How can the rice supply side be secured? Guarding every single grain of rice
China's grain output has achieved "twelve consecutive years of growth," but this does not mean we can sit back and relax. A series of problems lie before us: severe inversion of domestic and international grain prices, lagging development of grain processing, agricultural pollution, cheap grain hurting farmers, and so on... During the "13th Five-Year Plan" period, from the grain production end to the sales end of the chain, how should the "supply side" of a single grain of rice be reformed?
Deep processing of grain urgently needs quality improvement and acceleration
15 billion jin! This is the amount of grain wasted each year in China due to processing.
This forms a stark contrast with the encouraging figures of China achieving "twelve consecutive years of growth" in grain output and another bumper summer grain harvest nationwide in 2016, reflecting a problem in China's grain industry that cannot be ignored -- the lagging development of the processing industry.
According to statistics, China's rice processing capacity utilization rate is only about 43%, and the wheat processing capacity utilization rate is only about 60%; while approximately 20% of wheat and rice is processed into refined flour and refined rice each year, and over-processing causes about 15 billion jin of grain loss.
On one hand, there is insufficient technological content in grain processing; on the other, there is extensive and wasteful grain processing. In the view of Tan Bin, a researcher at the National Grain Research Institute, China's grain resources are used extensively, products and their uses are single, and the comprehensive utilization level of grain processing by-products is still at an initial stage.
To this end, during the "13th Five-Year Plan" period, China's grain industry will implement an integrated whole-industry-chain business model of "production, purchase, storage, processing and sales," and effectively raise the supply capacity of safe, nutritious and healthy grain products.
China will actively advance the supply-side structural reform of the grain industry, promote the transformational development of the grain industry and the upgrading of products, guide and meet the new demand of grain consumption for nutritious and healthy grain products, and increase effective supply; implement a grain brand cultivation initiative, advance the industrialization of staple foods, and increase the supply of nutritious, healthy, diverse, green and high-quality grain products; and actively develop grain products with regional characteristics, building geographical indication brands for grain.
In addition, China will fully leverage the engine role of the grain processing industry, advance structural adjustment of the grain processing industry, optimize rice and wheat processing capacity, and accelerate the elimination of high-energy-consumption, low-level and extensive backward production capacity; improve support policies for the deep processing of grain industry, adjust the layout and product structure of the deep processing of grain industry, enhance the market competitiveness of deep-processed grain products, improve the grain industry chain, and build a number of influential grain processing industrial bases and parks.
Next, China will also implement a leading enterprise demonstration project for key backbone enterprises in grain industrialization, and improve support policies for leading enterprises; guide grain enterprises to actively develop a mixed-ownership economy through mergers, restructuring, acquisitions, and holding controlling stakes, forming large enterprise groups, and creating a number of grain processing industrial clusters with wide reach and strong driving capacity, as well as large grain enterprises with international influence.
This means that improving the deep processing utilization rate of grain has become an important part of the national grain strategy. Experts point out that as China's agricultural development enters a new stage, developing deep processing technologies with high resource utilization rates, low energy consumption and little environmental pollution, adjusting product structure, and increasing the economic benefits of the entire agricultural industry chain have become major strategic needs for China's national economy and social development.
Breaking the predicament of grain "disconnection"
In 2015, China's grain output achieved "twelve consecutive years of growth," with total national grain output of 621.4 million tons, up 2.4% year on year. Strangely, on one hand there were consecutive years of bumper harvests and full granaries, while on the other hand imports kept climbing and repeatedly hit new highs. In 2015, annual grain imports reached 100 million tons. Calculated by the share of imported grain, one jin out of every 5 jin of grain in China came from abroad.
In the view of Jiang Feng, director of the Xiangyang City Grain Bureau in Hubei, the fundamental reason for increased imports is that China's grain has "three disconnections." First, production is disconnected from circulation. China's grain production is handled by the agricultural department, whose responsibility is to ensure increased grain output and higher farmer incomes; grain circulation is handled by the grain and commerce departments, which organize varieties that sell well according to market needs and enterprise efficiency to meet consumer demand, and production and sales information cannot be effectively matched. On one hand, China's total grain volume has long been in a tight balance, and soybeans, high-quality wheat, rice and feed grain require large imports; on the other hand, some domestic grain and oil raw materials are of poor quality and high price, lack competitiveness, and have to pile up in state warehouses. According to estimates, by 2020 China's grain production-demand gap will reach 0.3 billion to 0.35 billion, and by 2030 China's grain production-demand gap will reach 0.2 billion to 0.5 billion. The grain production-demand gap will exist for a long time, and grain supply and demand will remain in a tight balance for a long time.
Second, international and domestic regulation are disconnected. At present, domestic grain circulation is handled by the commerce and grain departments. The grain bureau is responsible for domestic grain circulation, while the commerce department is responsible for international grain imports. The two have overlapping functions and lack coordination. At the same time, the main reason is still that there are relatively large price differences between current international and domestic grain varieties. China has become a high ground for grain prices, and foreign grain enters the country through various channels, seriously impacting the domestic grain balance and making domestic grain sales difficult.
Third, purchasing and sales policies are disconnected. China's minimum grain purchase price policy adopts protective purchasing and market sales, which stimulates grain purchasing and restricts grain sales. On one hand, because domestic grain purchase prices are high, a large amount of grain enters the market-supporting purchase program, causing tight warehouse capacity, and the state has to invest heavily in building warehouses, occupying fiscal funds; on the other hand, because the floor prices for policy-based grain and oil auctions continue to rise, processing enterprises find it hard to bear, and auctioned outbound shipments do not proceed smoothly. The result is that policy-based grain and oil are stockpiled for a long time, costs rise, quality declines and value decreases. Each year the state must pay necessary interest and storage fees for this, and when handling overdue grain it also has to bear losses from price reductions.
In view of the above reasons, Jiang Feng suggested that the state should promptly adjust China's grain planting structure, improve grain quality, transform business methods, maintain grain production capacity, ensure the grain self-sufficiency rate reaches 95%, and ensure that the rice bowl of the Chinese people is firmly held in their own hands; at the same time, improve China's grain import policy, strengthen coordination between the grain and commerce departments, strengthen import management, and crack down on smuggling; in addition, promptly adjust policy-based grain and oil sales methods, adopt measures such as price-reduction sales and targeted sales to stimulate domestic consumption, meet the needs of domestic processing enterprises, accelerate the pace of selling stocked grain and oil, reduce policy-based grain and oil inventories, and ease fiscal pressure.