How will soybeans be sold from now on? Understanding agricultural product target price reform in one article
Right now, the soybean harvest period is about to begin in Northeast China, and farmers are calculating whether this year's soybeans can fetch a good price, which is also a matter of great concern to local officials.
Farmers already know that this year the state abolished the temporary purchase and storage policy and will no longer purchase soybeans at the market-support price of previous years, but instead implements a target price policy, and they must sell soybeans at market prices.
In May, the National Development and Reform Commission, the Ministry of Finance and the Ministry of Agriculture jointly announced this year's soybean target price at 4,800 yuan per ton. When the soybean market price is below the target price, the state gives subsidies to producers in pilot areas based on factors such as the price difference and planting area; when the market price is above the target price, the state does not issue subsidies. At present, pilot provinces including Heilongjiang, Jilin, Liaoning and Inner Mongolia are busy formulating implementation rules to fully carry out the soybean target price subsidy plan.
Positive policy effects begin to show
Wang Xiaoyu, deputy secretary-general of the Heilongjiang Soybean Industry Association, told reporters that the positive effects of the soybean target price subsidy policy have begun to appear initially, and Heilongjiang's soybean planting area has reversed the sharp decline of previous years. According to preliminary estimates, this year's planting area is stable at more than 37 million mu, among which Hailun city's soybean planting area this year reached 1.39 million mu, an increase of nearly 200,000 mu over last year.
A relevant official of the Inner Mongolia Department of Agriculture and Animal Husbandry also said that the soybean target subsidy policy, by directly subsidizing farming households, can effectively guarantee farmers' basic returns and help raise farmers' enthusiasm for growing soybeans.
The positive effects of the soybean target price subsidy policy are beginning to show, but there are still many areas that need improvement in order to stabilize and increase the soybean planting area.
The modern agricultural machinery cooperative in Anquan village, Changsheng township, Kedong county, Heilongjiang, has 32,000 mu of cultivated land, with 20,000 mu planted to soybeans. He Chengchun, the cooperative's chairman, is not very optimistic about the cooperative's soybean returns this year. The reason is that the soybean target price currently announced by the state is lower than farmers' expectations and is not enough to mobilize farmers' enthusiasm for growing soybeans. Guo Changsheng, deputy director of the Hailun City Agriculture Committee in Heilongjiang, believes that in Heilongjiang there is a conflict between corn and soybeans competing for land, and only when planting returns are roughly equal can the soybean planting area remain relatively stable. The soybean target price subsidy should refer to the returns from growing corn, so that the returns from growing soybeans approach those of corn, and only then can farmers' enthusiasm for growing soybeans be stimulated.
“Although this year's soybean target price is higher than last year's temporary storage price, it still has not changed the current situation of low soybean planting efficiency. If the strength of the soybean target price subsidy cannot bring soybean planting returns close to those of corn, it will be impossible to change the situation of an increasingly shrinking soybean planting area.” He Chengchun said.
Policy implementation is not easy
It is understood that at present the main soybean-producing areas in the three northeastern provinces and Inner Mongolia are formulating implementation rules to ensure that the soybean target price policy is carried out. However, the new policy faces millions of farming households, and the greatest difficulty in implementation lies in how to precisely subsidize soybean growers with high efficiency and low cost.
Lan Haitao, a researcher at the Macroeconomic Research Institute of the National Development and Reform Commission, believes that the direct subsidy recipients of the soybean target price are agricultural producers, and the key is how to define agricultural producers. In the early stage, ordinary farming households should be the main focus, while also taking into account new types of business entities such as family farms, specialized large growers and specialized cooperatives. In the later stage, new types of business entities such as family farms, specialized large growers and specialized cooperatives should be the main focus, while also taking into account ordinary farming households. Doing so is conducive to promoting household-scale operations and cultivating a new type of professional farmers.
Implementing the target price subsidy policy requires very scientific and accurate data as support. Because our country has long attached insufficient importance to the collection and organization of basic data and information on farming households, obtaining “very scientific and accurate data” in the short term is not very realistic, and the target price policy subsidy can only be carried out on the basis of basically scientific and accurate data.
Lan Haitao believes that the following measures should be taken to ensure the smooth implementation of the soybean target price subsidy policy: First, gradually establish an information database for target price subsidies in main producing areas. The contents of the information database include subsidy recipients, area, amount, region, output, per-unit yield, and so on. Second, use high-tech means to assist in measuring soybean planting area and solve the problem of information asymmetry in area-based subsidies. Third, establish an open, transparent and efficiently executed reward and punishment mechanism. The procedures and key details for receiving state subsidies must be made public in rural areas and accept villagers' supervision. Farmers who conceal the planting area of important agricultural products to fraudulently obtain state subsidies must be heavily punished. Fourth, provide rural areas with working funds subsidies. Most pilot areas are financially difficult, and rural areas lack funds. The central government can adopt the method of subsidies or reward-and-subsidy payments and entrust local governments to give appropriate subsidies for rural working funds, so as to mobilize the enthusiasm of the grassroots.
Make every effort to stabilize the planting area
In the soybean industrial park in Kedong county, Heilongjiang, Kedong Yuwang Soybean Protein Food Co., Ltd. is installing and debugging equipment. At a time when domestic soybean processing enterprises have shut down on a large scale, Yuwang Group has bucked the trend and invested in building a processing plant in Kedong county with an annual output of 10,000 tons of soybean protein and 300,000 tons of soybean meal. Company official Zhu Chunmin said that what they worry about most is that the soybean planting area will continue to decline, and that soybean supply falling short of demand will lead to price increases, leaving the company under the dual pressure of raw material shortage and rising costs.
Supported by many years of temporary storage policy, soybean prices continued to rise. Because the temporary storage price was relatively high, domestic soybean prices were far higher than imported soybeans, and large quantities of domestic soybeans entered state reserves. The state implemented sales at a price that covers costs for purchased and stored soybeans, and this “one in and one out” distorted the market price formation mechanism. Under this purchase and sales mechanism, soybean processing enterprises mainly obtained raw materials through competitive bidding for state-reserved soybeans, and most enterprises were in a state of phased operation. It is understood that soybean processing enterprises in Heilongjiang operated for only one month on average each year. The province's annual soybean processing capacity is 15 million tons, but actually only about 2 million tons are processed each year. In order to reduce production costs, some enterprises moved to build plants in coastal areas and bought imported soybeans as raw materials.
Wang Xiaoyu believes that after the implementation of the soybean target price policy, soybean prices will be determined by the market, the purchase and sales mechanism will be straightened out, and soybean processing enterprises can obtain soybean sources at market prices, which will help enterprises reduce production costs and increase profits. However, after the market is fully liberalized, issues such as how to sell soybeans, to whom to sell them, at what price to sell them, whether processing enterprises can obtain a stable supply of raw materials, and how to achieve effective connections between soybean farmers and enterprises still need attention.
For processing enterprises, what they fear most after the market is liberalized is that soybean prices will fluctuate sharply, affecting business operations. Nie Xiaojun, general manager of Heilongjiang Dongxue Biotechnology Co., Ltd., believes that while implementing the soybean target price subsidy, the state must also do a good job in macroeconomic regulation, stabilize the soybean planting area, guide farmers to carry out reasonable crop rotation, and ensure a stable supply of soybeans.