Prices of agricultural inputs are rising, yet grain prices are not. What is the reason?

Summary: Prices of agricultural inputs are rising, and the cost of farming keeps climbing. How should farmers respond?

With the advance of the country's supply-side reform, the field of agricultural inputs will also see a major transformation. The country's environmental protection efforts are intensifying, and some small enterprises are forced to rectify, shut down, or limit production. Although this regulates the industry's operating environment, the direct impact on the market is reduced supply. Chemical fertilizers and pesticides are agricultural production materials and are indispensable for farming, so price increases are unstoppable.

The Measures for the Administration of Pesticide Operations, reviewed and approved at the 6th meeting of the Ministry of Agriculture in 2017, set strict standards and requirements for pesticide business practitioners. If pesticide operators want to continue operating pesticides, they have to study diligently, standardize their operations, purchase equipment, and obtain a series of supporting facilities. From a long-term perspective, this is a good thing. But for now, it is also a considerable expense. I asked practitioners who had obtained a pesticide business license, and the total cost came to 30,000 to 50,000 yuan. Pesticide operators will inevitably pass this portion of increased cost on to pesticide sales, which is also a reason for pesticide price increases.

As early as February 17, 2015, the Ministry of Agriculture issued the Action Plan for Zero Growth in the Use of Pesticides and Chemical Fertilizers by 2020. The arrival of that day is getting closer and closer. Throughout 2018, the operating rate of urea was less than 60%, and the prices of chemical fertilizer raw materials soared. Ammonium chloride rose from the original 500 yuan/ton to over 700, over 800. Urea rose from over 1,400 to around 2,000, and recent signs indicate that urea will rise further. Potassium chloride rose to above 2,500, and potassium sulfate could not be bought at 3,000. So chemical fertilizers are also rising in price.

Why are grain prices not rising?

Some time ago, reports pointed out that the state lowered the minimum protective purchase price for rice, by 1 mao per jin. I do not know whether it is true or not. For this year's summer grain, corn was affected by high temperatures, drought, and other severe weather, so supply decreased, and the corn price market should be decent. Grain is a top priority related to the national economy, people's livelihood, and national security. Prices definitely will not fluctuate wildly.

Faced with rising fertilizer and pesticide prices, farmers' farming costs rising in a straight line, grain prices not rising, and various extreme weather events occurring frequently, what should farmers do?

I suggest everyone first choose good-quality seeds and pesticides, and be sure to believe in science, so as to reduce cost inputs as much as possible. Second, increase sources of income by growing differentiated products, and do not blindly follow the crowd. When everyone else grows wheat and corn, you can grow some vegetables, melons, fruits, and so on. Third, buy agricultural insurance for the crops you grow, to reduce losses caused by natural disasters. Fourth, during the slack farming season, go out to work or do some small business to earn some extra money.

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