How is corn harvested, and do farmers actually lose money?
Starting this year, following the principle of "market-based pricing with separation of price and subsidies," China has adjusted the temporary corn storage policy for the three northeastern provinces and Inner Mongolia to "market-based purchasing" plus "subsidies."
Under the new mechanism, how exactly have the returns of grain-growing farmers changed? What new moves will processing enterprises, grain brokers and other market purchasing entities make? What challenges does the reform face, and how will they be addressed? With these questions in mind, our newspaper's reporters recently went to corn purchasing and sales sites in Heilongjiang and Jilin provinces to find out.
Large-scale grain growers' income has declined somewhat compared with last year, but with subsidies they can still hold on
"With the subsidy, it's just about breaking even." In Yingkou Village, Chang'an Town, Bin County, Heilongjiang Province, when reporters asked about this year's corn planting profits and losses, large-scale grain grower Yang Baochen counted on his fingers and worked out a detailed account:
Of the total 92 mu of corn land he planted, 70 mu was rented. Excluding labor, the planting cost per rented mu included a transfer fee of 500 yuan, and 430 yuan for fertilizer, seeds, pesticides, mechanical tillage and other costs, totaling 930 yuan. In terms of average yield per mu, wet grain was 1,500 jin, roughly equivalent to 1,300 jin of dry grain. At the current market price of 0.7 yuan per jin, the gross income per mu was 910 yuan.
"After deducting costs, not counting state subsidies, the family's own land yields a profit of 480 yuan per mu, while the transferred land loses 20 yuan per mu," Yang Baochen said.
According to policy, this year Heilongjiang Province's subsidy standard is 153.92 yuan per mu, and distribution has basically been completed. Adding the subsidy, Yang Baochen can earn more than 130 yuan per mu on transferred land, a slight surplus; on his own land he nets more than 630 yuan, about 230 yuan less than last year when there was a floor purchase price.
It is worth noting that although corn prices are relatively low this year, because the new purchasing policy is being implemented, land transfer fees have dropped considerably accordingly, and Yingkou Village's rent for next year has fallen to 300 yuan per mu. For large operators who contract large tracts of land for scaled operations, this is good news.
Cong Jian is the Party secretary of Guanglong Village, Wukeshu Town, Yushu City, Jilin Province, and also chairman of Tianyu Machinery Planting Professional Cooperative, which contracts 360 hectares of land. The average land rent per hectare is 9,000 yuan, planting costs are 15,800 yuan, and net income is more than 1,600 yuan.
"Fortunately there is the producer subsidy. Although income has declined somewhat compared with last year, we can still hold on," Cong Jian said. "Next year land transfer fees will drop a lot, which is inspiring." He plans to plant corn again next year, "I'm good at this work."
Zhu Yuwen, director of the Heilongjiang Provincial Grain Bureau, believes that market-based pricing for corn can push producers to lower production costs, realize optimal allocation of farmland resources under the market mechanism, and promote improvement in the level of large-scale and intensive agricultural operation.
After market-based purchasing of corn, enterprises survive on their strength, and all welcome this reform
Whether in front of COFCO Bioenergy (Zhaodong) Co., Ltd. in Zhaodong City, Heilongjiang Province, or in the yard of Jiliang Tianyu Bioengineering Co., Ltd. in Yushu City, Jilin Province, reporters on the way to interview corn processing enterprises could see long lines of large trailers loaded with corn. These were grain brokers waiting for enterprises to inspect and unload the goods.
"After the corn purchasing and storage system reform, in terms of grain sources, costs and government policy support, many advantages have been added for enterprise development," said Shi Xiaomei, executive deputy general manager of COFCO Bioenergy (Zhaodong) Company.
The so-called grain source means the company can obtain sufficient raw material supply nearby within Suihua City, without having to go to Sinograin warehouses for auctions or look outside the province as in previous years. The so-called cost advantage means that after corn prices follow the market, the purchase price has fallen considerably. The so-called policy advantage means that according to Heilongjiang regulations, above-scale corn deep-processing enterprises that finish purchasing and processing new corn within the province before the end of June next year receive a subsidy of 300 yuan per ton. Jilin Province also has a similar processing subsidy policy, with a standard of 200 yuan per ton.
Liu Hongju, purchasing department manager of COFCO Bioenergy (Yushu) Company, told reporters that because corn prices in the north and south were inverted, the company had been losing money since 2013. This year northeast corn purchase prices have fallen, and the company plans to purchase 500,000 tons of corn, processing 60,000 tons per month, striving to turn losses into profits. "After market-based purchasing, enterprises survive on their strength. Our technology, equipment and production lines are all fine, so we all welcome this reform."
Guide grain farmers to store grain scientifically, tap internal potential to solve the transport bottleneck
Zhu Yuwen revealed that despite adjusting part of the planting structure, Heilongjiang's total corn output this year is estimated at about 100 billion jin; total corn consumption for processing and feed conversion within the province for the year is about 42 billion jin, and overall it is estimated that about 58 billion jin of corn will need to be sold outside the province. Yang Guang, deputy director of the Jilin Provincial Grain Bureau, said Jilin's corn output this year will reach 60 billion jin. Taking into comprehensive consideration the province's needs for purchasing and storage, deep processing and conversion through livestock, as well as inflows from other provinces, corn supply is expected to exceed demand by about 32 billion jin this year.
The huge old grain stocks, plus the enormous new grain increment, will inevitably bring many challenges to the first year of corn market-oriented reform. The market price of corn is about 0.70 yuan per jin, which is the break-even point for farmers planting corn in Heilongjiang and Jilin. If corn prices continue to fall, it may exceed the range farmers can bear. Because grain farmers generally now hold back sales in hopes of a better price, guiding them to store grain scientifically, sell in off-seasons and choose the right time to sell is important work for governments at all levels.
In terms of scientific grain storage, under the background of market-based purchasing, corn prices follow the principle of "high quality, high price." Reporters saw on both sides of the village road in Yingkou Village that, under government guidance, many farming households had built corn cribs 40 m long, 4 m high and 1.5 m wide, with iron sheet roofs, able to store corn cobs produced from 70 mu of land and increasing flexibility in selling grain.
In terms of solving the difficulty of transporting grain, due to insufficient railway capacity, competition between grain and coal for rail space, and sharp rises in highway freight costs, moving grain from the north to the south has long suffered from a transport capacity bottleneck. Shen Lizhi, director of the Suihua City Grain Bureau, suggested tackling this problem from two aspects: first, relevant state departments should strengthen coordination, tap internal potential and allocate resources jointly; second, it is hoped that highways will open green channels similar to those for transporting southern vegetables north, attracting logistics providers and traders and increasing enthusiasm for transport. It is understood that through the efforts of all parties, the average daily number of railcars loaded for corn outbound transport in Heilongjiang Province has increased from 700 to 800 at the beginning of October to 2,000 at present.