Domestic grain prices are 50% more expensive than foreign prices and are unlikely to fall, while the grain self-sufficiency rate declines year by year

50% more expensive than foreign prices, domestic grain prices are unlikely to “bow”

Domestic prices of rice, wheat, corn and soybeans are 17.26%, 32.8%, 88.24% and 60.16% higher than international prices respectively

Author: Huang Lichang

Recently, the Ministry of Land and Resources and the Ministry of Agriculture jointly issued the "Notice on Further Improving the Delineation of Permanent Basic Farmland", requiring that, on the basis of the existing work of delineating permanent basic farmland, high-quality farmland around cities and towns and along transportation routes that is currently vulnerable to occupation be given priority for designation as permanent basic farmland, so as to maximize the protection of comprehensive grain production capacity.

Recently, the Ministry of Land and Resources and the Ministry of Agriculture jointly issued the "Notice on Further Improving the Delineation of Permanent Basic Farmland", requiring that, on the basis of the existing work of delineating permanent basic farmland, high-quality farmland around cities and towns and along transportation routes that is currently vulnerable to occupation be given priority for designation as permanent basic farmland, so as to maximize the protection of comprehensive grain production capacity. The state is stepping up efforts to safeguard comprehensive grain productivity, but against the backdrop of a highly self-sufficient domestic grain market, its market competitiveness is encountering a touch of awkwardness: domestic grain prices are far higher than import prices, especially for corn and soybeans, where the price gap exceeds 50%.

Southern Metropolis Daily reporter Huang Lichang

1

Grain self-sufficiency rate declines year by year

According to the "Outline of the Medium- and Long-Term Plan for National Food Security (2008-2020)", China's grain self-sufficiency rate needs to remain above 95%. Although the grain self-sufficiency rate has been above 95% for the past five years, it has shown a trend of slight decline each year.

2

Soybean imports surge, self-sufficiency rate falls below the 95% red line

(Data source: Customs, Grain and Oil Market News)

According to the "Outline of the Medium- and Long-Term Plan for National Food Security (2008-2020)", China's grain self-sufficiency rate needs to remain above 95%. Because China's current grain self-sufficiency rate uses the self-sufficiency rate of cereals (including cereals, wheat and corn) as a substitute, if soybeans are included, then due to the rapid growth in soybean imports, the actual grain self-sufficiency rate has already broken through the red line.

3

Implementing import quotas to ensure a high degree of self-sufficiency

Even including soybeans, our grain self-sufficiency rate is still very high. But behind this high self-sufficiency rate, we have paid a very high price. International grain prices are substantially lower than domestic grain prices, but in order to achieve “high self-sufficiency in cereals and absolute safety of staple food rations”, the state implements a quota system for grain imports. In short, consumers have to eat expensive grain.

Revealed

Why is the price gap so large?

Reason one: In recent years, the prices of domestic agricultural production materials, labor and land have all risen relatively quickly, but farmers' operating scale has not expanded correspondingly, so the price disadvantage has become apparent.

Reason two: In order to protect farmers' interests, the state raises the minimum purchase price of grain or the price of retail reserves and provides subsidies to farmers.

Reason three: Tariffs are too low to play a role in protecting domestic agricultural products. According to data from Ban Yue Tan, the average tariff level for agricultural products in the world is 62%, and the highest tariff level can even reach more than 1000%. China's average tariff level for agricultural products is 15.2%, less than 1/4 of the world average. The tariff level for soybeans is only 3%. China implements tariff quota management for important agricultural products such as wheat, corn, rice, sugar, cotton and wool, and the highest out-of-quota tariff is only 65%. For example, Japan: Japan once levied a tariff of 341 yen per kilogram on imported rice, with a tariff rate as high as 778%. Because international market rice prices rose sharply, Japan's domestic rice prices fell. In 2012, after investigating the international market, Japan lowered the tax rate, but still levied a tax of 122 yen per kilogram of rice, with the tax rate still as high as 280%.