Corn May Become the Next Pilot Commodity, Temporary Storage Policy in the Works for Full Abolition

Corn May Become the Next Target Price Subsidy Pilot Commodity; Decade-Long Temporary Storage Policy Faces an End

China Times reporter Chen Yanpeng reports from Beijing

“The National Development and Reform Commission, the Ministry of Agriculture and other departments are in the works to fully abolish the temporary storage policy, intending to replace it with a more market-oriented target price subsidy system.” A grain expert involved in relevant policy research recently revealed this to a China Times reporter.

It is reported that the target prices for cotton and soybeans in 2014 were made public in early April and late May of this year respectively. However, so far, apart from soybeans and cotton having ended temporary storage, corn, rapeseed and sugar are still following the temporary storage policy of past years, while rice and wheat are still implementing the minimum purchase price policy.

This newspaper's reporter learned from informed sources that the general direction of ending the temporary storage policy for corn, rapeseed and sugar has been set, and corn may become the next commodity after soybeans and cotton to implement the target price pilot, possibly as early as next year. The above expert said that the agricultural “13th Five-Year” plan currently under study has already put the abolition of temporary storage on the agenda, and the temporary storage policy launched in 2005 has reached its end.

Pilot Expansion

The pilot scope of cotton target price reform is in the works for expansion. Recently, a person in charge at the Price Department of the National Development and Reform Commission said at a press conference that in addition to the pilot region in Xinjiang, the state will also appropriately provide subsidies to the main producing areas in the Yangtze River and Yellow River basins.

As for the expansion of pilot commodities, the above person in charge said “there is no timetable yet”, but he also pointed out that each agricultural product is different, and whether it can be expanded to other commodities in the next step all depends on the situation of the cotton and soybean reform pilots.

The National Development and Reform Commission gave a positive assessment of the pilot: since the pilot was launched, the cotton planting area in Xinjiang has been relatively stable, the price gap between domestic and international cotton and soybean markets is gradually narrowing, and enterprise confidence and market vitality are also gradually strengthening.

“In fact, implementing target price reform means adjusting the original temporary state purchase and storage policy to a target price policy, which takes the interests of textile enterprises more into consideration.” said Liu Xiaonan, deputy director of the Economic and Trade Department of the National Development and Reform Commission.

In the past, the state purchased and stored at a fixed price higher than the market, making domestic cotton prices much higher than international market prices, which affected the competitiveness of textile enterprises. But after implementing target price reform and abolishing the temporary storage policy, cotton prices are formed by market supply and demand, the linkage between domestic and international cotton markets will strengthen, the domestic and international price gap should narrow to a reasonable level, and the competitiveness of our country's textile enterprises will improve.

Wen Bu, deputy director of the Policy Research Office of the National Development and Reform Commission, said on this that judging from the domestic and international cotton price gap in the new year, it is expected to narrow to a reasonable range, which will help curb substitution by chemical fibers and reduce imports of cotton yarn, and domestic cotton demand is expected to stabilize and rebound.

In the view of people in decision-making departments, implementing the target price system is a major institutional innovation for improving our country's agricultural product price and market regulation mechanisms.

“What is certain now is that the pilot region for cotton target price reform will expand, and expanding pilot commodities is only a matter of time; later rapeseed, corn and sugar will all be included in the pilot.” said the above grain expert.

This newspaper's reporter learned from informed sources that the next commodity to implement the target price pilot will be corn, possibly as early as next year. The grain expert also believes “corn is the most likely”, saying that corn is not a staple grain and is mainly used as a feed crop, making it more convenient for piloting.