Grain Output Rises for Eleven Consecutive Years: Implementing the Spirit of the 52nd Executive Meeting of the State Council

Implementing the Spirit of the 52nd Executive Meeting of the State Council
Grain Output Rises for Eleven Consecutive Years, Storage Expansion and Warehouse Construction Accelerate

China's summer grain harvest increased substantially this year, achieving an “eleven-year streak of consecutive increases.” According to data released by the National Bureau of Statistics on July 14, the total national summer grain output in 2014 was 273.19 billion jin.

In response to relatively sluggish markets for some varieties and high inventory levels, which left the purchase and storage of new grain facing a severe shortage of warehouse capacity, the 52nd Executive Meeting of the State Council conducted a dedicated study on doing a good job in grain purchase and storage and strengthening the construction of storage facilities, clarified the priorities and requirements of the work, and made specific arrangements and deployments in areas including promoting sales to reduce inventory, strengthening transportation scheduling, increasing local reserves, intensifying warehouse construction, and tapping the potential of social warehouse capacity.

After the meeting, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture, the National Grain Administration, the Agricultural Development Bank, Sinograin and other relevant departments and units attached great importance to the matter and treated doing a good job in grain purchase and storage and the construction of storage facilities as the most urgent and most important task, going all out to advance the implementation of all policies and measures.

Summer Grain Purchasing Goes Smoothly, Emptying Warehouses and Reducing Inventory Shows Results

At present, summer grain purchasing is proceeding smoothly. This year's summer grain, oil crops and early indica rice again achieved a bumper harvest, and in the early period after the new grain came onto the market, market prices were generally below the floor prices.

In order to protect farmers' interests, five provinces including Hubei, Jiangsu, Anhui, Henan and Shandong successively launched the implementation plans for the minimum purchase price of wheat; ten provinces including Jiangsu, Anhui, Hubei, Sichuan, Jiangxi, Henan, Hunan, Zhejiang, Yunnan and Guizhou launched the temporary purchase and storage policy for rapeseed; and five provinces (regions) including Hubei, Anhui, Jiangxi, Hunan and Guangxi successively launched the implementation plans for the minimum purchase price of early indica rice. The purchasing of summer grain and early indica rice is proceeding smoothly.

As of August 15, various enterprises in the main producing areas had purchased a cumulative 133 billion jin of wheat, an increase of 40.3 billion jin year-on-year; a cumulative 6.2 billion jin of rapeseed, a decrease of 5.4 billion jin year-on-year; and a cumulative 7 billion jin of early indica rice, a decrease of 5.2 billion jin year-on-year.

In response to the still relatively tight storage capacity in the main early rice producing areas this year, relevant departments and units conducted a dedicated study. While doing a good job in selling and transferring grain to empty warehouses and accelerating new construction and maintenance to increase capacity, they also adopted multiple emergency measures, including approving two provinces to appropriately relax access conditions and listing some social enterprises that basically meet the conditions as preparatory storage purchase sites; and requiring Sinograin to implement collection alongside transfer, promptly organizing the consolidation of grain purchased as an emergency measure at sites that do not meet storage conditions, so as to ensure purchase and storage needs are met.

So far, the results of emptying warehouses and reducing inventory have begun to appear. First, the volume of policy grain placed on the market has been increased; since May, a cumulative 61.8 billion jin has been sold (as of August 20). Second, in three batches, a cross-provincial transfer plan for 20 billion jin of policy grain was issued to five regions with tight warehouse capacity: Heilongjiang, Jilin, Inner Mongolia, Jiangxi and Hunan. At the same time, a coordination mechanism for grain transportation was established, support for transport capacity was increased, and implementation was accelerated by arranging sites and transferring grain at the same time. As of August 19, 5.1 billion jin of transferred grain had been shipped out. With the completion of preparatory work such as matching of sites, the pace of subsequent transfers will accelerate further. Third, tasks have been arranged for Sinograin to swap and transfer varieties of policy grain, and it is expected that 10 billion jin of warehouse capacity can be freed up by the end of September. Fourth, the Ministry of Finance took the lead in issuing the Measures for the Administration of Subsidies for Corn Deep-Processing Enterprises in Northeast China Bidding to Purchase and Process Corn from National Temporary Reserves, which specified that for corn deep-processing enterprises above designated size in the three provinces (regions) of Heilongjiang, Jilin and Inner Mongolia that bid to purchase temporary reserve corn and process it for their own use between May and the end of this year, the central government treasury will provide a subsidy of 100 yuan/ton for the portion of the bid amount exceeding their two-month processing capacity, encouraging enterprises to purchase and use more. At present, 61 enterprises have been determined to be included in the subsidy scope. Preliminary statistics show that as of August 17, the above enterprises had bid to purchase 10.3 billion jin of temporary reserve corn and actually processed 5.3 billion jin.

Reserve Increase Plan Drafted, Granary Construction Accelerated

At present, the National Grain Administration, together with relevant departments, has studied and proposed a calculation plan for increasing the scale of local grain reserves. In late July, the National Development and Reform Commission, the National Grain Administration, the Ministry of Finance and the Agricultural Development Bank, in accordance with a certain proportion of the calculated newly increased reserve scale, issued in advance part of the local reserve grain increase plan, requiring all localities to fully implement it before the end of the 2014 new grain purchase and storage season.

The construction of grain storage facilities is being accelerated. First, accelerate the implementation of the proposed plan for 13 billion jin of warehouse capacity already issued this year. The National Grain Administration convened a meeting on July 14 with some key provinces (regions and municipalities) to urge the relevant provinces, regions and municipalities to speed up the progress of warehouse construction and strive to complete the construction task before the autumn grain comes onto the market. Second, 12 key provinces and regions receiving support for the maintenance and renovation of dangerous and old warehouses have signed target responsibility statements, and will complete this year's maintenance and renovation tasks before the autumn grain comes onto the market; central subsidy funds have already been allocated, and special supervision was conducted for Jiangxi and Hunan. Third, study and deploy work related to building 100 billion jin of new warehouse capacity this year and next. Specific warehouse construction projects are being prepared according to the target of 150 billion jin, to ensure completion of the 100 billion jin task this year and next. Fourth, study and arrange the plan and key points for the construction of 20 billion jin of grain storage canopy in Northeast China, and the relevant documents have already been issued.

The National Grain Administration successively dispatched 6 supervision and inspection teams, led by bureau leaders, to 12 key provinces to carry out supervision and inspection of grain purchasing, storage facility construction, grain inventory, and the implementation of the minimum and maximum inventory systems by grain enterprises. First, organize and carry out the national granary inventory check to maximize the use of idle granaries. Second, carry out inspections of summer grain, oil crops and early indica rice purchasing, and strictly investigate and deal with acts that harm farmers' interests, such as issuing “IOUs” and depressing grades and prices. At the same time, a six-month concentrated special rectification was carried out against the problem of “circulating grain” in policy grain purchasing and reserve grain rotation. Third, strengthen supervision and inspection of the sale, outbound shipment and cross-provincial transfer of policy grain, strictly investigate and deal with illegal and non-compliant acts such as setting up obstacles to obstruct and delay outbound shipment and charging extra fees, so as to ensure timely outbound shipment of grain and free up more warehouse capacity for autumn grain purchasing. Fourth, successfully complete the 2014 national grain inventory inspection work.

Next, relevant national departments will continue to intensify their work to ensure that all established measures are implemented in place and that “difficulty in selling grain” does not occur. The priorities are: continue to advance sales, transportation and warehouse emptying in main producing areas; implement the local grain reserve increase plan; improve autumn grain purchase and storage policies and solidly do a good job in purchase and storage work; promptly determine the specific plan for 100 billion jin of new warehouse capacity and further do a good job in new construction, maintenance and renovation, erecting simple canopies, and utilizing social warehouse capacity; conduct in-depth study of guidance and support policies for grain processing and conversion and implement minimum inventory; earnestly implement the pilot reform of target prices; further deepen the reform of the grain circulation system; effectively strengthen production safety and grain storage safety work and strengthen the internal management of grain storage enterprises; continue to strengthen interim and ex post supervision of the implementation of various policies and measures, accelerate the establishment of a credit system for grain enterprises, push enterprises to strengthen social responsibility, and serve the overall situation of grain market regulation.