China's Grain Output Rises Year After Year, Yet Supply and Demand Remain Tight: How Much Room Is There to Raise Yields Per Unit Area?

At present, the national winter wheat autumn sowing is drawing to a close. China's wheat has enjoyed bumper harvests for many consecutive years, yet stable development still faces some weak links. Under the rigid constraints of land and water resources, declining comparative returns from planting, and the impact of the international market, how can China's wheat achieve stable production and increased output? In early November, reporters went to major grain-producing areas to conduct research and interviews.

The Contradiction of Output Falling Short of Demand Emerges

Wheat is one of China's two major staple grains, and 40 percent of the country's population relies mainly on flour-based foods. Although China's wheat output has risen year after year, it has shown a net import trend for 3 consecutive years, and wheat prices face strong upward pressure.

A set of data attracted attention recently: in 2011 China imported 2.52 billion jin of wheat, 7.4 billion jin in 2012, and 10.51 billion jin in 2013; in the first 8 months of this year, imports reached 5.46 billion jin, up 27.7 percent year on year. Although wheat imports still account for a very small proportion of domestic output, the contradiction of output falling short of demand has begun to emerge.

The “collision” of a bumper wheat harvest with rising imports puts pressure on the stability of domestic wheat prices. Data show that in the 2014——2015 marketing year, global wheat output increased substantially, supply and demand were loose, and international wheat stocks were expected to rise by about 1 million tonnes, with stocks remaining high and international wheat prices running at a low level. Since last November, the domestic market price of wheat has been higher than the after-tax landed import price for 9 consecutive months. In September this year, the after-tax landed price of hard red winter wheat from the U.S. Gulf was about 1.35 yuan per jin, 0.12 yuan lower than the price in domestic high-quality wheat sales areas.

In fact, large-scale wheat imports from the international market are not feasible. Vice Minister of Agriculture Yu Xinrong explained that at present, the international wheat trade volume is about 250 billion jin, which is equivalent to China's wheat output. Wheat exporters are concentrated in the United States, Canada, Australia, the European Union, Argentina and Russia. The reality is that these 6 countries and regions account for more than 85 percent of total world exports, while two-thirds of wheat consumption in developing countries depends on imports. Experts estimate that by 2020 China's wheat consumption will increase by more than 10 billion jin. According to the new national food security strategy, relying on domestic production is the primary starting point for wheat production.

Besides the inversion of domestic and international prices, the unchanged minimum purchase price for domestic wheat sends a signal different from the past. The National Development and Reform Commission recently announced that, after comprehensively considering factors such as grain production costs, market supply and demand, comparative returns, international market prices and the development of the grain industry, the minimum purchase price for wheat next year will remain unchanged at the 2014 level. Since 2007, the minimum purchase price for wheat has risen all the way from 0.72 yuan per jin to 1.18 yuan per jin in 2014. A one-way rise in wheat prices has become almost a consensus among all types of market participants. The industry believes that, at a time when the minimum purchase price for wheat has been raised year after year, keeping the price unchanged next year shows that raising prices is not the only option for mobilizing farmers' enthusiasm for planting. In fact, since 2011, because market prices have been relatively high, many wheat-producing areas have not launched the minimum-price wheat purchase plan year after year, and in 2013 purchase volumes in most major producing areas fell sharply, and the policy's influence on wheat prices began to weaken.

Resource and Efficiency Constraints Intensify

Wheat is the only one of the three major cereals to achieve “eleven consecutive increases”, and stable area is the key factor in stabilizing and increasing wheat production. At present, planting efficiency and water resource constraints affect the stability of the wheat area.

Whether the wheat planting area can remain stable, and whether farmers are willing to increase input, mainly depends on economic returns. Zhao Guangcai, a member of the Wheat Expert Steering Group of the Ministry of Agriculture, said that among the three major cereals, wheat has the lowest planting efficiency. In recent years, the net income per mu of wheat has been more than 100 yuan, about 100 yuan lower than corn and nearly 200 yuan lower than rice. Although the national minimum purchase price has risen somewhat each year, overall the price increase is still lower than the cost increase.

A survey by the price department of Weihai city, Shandong province, shows that the wheat purchase price has now exceeded that of corn, but because corn yield per mu is noticeably higher than that of wheat, wheat returns are still lower than those of corn. Compared with the income of more than 10,000 yuan per mu from greenhouse vegetables, the problem of wheat's low comparative efficiency is even more prominent.

During interviews, many farmers said: “Growing wheat keeps you busy for more than half a year, and you only earn one or two hundred yuan per mu, which is less than what you earn from two days of work. If it were not for machine sowing and machine harvesting, we would not want to grow it.” Based on the 2013 minimum purchase price for wheat of 2.24 yuan per kg and an average wheat yield of 343.6 kg per mu, the gross income from 1 mu of wheat is 770 yuan, only one-third of the average monthly wage of a rural migrant worker nationwide in 2012, while net income is only 150 yuan. “Growing a season of grain is not as good as working for a month” is no exaggeration.

Water resource constraints also affect the wheat area. “Wheat needs watering 4 to 5 times in one season, consuming 250 to 300 cubic meters of water.” Yu Zhenwen, an academician of the Chinese Academy of Engineering and a wheat cultivation scientist, said that the wheat growth period is mainly in the seasons of winter and spring when rainfall is relatively low, so watering is needed to replenish soil moisture to meet growth needs. Of Henan's 80 million mu of wheat, 18 million mu are dryland wheat without irrigation conditions; of Shandong's 54 million mu of wheat, 13 million mu are dryland wheat; and more than 20 million mu of wheat in Huaibei, Anhui, lack good irrigation conditions. The northern Huang-Huai region and North China lack water resources. Apart from irrigation by diverting water from the Yellow River, other areas mostly rely on pumping groundwater to water wheat. Especially in North China, wells are drilled deeper and deeper, which not only increases production costs but also, due to over-extraction, has formed groundwater funnel areas.

The comprehensive treatment of severe groundwater over-extraction areas in North China, with the appropriate withdrawal of part of the wheat area, has become an unfavorable factor for the stability of the wheat area in the Huang-Huai region. Wei Baigang, director of the Department of Agriculture of Hebei province, said that the province's wheat irrigation water needs about 7 billion cubic meters, accounting for half of agricultural water use. Over the past 10 years, the groundwater level has fallen by an average of 1.37 m per year, and drought and water shortage have become the biggest obstacle for Hebei's wheat market. According to the requirements of the national pilot program for comprehensive treatment of groundwater over-extraction, this autumn Hebei implemented seasonal fallowing in over-extraction areas, with plans to reduce winter wheat by 850,000 mu.

However, favorable conditions also exist. In some areas, cotton planting has been reduced, adding space for expanding wheat planting. According to agricultural situation scheduling, Hebei's cotton spring sowing area was 7.23 million mu, down 16.4 percent year on year; Jiangsu's cotton area fell by about 20 percent from last year. Farmer He Yanzeng of Nanwu Village, Nanwucun Town, Jizhou city, Hebei province, planted 11 mu of cotton last year. This year, after hearing that the state had canceled the temporary cotton purchase and storage policy, he planted only 6 mu: “Next year I may not plant any cotton at all and am considering switching to wheat.”

To Increase Production, First Stabilize Advantageous Regions

To stabilize wheat production, advantageous regions must be highlighted. As long as effective measures are taken and new technologies are promoted faster, it is possible to raise wheat yields per unit area.

“The northern winter wheat region refers to the 5 provinces of Hebei, Shandong, Henan, Jiangsu and Anhui in the Huang-Huai-Hai area. Of every 4 steamed buns on people's dining tables, 3 are produced in these 5 provinces.” Zeng Yande, director of the Department of Crop Production of the Ministry of Agriculture, said that to stabilize wheat production, advantageous regions must be highlighted. Nationally, the focus is on doing a good job in the 5 Huang-Huai-Hai provinces. Wheat output in the 5 provinces accounts for 76 percent of the national total. Over the past 10 years, national wheat output increased by 70.9 billion jin, with these 5 provinces contributing 90 percent.

In recent years, agricultural infrastructure construction in the Huang-Huai-Hai region has achieved considerable results, playing an important role in promoting stable increases in grain output. This year, spring and summer rainfall in Henan was relatively low, and the important reason wheat was able to increase production substantially was the relatively large irrigated area: there was meteorological drought but no large-scale agricultural drought. Yu Zhenwen said that if all wheat fields in the Huang-Huai-Hai wheat region had irrigation conditions and water-saving irrigation were developed, yields per unit area would rise steadily. According to estimates, under the existing irrigation volume, using a comprehensive water-saving production system including water-saving varieties, improved soil fertility and water-saving cultivation, yields per unit area can be raised by 10 percent in the near term and 20 percent in the longer term. In the “Wheat Advantageous Regional Layout Plan”, whether for low-yield areas becoming medium-yield, medium-yield becoming high-yield, or high-yield becoming even higher-yield, all involve the Huang-Huai-Hai wheat region.

According to expert estimates, there is still considerable room to continue raising wheat yields per unit area. The theoretical yield of wheat in the Huang-Huai-Hai region can reach more than 800 kg. At present, the average yield per mu in this region is around 400 kg, less than half of the theoretical yield. Within the same ecological zone, yield differences between provinces are also large: wheat yields per mu in Shandong and Henan exceed 400 kg, 40 kg higher than Anhui. Judging from current high-yield practices, in some places 10,000-mu demonstration plots have reached more than 700 kg per mu, more than double the national average yield per unit area of 337 kg. As long as effective measures are taken and new technologies are promoted faster, it is possible to raise wheat yields per unit area.

How can the potential of wheat yields per unit area be converted into actual output? Zeng Yande said that in the future, investment must be increased, high-standard farmland construction strengthened, and the ability to withstand natural disasters enhanced. In conjunction with implementing the “National Overall Plan for High-Standard Farmland Construction”, priority should be given to transforming low-yield areas at 33 degrees north latitude, with focus on improving the sandy ginger black soil of northern Jiangsu, Huaibei and southern Henan, building a new batch of high-standard farmland that guarantees harvests despite drought or excessive rain, and further raising the proportion of wheat area with guaranteed irrigation. It is also necessary to strengthen cultivated land quality construction, especially to increase organic matter content, so as to “store grain in the land”.

Zeng Yande stressed that the key to raising yields per unit area lies in scientific and technological progress. First, promote seed industry innovation. Wheat is a conventional variety, and some seed enterprises do not pay much attention to variety research and development innovation. At the same time, farmers in some places are accustomed to keeping their own seed, causing variety degeneration. In the future, it is necessary to accelerate the breeding of a batch of new varieties that are cold-tolerant, drought-tolerant, disease-resistant and heat-damage-resistant. Second, promote integrated technological innovation. In conjunction with tackling key problems in grain yield-increase models, it is necessary to integrate a batch of regional, standardized high-yield and high-efficiency technical models, especially to integrate and assemble technical models for water-saving varieties, agronomic water saving and facility water saving, so as to “store grain in technology”.”