a certain extent this fallback is gone.”
Regarding whether a sugar target price pilot will be carried out in Guangxi next year, Chen Xiwen said that the problem of sugar price inversion in Guangxi is now very urgent, and a large-scale reduction in production may occur next, so measures need to be taken to protect farmers' interests and national food security. However, because the current sugar price inversion is too serious, it is hard to say whether implementing target price adjustments will actually be effective, and relevant departments are studying and consulting on the matter.
Li Guoxiang, a researcher at the Rural Development Institute of the Chinese Academy of Social Sciences, said that at present fewer and fewer countries in the world intervene in the pricing of agricultural products. How to change agricultural products from pricing to price evaluation, give play to the government's public welfare role, and assist farmers in increasing their returns is a major challenge facing the Chinese government in the future.
In addition to reform of the agricultural product price formation mechanism, many market participants predict that a series of heavyweight policies centered on rural land system reform will be introduced next year. It is understood that relevant departments are currently studying policies such as reform of the land expropriation system, allowing collective land to enter the market, and mortgage and transfer of farmers' housing property rights.
According to the deployment of this year's No. 1 Central Document, the cotton and soybean target price pilots successively carried out in Xinjiang, Northeast China and Inner Mongolia have attracted much market attention. According to relevant sources, the pilot reform of the agricultural product price formation mechanism is only a beginning this year, and relevant departments are actively studying the 2015 price reform plan. Because the existing pilot agricultural products will take at least until the spring of 2015 from production to harvest before the trial situation can be basically understood, and it is difficult for price reform to form relatively complete policies and methods without going through two cycles, the preliminary idea is to continue implementing the target price reform pilots for cotton in Xinjiang and soybeans in Northeast China and Inner Mongolia in 2015, so that the overall plan for future price reform will be more complete, more scientific and more operable.
As to whether the varieties and scope of the agricultural product price reform pilots that the market had previously cared about will increase, reporters from Economic Information Daily learned that because the impact on CPI is too obvious, it has now been basically decided to continue implementing the minimum purchase price policy for wheat, rice and corn. Whether there will ultimately be changes must depend on the situation of this year's soybean target price pilot.“The earlier widely circulated claim that the temporary storage policy would be abolished during the ‘13th Five-Year Plan’ period is not accurate. This must be a major decision that can only be made after the experience of the price reform pilots has accumulated to a certain extent.” An informed source said. In addition, because the situation of sugar is very similar to that of cotton, relevant departments are now studying carrying out a target price subsidy pilot in Guangxi. It is said that the above reform plans targeting the agricultural product price formation mechanism will all become important components of the 2015 No. 1 Central Document.
The target price reform pilot first proposed in this year's No. 1 Central Document is an important measure to improve China's agricultural product price formation mechanism. The so-called target price system means that the government sets a target price for agricultural products. When the actual market price is higher than the target price, low-income consumers are subsidized; when the market price is lower than the target price, producers are subsidized according to the price difference.
The formation of the target price is entirely determined by market supply relations. This not only gives play to the decisive role of the market mechanism in resource allocation, but also clarifies the government's responsibility for agricultural and rural development.
Chen Xiwen, deputy head of the Central Rural Work Leading Group and director of its office, previously said in an interview with reporters from Economic Information Daily that carrying out the target price pilot is in accordance with the requirements of the decision of the Third Plenary Session of the 18th Central Committee, allowing supply and demand relations to be reflected in the market so as to form product prices. This is also the general mechanism of price formation under market economy conditions.
It is understood that at present the prices of the vast majority of China's agricultural products are formed according to market mechanisms, and the government mainly intervenes in the prices of six important varieties, namely wheat, rice, corn, soybeans, cotton and sugar. In 2004, while fully liberalizing the grain market, the central government proposed the main means of price regulation. At first, the minimum purchase price system was implemented for wheat and rice, and later four varieties were gradually added, with a “temporary storage price” set. This adjustment of the target price pilot mainly has two meanings: first, to let the market play a decisive role in resource allocation while the government also plays a good role; second, to solve some problems that actually exist at present. In addition to the overall return on land still being relatively low and farmers' enthusiasm for growing grain not being high, these problems also include the fact that since 2010, the import volume of some agricultural products has been relatively large, even showing a trend of net imports. The import prices of some agricultural products are obviously lower than domestic ones, creating a price inversion, so operators and processors are more willing to choose imported agricultural products. Because the increase in import volume is not entirely caused by supply and demand relations, after domestic agricultural products are harvested they are instead harder to sell, causing inventory backlogs and dealing a huge blow to the market.
Chen Xiwen believes that the most important problem currently facing agricultural product price reform is the mechanism. Since this is a socialist market economy, the role of the market mechanism should be brought into greater play, yet grain is also related to the national economy and people's livelihood, so the government cannot completely refrain from intervening.“In the past, the minimum price and temporary storage both had the government supporting the market and providing a fallback, but after the implementation of the target price, to a certain extent this fallback is gone.”
Regarding whether a sugar target price pilot will be carried out in Guangxi next year, Chen Xiwen said that the problem of sugar price inversion in Guangxi is now very urgent, and a large-scale reduction in production may occur next, so measures need to be taken to protect farmers' interests and national food security. However, because the current sugar price inversion is too serious, it is hard to say whether implementing target price adjustments will actually be effective, and relevant departments are studying and consulting on the matter.
Li Guoxiang, a researcher at the Rural Development Institute of the Chinese Academy of Social Sciences, said that at present fewer and fewer countries in the world intervene in the pricing of agricultural products. How to change agricultural products from pricing to price evaluation, give play to the government's public welfare role, and assist farmers in increasing their returns is a major challenge facing the Chinese government in the future.
In addition to reform of the agricultural product price formation mechanism, many market participants predict that a series of heavyweight policies centered on rural land system reform will be introduced next year. It is understood that relevant departments are currently studying policies such as reform of the land expropriation system, allowing collective land to enter the market, and mortgage and transfer of farmers' housing property rights.