How Can Deepening Market Reform Shore Up Grain Farmers' Confidence?

Golden October is the harvest season. Hardworking farmers across the country are enjoying the joy of a bumper harvest, but some are also worrying about the current fall in grain prices.

As grain market-oriented reform continues to develop today, while positive effects such as the improvement of the agricultural planting structure gradually emerge, the reform has also entered a painful period. How to protect farmers' enthusiasm for planting, do everything possible to shore up farmers' confidence in growing grain, and thereby ensure national food security has become an issue of concern to the whole of society.

Bian Shujun, a major grain grower in Ping'an Village, Changting Town, Hailin City, Heilongjiang Province, is highly representative among farmers in Northeast China. This year's bumper corn harvest did not bring him the joy it should have. Bian Shujun said his family planted 180 mu of corn this year, of which 115 mu was leased land, with a contracting fee of 300 yuan per mu. This year the wet grain yield per mu of corn was about 1,300 jin, and the price of wet corn has fallen to about 0.45 yuan per jin. He made a rough calculation: after deducting costs for seeds, pesticides, chemical fertilizers, labor, and land rent, he basically made no profit this year.

Xi Yinsheng, director of the Macro Department of the Agricultural Research Center of the Ministry of Agriculture, said in an interview with reporters that the fall in grain prices is the result of a combination of factors. After China's grain output achieved "twelve consecutive increases," the three major crops of corn, wheat, and rice had for many years produced more than demand, and market prices remained sluggish, affecting farmers' income from growing grain. In recent years, the state has begun to gradually reform the grain purchase and storage system, changing the practice of continuously raising grain prices for many years. While stabilizing or lowering the minimum purchase prices for wheat and rice, it abolished the temporary storage policy for corn and implemented market-oriented purchasing. A decline in corn prices was inevitable.

According to calculations based on public data, China's corn stock is close to half of total grain stocks, and corn destocking faces severe pressure. The 2016 "No. 1 Central Document" proposed advancing supply-side structural reform in agriculture. This year, the three northeastern provinces and the Inner Mongolia Autonomous Region abolished the eight-year-old temporary corn purchase and storage policy and adjusted it to a new mechanism of "market-oriented purchasing" plus "subsidies," which is regarded as one of the signs that China's agricultural supply-side reform has officially begun.

Experts say that after the temporary corn storage policy was adjusted to the new mechanism of "market pricing and separation of price and subsidy," it is conducive to guiding farmers to adjust the planting structure and switch to cash crops with better returns. The long-standing imbalance in China's agricultural planting structure is gradually being improved. This year, the corn planting area is expected to decrease by more than 30 million mu, which is conducive to reducing seriously oversupplied corn production capacity.

At present, some farmers have already strengthened their market awareness and begun to take action. Zhao Sanxian, a major grain grower in Chengmiao Village, Yuanqiang Town, Taihe County, Anhui Province, is considering adjusting his existing planting structure because of falling grain prices. He decided to reduce the grain planting area next year and use part of his land to grow Chinese medicinal herbs with better economic returns. Unlike Zhao Sanxian, who was pushed by grain prices to adjust his planting structure, Ma Zhanyou, chairman of the Zengyi Agricultural Planting Professional Cooperative in Guijia Village, Huancheng Township, Yushu City, Jilin Province, began proactively adjusting his planting structure as early as 2014, growing high-quality corn varieties such as Belgian corn and high-protein corn, as well as higher-return cash crops such as evening primrose, potatoes, and watermelons, and developing contract farming. He has no worries at all about selling the products he produces. The cooperative's more than 500 hectares of land this year generated a net income of more than 2 million yuan and was basically unaffected by the fall in grain prices.

Lan Haitao, a researcher at the Institute of Industrial Economics and Technical Economics of the National Development and Reform Commission, said that adjusting the agricultural structure must respect objective economic laws. In the new round of agricultural structural adjustment, measures must be taken to prevent the negative effects brought by too rapid and too drastic a reduction in grain area and by sharp fluctuations in output.

At present, China's agricultural development environment is undergoing profound changes. Old problems continue to accumulate, new contradictions keep emerging, and there are many difficulties and challenges. Reporters learned in interviews that the problem of farmers' enthusiasm for growing grain being dampened by falling grain prices has already attracted great attention from all sides. Su Jieming, manager of the Operations Management Department of Jilin Agricultural Innovation Investment Group Co., Ltd., said in an interview with reporters that multiple measures should be taken simultaneously to help farmers get through the current difficulties, and in particular subsidy efforts should be increased to shore up grain farmers' confidence. This year, the first batch of 30 billion yuan in corn producer subsidies from the national finance to the three northeastern provinces and Inner Mongolia has already been issued, amounting to about 150 yuan per mu. At present, the key is to truly implement the subsidy policy, especially to implement the relevant provisions on directly subsidizing corn producers with grain price differential subsidies, so that farmers truly benefit from them. In short, multiple measures must be taken to protect farmers' enthusiasm for planting in order to ensure national food security.