The corn producer subsidy system will be further improved

Since the "Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform" first proposed improving the price formation mechanism for agricultural products and emphasizing the role of the market in price formation, our government has already begun reforming, or signaling reform of, the minimum purchase price and temporary purchase and storage policies for grain and other important agricultural products. In 2014, pilot target price subsidies were first carried out for soybeans and **cotton in Northeast China and Inner Mongolia, which is regarded as the first exploration of improving the price formation mechanism for agricultural products. The problems accumulated in corn were relatively prominent, and in 2016 the temporary purchase and storage policy was adjusted to a producer subsidy system, which was interpreted as a breakthrough in China's agricultural supply-side reform. Drawing on the pilot experience of target price subsidies for soybeans and cotton, and taking into account the actual supply and demand situation for corn, improving the corn producer subsidy system should start from the following four aspects:

Take multiple measures to digest corn inventory. The corn surplus is only temporary, and there is a short-term problem of destocking. As an important energy feed, corn's demand shows a long-term growth trend. Destocking must fundamentally eliminate the causes of high inventories and establish a long-term mechanism for balancing grain supply and demand. If the corn market price is formed by supply and demand, farmers will adjust their planting structure according to market demand. On the supply side, continue to advance the structural adjustment of corn in the "sickle bend" region, mainly by appropriately reducing it in non-advantageous areas, especially the fourth and fifth accumulated temperature zones in northern Heilongjiang and northeastern Inner Mongolia, as well as the mountainous areas of eastern Jilin. Through market guidance and policy support, withdraw corn planted beyond suitable areas and expand the scale of grain-soybean rotation and "grain-to-feed" conversion. On the demand side, the main uses of domestic corn are approximately 65% for feed, less than 30% for corn deep processing, and less than 10% for food. Through subsidies to processing enterprises, encourage leading agricultural enterprises to accelerate corn conversion and processing, develop intensive and deep processing, extend the industrial chain, and turn the "granary" into a "granary" + "meat warehouse" + "milk bottle" + "sugar jar" + "fuel tank." At present, international oil prices are at a low level, while cassava starch prices are more than double corn starch prices, so corn processing into fuel ethanol has a price advantage.

Cultivate diverse market entities. After the establishment of the corn producer subsidy system, the state will no longer be the main force in corn purchasing, and market-based purchasing by diverse entities will become the norm in the future corn purchasing market. The state and local governments (especially the Agricultural Development Bank of China) should increase credit support for corn purchasing, strengthen market information services, actively guide diverse entities to enter the market to buy grain, change "storing grain in granaries" to "circulating it in the market," enhance industrial vitality, and also help reduce inventories and ease the difficulty of selling grain.

Establish a bottom-line purchase and storage system. After the establishment of the corn producer subsidy system, dealers will find buyers themselves and bear all market risks, and they will enter the market more cautiously. The probability that farmers will have difficulty selling grain is expected to increase, especially when natural disasters occur. During the target price reforms for cotton and soybeans, problems of difficulty selling also appeared. With reference to the measures for the management of special grain reserves, the grain regulation reserves can be managed institutionally and legally. Large enterprises such as Sinograin can, in conjunction with the task of national grain reserves, enter the market to purchase at the bottom line when difficulty in selling occurs.

Improve the implementation plan and detailed rules for corn producer subsidies. In response to the prominent problems existing in the implementation process of the corn producer subsidy implementation plans and detailed rules separately formulated by Liaoning, Jilin, Heilongjiang and Inner Mongolia, focus on proposing improvements to the subsidy scope, subsidy recipients, subsidy basis, and subsidy standards, and optimize the implementation plan.