When new grain hits the market, farmers' interests must be effectively protected
New grain is now gradually coming onto the market. However, this year's grain market has not been good, with corn prices plummeting, which has had a considerable impact on the market. So how should we view the current fall in grain prices?
Rises and falls in grain prices are a normal phenomenon of market fluctuation. Starting this year, China abolished the corn temporary storage policy that had been in place for 8 years, kicking off the market-oriented reform of grain. Domestic corn stocks are relatively high, the price gap between domestic and international grain has widened, and with livestock feed and grain deep-processing enterprises generally sluggish, consumer demand for grain is weak; the arrival of new grain on the market is bound to increase supply pressure on the market. Against this backdrop, carrying out market-oriented grain reform will both help draw down the ever-rising grain stocks and promote a gradual convergence of domestic grain market prices with international grain prices. Therefore, lower grain prices are a normal market reaction.
Lower grain prices are not the purpose of market-oriented grain reform. The purpose of market-oriented grain reform is to straighten out the grain price formation mechanism, invigorate the grain circulation market, improve the competitiveness of the grain industry and grain enterprises, effectively curb imports, and reduce grain stocks. At the same time, in the course of reform, it is essential to grasp the key point of safeguarding farmers' interests and protecting farmers' enthusiasm for growing grain, and to strike a good balance between ensuring national food security and giving play to the role of market mechanisms.
Judging from the reality of domestic grain production and the development of the grain market, with the direction of grain reform already clear, introducing practical and feasible support policies to reduce farmers' losses and protect grain-growing farmers' enthusiasm is fundamental to ensuring food security.
Compensating through subsidies for the losses that falling grain prices bring to farmers is one of the core elements of this reform of the grain purchase and storage system. How to achieve precise subsidies is a key issue that must be grasped. In the past, broad, indiscriminate subsidies brought farmers some benefits to a certain extent, but their overall effectiveness has been diminishing, and they have also brought some unfavorable factors.
Under the new circumstances, subsidies need to follow several principles: they must conform to the direction of market-oriented grain reform, conform to the relevant rules of the World Trade Organization, and also help protect national food security and farmers' enthusiasm. It is precisely in accordance with such principles that this year the corn temporary storage policy was abolished and a purchase and storage system of "market-based purchase" plus "subsidies" was implemented to stabilize grain prices and protect farmers' interests.
Of course, precise subsidies are only one means of protecting grain-growing farmers' interests. Another important purpose of market-oriented grain reform is to continuously raise farmers' awareness of being market players and their ability to withstand market risks. Because the minimum grain purchase price policy and the temporary storage policy had been implemented for many years in succession, quite a few farmers developed a dependence on market-support policies, had weak market awareness, and were insensitive to rises and falls in grain prices. Advancing grain price reform is precisely about letting prices return to the market. From this perspective, rises and falls in grain purchase prices will become the norm in the market in the future.
With market awareness and risk awareness, grain-growing farmers can gradually grow into genuine market players. In production and operation, they can continuously and proactively adapt to market demand by adjusting their planting structure and adjusting the crop varieties they grow, and in accordance with the requirements of green, ecological and sustainable development, reduce the use of chemical fertilizers and pesticides and pursue a business path of high quality at a good price. At the same time, market awareness can also help farmers quickly raise their awareness of grain brands and agricultural insurance, and gradually learn to use futures and other financial and derivative products to enhance value and protect their interests. At present, some new types of agricultural business entities, such as family farms, cooperatives and leading enterprises, have begun to register their own grain brands, process and sell branded grain, and have achieved decent economic returns. As the futures market and the agricultural insurance system gradually improve, some new types of agricultural business entities can avoid or transfer market risks through financial instruments such as the futures market and price insurance.
It can be imagined that as grain reform gradually deepens, the grain price formation mechanism will also gradually be straightened out, and a grain market with smooth production and sales, strong protection and more secure food security will gradually take shape. At present, just as new grain has come onto the market, how to protect farmers' confidence and enthusiasm for growing grain through precise subsidies is especially important.