Five Measures to Ensure Food Security: The Food Law Should Be Enacted as Soon as Possible

The "Outline of the National Medium- and Long-Term Plan for Food Security (2008—2020)" has been more than half implemented. When General Secretary Xi Jinping inspected [relevant areas] last year, he said: “Food security must rely on ourselves.” This year's Central Document No. 1 even puts food security in the first place. Looking at the speeches of city and county party secretaries, even major grain-producing areas have not put it on the agenda, let alone consider it as a major strategic issue for national economic development, social stability, and national self-reliance! Why is this? And how should it be solved?

Why do city and county party secretaries not take food security seriously?

First, it is unrelated to their growth and advancement. For city and county party secretaries, anything with responsibility, hard rules and requirements, and things they must account for, that is, anything related to their “hats,” they will take the initiative to grasp, trying every possible means to grasp it, doing everything possible to grasp it, and grasping it creatively. Once it has nothing to do with their “hats,” no matter how well it is said, how strict the requirements are, or how many regulations there are, they treat it as wind past their ears and will not lift a single hair. Calls to legislate the Food Law have lasted for many years, but only a draft for soliciting opinions was formed in 2012, and formal legislation has still not appeared so far. Before the abolition of the agricultural tax, most farmers paid taxes by handing over public grain. After the abolition of the agricultural tax, city and county party secretaries sighed that there was no longer the slightest constraint on whether farmers planted grain or how much they planted. With no pressure from agricultural taxes, city and county party secretaries no longer cared about grain production. And the farmers? If they want to plant, they plant; if they do not want to plant, they let it be!

Second, they are forced to give it up for fiscal revenue. Major grain-producing areas make important contributions to national food security, but their contribution rate to local finance is too low. Media reports: in a certain province in central China, among 52 counties and cities with grain output above 1 billion jin, the per capita fiscal expenditure level is less than one third of the national average, and even “the higher the grain output, the heavier the fiscal burden.” For farmers, “one year of planting grain is not as good as half a month of working away from home.” Central and provincial projects all require matching funds from cities and counties, while the predicament of “major grain counties, poor fiscal counties” and “major ecological counties, small economic counties” has long been difficult to change institutionally, forcing major agricultural counties and major ecological counties to deviate from their own “main business” and build industrial parks and develop industry.

Third, grain-growing subsidies have bred “lazybones.” There are quite a lot of central funds benefiting farmers of various kinds, but they are divided among dozens of projects in departments such as land, agriculture, and forestry, and cannot form a joint force. In particular, “departmentalization of funds for policies benefiting farmers and overlapping establishment of departments benefiting farmers” gives city and county party secretaries headaches. In recent years, grain subsidies have increasingly lost their effect: those with money do not care about this little subsidy, and those who are poor cannot become prosperous relying on this little subsidy; those with money do not grow grain or leave the land abandoned, and those without money cannot contract large tracts of farmland because they are poor. When central and provincial inspection teams inspect various policies and measures benefiting farmers, both cities and counties and farmers say they are good, because township cadres understand the situation but do not dare to speak, and farmers do not know how to speak. Much of the funds that cities and counties obtain from higher-level departments through lobbying are not used for farmers or agriculture. Grain-growing subsidies were originally supposed to be given to grain-growing farmers to protect their enthusiasm for growing grain, but it is also stipulated that the subsidies must be transferred directly to farmers' passbooks. Farmers can receive subsidies whether they grow grain or not, so the “arrow token” in the hands of city and county party secretaries has thus become a “chicken feather.”

Fourth, the illusion brought by market supply. After the reform of the grain purchase and sales system in 1998, the original state-owned grain stations extending to townships basically went bankrupt after the abolition of the agricultural tax. Without grain stations, urban residents still had grain to eat, and there were many varieties at not expensive prices. “Northeast rice,” “Thai rice,” “South Korean rice,” “American soybeans,” “American corn,” “Brazilian wheat”: merchants' vision and capabilities are much stronger than those of local governments, giving city and county party secretaries the illusion that “even if I do not produce grain, there will still be grain on the market” and “if I produce grain, I will even lose money.” The more industrially developed the city or county, the less the secretaries worry about purchasing grain. City and county GDP and fiscal revenue rankings have also made major grain counties give up grain production and focus their minds on attracting investment and vigorously developing industry.

Fifth, blind confidence due to increased grain production. In recent years, hybrid technology, plastic mulching technology, and greenhouse planting technology have been widely promoted, and herbicides, insecticides, and others have been used in large quantities, raising grain yields per unit area to a certain extent. At present, rice yield per mu is mostly above 400 kg, wheat above 300 kg, and corn above 450 kg. Major grain-producing areas mostly have two crops, or even three crops. This is also the key to more than a dozen consecutive increases despite reduced cultivated land, declining sown area, and severe natural disasters in some areas. There is also statistics plus estimation. For total grain output, the national and provincial levels estimate based on the sample survey results of sample survey counties. Sample surveys only solve the overall estimation problem of total grain output and make it difficult to obtain accurate grain output data. The sample size of sample surveys is small, uniformity is poor, representativeness is not strong, and it is not random. Output of classified grains still depends on comprehensive statistics. Comprehensive statistics are affected by factors such as registration errors, statistical precision, and administrative interference, as well as the blindness and arbitrariness of statistics, and can easily cause serious distortion of statistical results.

⟦NL> Sixth, the huge impact of the international market. Since 2010, the prices of all grain varieties in China have all been higher than international market FOB prices. If grain prices continue to rise and break through the “ceiling” price after out-of-quota tariffs, the tariff quota “firewall” negotiated when China “entered the WTO” will completely lose its protective effect, and China's current policy measures to regulate and stabilize the grain market will also all become ineffective. In 2013, the sugar market began to fall. According to the current trend, it is expected that within 10 years, rice, wheat, and corn will successively follow in the footsteps of soybeans and sugar, and the country's trade gates will be wide open, fully exposed to the impact of the international market. Since 2005, genetically modified corn, soybeans, and wheat have seized China's grain and oilseed markets. In 2009, more than 45 million tons of genetically modified soybeans were imported, 3 times China's soybean output that year. Since last year, China has returned more than 2 million tons of genetically modified corn cumulatively. The price issue and the genetically modified issue have become the two most tangled issues at present.

⟦NL> Seventh, the grain purchase and storage system is unreasonable. The "Outline of the National Medium- and Long-Term Plan for Food Security (2008—2020)" clearly stipulates the reserve quantities of each province (region, municipality): “production areas maintain 3 months of sales, and sales areas maintain 6 months of sales.” Because the market price of old grain is lower than that of new grain, consumers are more willing to buy new grain rather than old grain, resulting in actual reserves in many grain depots being insufficient. For grain entrusted for purchase and storage, storage companies allocate about 2 yuan per 100 kg for purchase expenses, about 600 yuan per million kg per month for storage staff wages, and about 5,600 yuan per million kg per year based on the annual average storage volume for storage fees, making purchase and sales losses large and making them unwilling to purchase and store. The subsidy for provincial-level reserved grain storage fees is 0.05 yuan per jin per year. The management fee extraction standard of the Provincial Reserve Grain Management Corporation: calculated on the average inventory, 0.0025 yuan per jin of grain per year; after the Provincial Reserve Grain Management Corporation extracts management fees, the accrual standard for the “subsidy income” of storage enterprises storing provincial-level reserved grain: calculated on the average inventory physical quantity, 0.0475 yuan per jin of grain per year. Whoever stores bears the subsidy. In addition, farmers feel that state-owned grain depots are picky in purchase and storage, and there is no requisition task, so they plant less or do not plant.

⟦NL> A strategic concept for binding city and county party secretaries in major grain-producing areas to food security

⟦NL> To ensure food security, one aspect is quantity security, basically self-sufficient in grain; another is quality security, non-toxic and harmless. Food security is not a matter for a certain city or county party secretary, nor for a few, dozens, or hundreds or thousands of city and county party secretaries, but a “major affair of the state.” To make city and county party secretaries think about problems and implement work from the perspective of the “state,” it is necessary to solve the following five aspects, so that there can be a turn for the better and real effectiveness.

⟦NL> 1. Enact the Food Law as soon as possible. To grasp the grain bag, legislation must come first. Only with a legal basis can it be grasped effectively. In February 2012, the Food Law (draft for soliciting opinions) was published, but to this day it has still not been formally enacted. First, ensuring food security requires legislation. American agriculture also once experienced large-scale pollution. A 1990 U.S. survey and assessment report showed that U.S. agricultural pollution accounted for 68% to 83% of total surface pollution, causing 50% to 70% of surface water bodies to be polluted or affected. The United States effectively controlled the release of highly toxic pesticides in agricultural production through policies, technology, law, and other aspects, effectively alleviating agricultural pollution. By 2006, the area of U.S. agricultural pollution had decreased by 65% compared with 1990. Second, solving the problem of “the central government is anxious while cities and counties do not take it seriously” requires legislation. The current national food security management system is a system under the leadership of the National Development and Reform Commission, with the State Administration of Grain and the China Grain Reserves Corporation managing jointly. The "Regulations on the Administration of Grain Circulation" and the "Regulations on the Administration of Central Grain Reserves" cannot assign the responsibilities of grain production, grain circulation, grain reserves, and ensuring food security to the “top leaders” of cities and counties. Food security without the support of city and county party secretaries is like a castle in the air. Of course, to ensure food security, it is not necessary to assess all cities and counties, only major grain-producing areas. Legislating to clarify the assessment and appointment standards for cadres in major grain-producing areas can bring divided attention together.

⟦NL> 2. Change the subsidy method. To grasp the grain bag, it is necessary to ensure farmers' incomes. Only with income and the ability to defuse risks in the grain production process can orders be carried out without being issued. Calls to change the grain subsidy method have been very strong in recent years. At present, the more concentrated ones are as follows. First, direct subsidies. Change grain-growing subsidies to grain price subsidies and cancel other subsidies. Change past grain area subsidies to grain output subsidies, so that all grain-growing farmers directly benefit. The specific calculation method is: subsidy amount = government-approved subsidy area × prescribed subsidy yield per unit × subsidy amount per unit output. Second, deficiency payments. The specific method is: first, the government sets a target price to ensure farmers' incomes. When the market price is lower than the target price, the government makes deficiency payments to farmers. The deficiency payment range is the difference between the target price and the higher of the market price and the loan rate. When the market price is higher than the loan rate, the deficiency payment range is the difference between the target price and the market price; when the market price is lower than the loan rate, the deficiency payment range is the difference between the target price and the loan rate. Third, loan subsidies. Before the loan matures, if the grain market price is higher than the loan rate, farmers may sell the grain and then repay the loan and interest; if the grain market price is lower than the loan rate, farmers may, when the loan matures, not repay the loan, but instead hand the grain over to the Commodity Credit Corporation. The loan rate is in fact a support price. Through this policy, the price farmers receive is ensured not to be lower than the loan rate, thereby protecting farmers' enthusiasm for growing grain. Fourth, insurance subsidies. Encourage commercial insurance organizations to participate in agricultural insurance. Through reinsurance, reduce the risk for commercial insurance institutions participating in agricultural insurance and mobilize their enthusiasm. The government gives insured farmers a 50% to 80% premium subsidy, so that farmers need only pay a very small premium to participate in agricultural insurance. Fifth, disaster subsidies. Through special disaster assistance plans, subsidize income losses caused by natural disasters to help affected parties stabilize income and restore production. At the same time, in order to prevent agricultural input manufacturers from raising prices blindly and grabbing farmers' grain-growing profits, each year the State Council should issue guiding prices for agricultural input products for agricultural input manufacturers and distributors, safeguarding the interests of grain-growing farmers.

⟦NL> 3. Implement fiscal compensation. To grasp the grain bag, it is necessary to grasp the money bag. Only when there is no worry about fiscal revenue can the attitude of city and county party secretaries change. Fiscal revenue, as real gold and silver for cities and counties, is the focus of attention of city and county party secretaries in a market economy, and also the foundation and face of cities and counties. To change the attitude of city and county party secretaries in major grain-producing areas, it is impossible without paying attention to finance. At present, the fiscal revenue of most major grain-producing areas is less than one quarter that of industrial areas. The more a city or county is a major grain producer, the less fiscal revenue it has. First, increase transfer payment efforts. On the basis of rewarding major grain-producing counties, the central government should calculate and arrange transfer payment amounts according to each area's comprehensive grain production capacity and increase range, as well as the public service expenditure needs of major grain-producing areas, and strive to narrow the fiscal revenue gap between major grain-producing areas and other economically developed areas. Second, support farmer-supermarket direct linkage through central fiscal support. Issue supportive measures to promote farmer-supermarket direct linkage, give fiscal support to the construction of agricultural product wholesale markets, and reduce agricultural product logistics costs. Third, distribute project funds according to contributions. Give preference in the distribution of agricultural project funds, distribute project funds according to cultivated land area, population size, and commodity grain contribution rate, lean more toward major agricultural counties (cities, districts), and cancel or reduce the proportion of local matching funds for construction projects, further mobilizing farmers' enthusiasm for growing grain. Fourth, keep high value-added parts in major grain-producing areas. The high value-added parts of grain production are at both ends: one end is agricultural production and food processing machinery manufacturing, and the other end is food processing. At present, major grain-producing areas generally have sufficient raw materials, but the processing industry is small in scale and low in technological content. The technical equipment of 80% of grain processing enterprises is still at the level of developed countries in the 1980s, and only about 5% has reached the current level of developed countries. The quality standards and testing systems of the grain processing industry lag behind and are not aligned domestically and internationally. Thai rice has 15 grades, 5 grain shape indicators, and 12 impurity indicators, while China has only 4 grades. Products do not adapt to the international market, the specificity of raw materials is not strong, and competitiveness is relatively weak. High-quality raw materials are mixed during logistics, affecting the grade and quality of processed products. In addition, “building warehouses in the south” and “building factories in the north” lead to disorderly competition for grain sources between the south and the north, rising raw material costs in the grain processing industry, and obstruction of the industrialization process. Deploying agriculture, food processing, and food processing machinery manufacturing in major grain-producing areas, and building the highest value-added part of grain production and sales in grain production areas, will solve the problem of major grain-producing areas worrying about industry, complaining about finance, and being unwilling to grow grain.

⟦NL> 4. Unified production and unified sales in major producing areas. To grasp the grain bag, power must be concentrated. One radish in one hole, one nail in one eye, only then can one grasp the key point. At present, the grain production link is the responsibility of the Ministry of Agriculture, the grain circulation and processing links are the responsibility of the State Administration of Grain, and the grain consumption and import and export links are the responsibility of the Ministry of Commerce. The Ministry of Science and Technology, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Land and Resources, the Ministry of Water Resources, the National Health and Family Planning Commission, the People's Bank of China, the State Administration for Industry and Commerce, the General Administration of Quality Supervision, Inspection and Quarantine, the National Development and Reform Commission, and so on all have rights and interests. The part involving collecting fees and allocating money none are willing to let go. Cities and counties face so many departments and are in a weak position, and farmers are even more at a loss. Therefore, Canada's practice can be borrowed, concentrating power in the Ministry of Agriculture, the grain bureau, and the quality inspection administration. The Ministry of Agriculture formulates grain policies, laws, and international trade rules, and is responsible for handling trade and agricultural policy issues. The grain bureau has monopoly operation (best price, targeting the market, market development), unified purchase and unified sales (reducing risk, equal interests, orderly progress), and the government as backing (guaranteeing initial payments, guaranteeing credit sales, guaranteeing all loans). The "Canada Grain Act" clearly stipulates: wheat and barley exported by Canada and used for domestic food consumption are monopolistically operated by the Canadian Wheat Board, implementing unified purchase and unified sales to meet the needs of domestic and international markets and create the highest income for farmers. The pricing of wheat and barley is entirely controlled by the Wheat Board. The Wheat Board ensures farmers obtain sales income by establishing a comprehensive account, implementing initial pricing, final settlement price, and secondary payments. The initial price is stipulated by the government and announced by the Wheat Board before annual production. The specific settlement method: when farmers deliver wheat, they receive income once according to the initial price; after the rice year, based on the actual sales price (after deducting various expenses), they receive the final payment a second time. If the market price rises substantially and large quantities of grain are sold above the initial price, the Wheat Board will promptly adjust the payment method and give farmers one or several interim payments. The quality inspection administration formulates grain quality standards and quality inspection methods, is responsible for final authoritative inspection of the quality of imported and exported grain, and engages in research and promotion of grain quality.

⟦NL> 5. Reform the reserve system. To grasp the grain bag, it is necessary to grasp adjustment. Only when the storage problem is solved can there be grain in hand and no panic in the heart. Grain reserves are an important link in food security. The current state-owned grain depot reserve has many problems. After the restructuring of the grain system in 2004, grassroots grain depots operating independently and bearing their own profits and losses have struggled to survive and are unable to undertake the task of national reserve grain regulation. Large grain depots, on the one hand, falsely report storage capacity upward to obtain storage fees, and on the other hand, profit on the market by reselling reserve grain that is “not allowed to be moved” or by renting out grain warehouses. In response, a “entrusted storage” grain reserve system can be adopted. Entrusted storage is the main measure used by the United States to stabilize grain supply and prices in the grain circulation field. The U.S. grain reserve system is closely related to the support price policy. The executing agency for grain reserves is the federal government's Commodity Credit Corporation. When the market price is lower than the loan rate, farmers may hand grain over to the Commodity Credit Corporation, and this part of the grain forms reserves; if the market price is higher than the loan rate and the government needs to increase reserves, it buys from the market. The Commodity Credit Corporation does not own grain storage facilities, but implements the “entrusted storage” method, that is, the grain reserve task is mainly executed by commercial grain storage enterprises with better technical facilities and sanitary conditions entrusted by the government. The grain ownership belongs to the government, and the government pays storage fees and all expenses incurred in the reserve process, including losses and deficits, while storage enterprises that accept the government's entrusted storage task must also act according to government instructions. Entrusted storage not only solves the problem of “raising a thief in the family” and the problem of fraudulent insurance claims, but also ensures the security of grain reserves.

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