How to establish risk prevention and control measures to ensure stable industry development

In recent years, with the implementation of the new national food security strategy, the potato has attracted widespread social attention, and vigorously developing the potato industry has become one of the important choices for major agricultural and rural development strategies such as agricultural supply-side structural reform and targeted poverty alleviation.

Since the "12th Five-Year Plan" period, China's potato production has achieved stable development, with the national planting area basically stable at around 85 million mu and total output exceeding 90 million tons; the annual production capacity of mini-tubers has increased year by year, and the application rate of virus-free seed potatoes has increased year by year; processing industries such as French fries, potato chips, whole flour, starch and staple food products have continued to innovate, injecting new vitality into the development of the potato industry. However, it is worth noting that China's potato industry still faces relatively large natural and market risks, and the latter often has a greater impact on the industry, so it must be taken seriously and effective risk prevention and control measures must be explored and established at an accelerated pace to ensure the stable and sustainable development of the entire industry.

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Production still mainly "relies on the weather," and supply is uncertain

Affected by the potato's growth habits such as preference for cool conditions, China's potato cultivation is mainly distributed in **, Qinghai, Gansu and Ningxia in the northwest, Inner Mongolia and Hebei in the north, Heilongjiang in the northeast, Shandong and Henan in the central region, and Yunnan, Guizhou and Sichuan in the southwest. Except for the central production areas, most of these regions are poor in water and soil resources, which has also created a situation in which potato production "relies on the weather," and natural risks bring greater uncertainty to production and supply. During field research, the author learned that this summer Dingxi and other places in Gansu experienced unusually long periods of high temperatures without rainfall rarely seen in nearly 60 years, and some areas suffered yield reductions of more than 50%, causing serious losses to potato production and a marked decrease in market supply.

Compared with natural risks, market risks are having an increasingly large impact on the sustainable development of the potato industry. Looking at the operation of the potato market in recent years, every sharp price fluctuation has had a relatively large impact on industry development. In 2010, potato prices soared and hit a historic level, causing a sharp increase in potato production area that autumn, which in turn led to the phenomenon of difficult sales in 2011. As one of China's agricultural products with a relatively high degree of marketization, the price formation of potatoes basically depends on market supply and demand. For example, this spring's "boss-level" late cold spell caused shortages in the supply of other substitute vegetables, and potato prices remained at a relatively high level throughout the first half of the year, reaching the year's highest level of 3.47 yuan/kg in May, up 53.3% year on year; while in summer, Gansu and other places experienced the most severe prolonged high temperatures in nearly 60 years, and Ningxia, Inner Mongolia, Heilongjiang and the southwest region were also affected to varying degrees, partially offsetting the effect of expanded area and also keeping new-season potato prices at a relatively high level. According to monitoring, in November the national average wholesale price of potatoes was 2.17 yuan/kg, up 14.3% year on year, at a relatively high historical level.

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There is great potential for improving supply capacity, while consumer demand still needs to be deeply tapped

Since 2015, the state has vigorously promoted the strategy of using potatoes as processed staple food, and at the same time, as the unquestionable choice for structural adjustment in the "sickle bend" region and for targeted poverty alleviation in poor western regions, China's potato production area is expected to increase substantially in the future. Coupled with the continuously rising popularity of virus-free planting and the continuous improvement of irrigation, water and fertilizer conditions, and cold storage and cold chain infrastructure, potato market supply will increase substantially. Correspondingly, the growth of China's potato consumer demand is relatively slow. According to FAO data, fresh consumption, processing consumption, seed use consumption and feed consumption are the main components of potato consumption; fresh consumption accounts for as much as about 70%, making it the most important part of potato consumption, among which residents' daily consumption is basically stable. Although consumption of puffed leisure foods such as French fries and potato chips and staple food products may increase, group consumption such as farmers working away from home is expected to increase substantially with returning-home entrepreneurship and the return flow of migrant workers, and overall food use is expected to shrink to a relatively large extent. In processing consumption, starch production is the main driving force, but affected by the continued appreciation of the renminbi, the slow recovery of the domestic macroeconomy, the continuous increase in production and circulation costs, and the impact of corn and cassava starch markets, potato starch processing may remain sluggish. With the continuous development of China's seed potato enterprises, the popularity of pre-basic, first-generation and second-generation virus-free seed potatoes will further increase, and seed potato consumption will continue to maintain an increasing trend. At the same time, affected by the continuous improvement of harvest mechanization and production levels, the damage rate and marketable rate will continue to rise, the proportion of broken and small tubers will decline somewhat, and feed raw material potatoes may decrease somewhat. Taken together, in the coming period, the increase in potato market supply will clearly exceed the growth rate of consumer demand, and the risk of sharp price fluctuations will become prominent. Where the consumer demand for additional potatoes will be, and how to ensure a basic balance between market supply and demand and effectively prevent and defuse market risks, will become important challenges facing the sustainable development of the industry.

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Accelerating the potato industry's "going global" provides new ideas for industry development

Therefore, work should focus on several aspects. First, strengthen information analysis, monitoring and early warning for the entire potato industry chain. Large fluctuations in market supply and demand will inevitably cause fluctuations in prices and production, thereby bringing a certain degree of impact on industry development. Therefore, the information analysis, monitoring and early warning system for the entire potato industry chain should be further improved, analysis and judgment of market supply and demand conditions should be strengthened, and information on production, prices, supply and demand should be released in a timely manner to effectively guide producers and operators to market and sell in a timely and balanced way, avoid sharp price rises and falls, and promote stable market operation.

Second, innovate risk control tools. Effectively controlling market risks is one of the important contents of building a modern market economy system. At present, the reform of China's agricultural product price formation mechanism also requires the use of modern risk prevention and control tools to effectively reduce the impact of market fluctuations on the sustainable development of the industry and the steady growth of farmers' incomes. Therefore, on the basis of summarizing local pilot targeted price insurance, fiscal support for agriculture should be increased, the proportion of funds for building national and provincial-level fiscal price insurance systems should be adjusted or newly added, and exploration should be made to establish a potato industry development fund featuring government platform-building, enterprise performance and social participation. The construction of a potato futures system should be advanced in due course, and at the same time, preferential credit policies for processing enterprises' storage purchase funds during important farming periods should be strengthened, so as to alleviate situations such as excessively high credit costs and excessive risks, and effectively enhance the industry's risk control capacity.

Third, promote advantageous enterprises to accelerate "going global." After rapid development in recent years, a number of potato industry enterprises in seed potato breeding, starch processing and leisure foods have grown rapidly and begun to stand out in international market competition, providing new ideas for accelerating the "going global" of China's potato industry and the sustainable development of the industry. Research on the "going global" strategy of potato industry enterprises should be further strengthened, with focus on countries and regions along the "Belt and Road" such as Vietnam, Myanmar, India, Iran and the United Arab Emirates, while support should be increased for overseas exhibitions, market inspections, export tax rebates and credit support, vigorously promoting advantageous potato industry enterprises to accelerate overseas market expansion and industrial layout.

Fourth, strengthen public-interest science popularization work. The formation of people's consumption habits does not happen overnight. In China's main potato production areas, potatoes have long entered thousands of households and become delicious dishes on the dining table; however, reasonable consumption habits have not yet been formed, especially the consumption potential of urban residents and young people remains to be further tapped. Therefore, the industry development orientation that emphasizes technology over the market should be accelerated and shifted to placing equal emphasis on technology and the market, and industry support policies should be tilted toward industrial links such as special-purpose potato production and the cultivation of consumption habits. The joint efforts of research institutes, industry associations, enterprises and public institutions should be fully brought into play, and through modern information dissemination channels such as television, newspapers, the internet and mobile terminals, effective publicity should be carried out on healthy ways of eating potato staple food products and leisure foods, so as to cultivate a new generation of consumer groups and create a favorable consumption atmosphere.