How to effectively dredge the "quake lake" of grain stocks

A certain level of grain reserves is the foundation for market regulation and buffer adjustment. At present, the biggest problem with China's grain reserves or stocks is poor outflow, ever-growing inventory volume, and the inability of the buffer adjustment function to work effectively. Currently, China's grain reserve ratio has reached 83.2%, far exceeding the 17%-18% safe reserve level stipulated by the UN Food and Agriculture Organization.

The astronomical inventory is like a "quake lake" hanging high above the agricultural industry, an obstacle that China's agricultural transformation cannot bypass no matter what.

Excess reserves bring three major problems. First, a heavy fiscal burden. Excess grain reserves bring fiscal burdens in many aspects: various subsidies in the production stage, huge warehousing facility construction and storage costs in the circulation stage, plus loss subsidies for grain outflow. Overproduction also brings ecological damage and declining productivity, requiring fiscal investment to restore the ecological environment and recover soil fertility. Calculating at 250 yuan per ton of grain in annual storage cost, 520 million tons of inventory consumes 130 billion yuan each year. This expenditure, unlike subsidies to farmers, does not form real consumption capacity and production capacity; storage costs are dissipated invisibly. Second, agricultural product prices remain depressed for a long time. With such an astronomical inventory, every time the warehouses are emptied, it will cause a huge shock to the agricultural product market, which in the long run is actually detrimental to the security of the agricultural industry. Third, poor outflow brings hidden quality and safety risks. As grain prices keep falling and new grain gradually comes onto the market, grain-using enterprises are increasingly taking a wait-and-see attitude, auction transaction volumes are gradually declining, and the probability of aged grain and moldy, low-quality grain greatly increases, bringing hidden dangers to food safety. From this perspective, China is facing the dilemma that the more inventory there is, the less safe it is. Therefore, China needs to seriously study the grain inventory problem. First, how much inventory is appropriate. The UN Food and Agriculture Organization stipulates a 17%-18% safe reserve level; too high or too low is unsafe. Considering that China's main sales areas and balance areas have not yet solved the food security problem, we can add another layer of insurance on top of the UN-stipulated reserve level, raising it to a 30% reserve level. If we further consider the central government's extreme emphasis on food security and geopolitical factors, and add double insurance to 40%, that is 250 million tons of grain. By this calculation, China's current inventory exceeds this standard by more than double. On the food security issue, as long as the 1 billion mu of high-standard farmland is built well, agricultural production capacity is protected, there is an appropriate grain reserve, and international market regulation is added, temporary output fluctuations are not to be feared at all; just let the market solve them.

Second, how to destock. Nowadays, whenever destocking is mentioned, it usually means subsidizing processing enterprises to promote the processing and conversion of agricultural products. This approach will of course have some effect, but the author believes it is short-term and cannot fundamentally solve the problem. This method of promoting processing through subsidies will transmit the surplus state of raw grain to the processed product sector and lead to a surplus of processed products, so it is a measure that treats the symptoms but not the root cause. Destocking is destined to be a difficult and painful process, and one cannot expect to solve it in a single charge; fundamentally, it is still necessary to control the source and stop opening the gate wide for grain to enter storage. As mentioned above, China's absolute safe level of grain inventory is 250 million tons (500 billion jin). If rotated once every 3 years, then the national treasury only needs to purchase 170 billion jin of grain each year, which is enough. Now we can only appropriately reduce output, change the structure, trade time for space, and gradually digest the excessive inventory. Specific measures include: using the current favorable opportunity to return sloping land to forest and grassland, change the use of contaminated land, and implement crop rotation and fallow on good land, so as to conserve ecology, protect soil fertility, and achieve the goal of reducing output; change the planting structure and actively develop green, healthy, safe, nutritious, and delicious high-quality agricultural products; conduct sealed-operation auctions of aged grain to avoid shocking the market; centrally handle low-quality grain no longer suitable for food or processing, strictly prohibit it from entering the market, and turn hidden losses into explicit losses to achieve a one-time clearing.

Third, use various means to control imports. Against the background of the current astronomical domestic grain inventory, every possible means must be used to control grain imports, win time and environment for domestic grain destocking, and give the domestic market a chance to catch its breath. On controlling imports, we are not without cards to play. For example, relevant departments can work on grain import quotas and the pace of issuing import licenses; commerce, quality inspection, and other departments can use certain technical means to appropriately restrict imports of sorghum, barley, DDGS, and so on; agriculture, quality inspection, and other departments can work on the safety testing of genetically modified agricultural products; the commerce department should immediately launch trade remedy investigations, as some Chinese industries have already been damaged to a very serious extent; customs, public security, and other departments must make every effort to combat grain smuggling and elevate the understanding of grain anti-smuggling to the height of protecting farmers' interests and agricultural industry security.