Selling mutton sheep means a loss, not selling means waiting to die: farmers caught in a dilemma
According to a report by China National Radio's "Sannong China," this summer Hulunbuir City in Inner Mongolia suffered a drought rarely seen in decades, with local temperatures reaching as high as 44.1°C. 98% of the city's grasslands were hit by severe drought. Recently, a China National Radio reporter conducting field interviews in Hulunbuir found that because large amounts of forage grass had withered and died, herders faced the predicament of lacking forage for their livestock to get through the winter. To reduce forage use, herders had no choice but to sell their sheep as quickly as possible.
But in the past two years mutton prices have not been high. Selling means a loss, and not selling means waiting to die. At the same time, the government encourages local meat processing enterprises to withstand market pressure and hold the bottom line on purchase prices, so as to guarantee herders' incomes. But this amounts to shifting the pressure onto the enterprises, and the enterprises find it very hard to cope.
Wu Jinsheng, a herder in New Barag Right Banner, Hulunbuir, raises 500 sheep at home. He said that the amount of forage grass cut this year is nowhere near enough for his own livestock, and buying grass is too expensive, so there is only one way out: sell the sheep. Wu Jinsheng plans to sell more than half of his sheep. But when everyone sells sheep, the price of mutton drops immediately. Now, in Hulunbuir, a sheep weighing over 25 jin has dropped to 13 yuan per jin, whereas at this time last year it was 18 yuan:
Reporter: At this price, are you willing to sell?
Wu Jinsheng: Not willing, but there's no choice. There isn't enough grass. If there's no grass by winter, they'll all die anyway. Once they're just about all sold, and the grass is all cut, however many bales of grass we can get, then we start selling.
The herders want to sell their sheep, and the meat processing plants are under great pressure too. At Guangda Food Co., Ltd. in New Barag Right Banner, chairman Ma Qiang told the reporter that in the past two years the supply of mutton has increased greatly, but end-user demand has shrunk sharply, which has led to a continuous backlog of mutton in cold storage. Right now, his plant still hasn't sold off last year's mutton, and the cold storage inventory has already reached saturation.
Ma Qiang: The inventory is almost full now. Last year nearly every customer had mutton left over, enough to sell for a year, so they aren't in a hurry to come and buy meat. The mutton purchased last year simply hasn't been used up this year.
Ma Qiang said that as the pressure from the drought continues to mount, this year the banner government encourages local meat processing enterprises to withstand market pressure and hold the bottom line on purchase prices; for enterprises with outstanding contributions, the banner government will offer preferential treatment in future policies. This approach takes into account the actual difficulties herders face after being hit by disaster, but it puts huge pressure on the meat processing enterprises. Because purchase prices have been raised, the price at which the meat plants sell mutton can only rise accordingly, which makes mutton prices in New Barag Right Banner higher than in other parts of Inner Mongolia; after comparison, customers naturally will not buy from the side with higher prices. Ma Qiang told the reporter that in the ten days since starting operations, the company has only seen herders coming to sell mutton, and has not seen a single customer coming to buy mutton.
Ma Qiang: We've been open for ten days now, and no customers have come to buy meat; it's all herders and large-scale raisers coming to sell mutton. All customers go by price; if the price is acceptable, they come to buy, if not, there's no way they'll come. Our mutton rolls are 3,000 yuan per ton higher than others'; for ten tons that's 30,000 yuan higher. So tell me, will customers come?
While the reporter was interviewing at the meat plant, a survey team investigating drought-related external outreach and external sales happened to arrive for research. Wang Yinghu, director of the Development and Reform Bureau, is the deputy head of the survey team. When asked why he called on meat processing enterprises to hold the bottom line on purchase prices, he said the local government had not previously done enough research on the operating conditions of local meat processing enterprises; they had originally assumed that enterprises of even modest scale would certainly be able to find sales channels.
Wang Yinghu: This is what we thought: these enterprises, around 150,000 sheep, they can all find sales channels; they all have their own regular customers. Right now, the banner has about a hundred or so customers coming from all over the country.
Ma Qiang, chairman of the meat processing plant, said that the local government has overestimated the strength of meat processing enterprises, which leaves them feeling helpless. This year, given local enterprises' inventory levels and absorption capacity, it is simply impossible for them to buy up all the herders' mutton. Moreover, the continued backlog of mutton is very likely to cause Inner Mongolia's mutton prices to keep falling next year, with serious consequences. Therefore, he hopes the local government can give meat processing enterprises some subsidy policies so they can better fulfill their social responsibilities.
Ma Qiang: The government's starting point is good, but the key question is whether enterprises can bear it. If the government could introduce policies to subsidize enterprises at the same time as subsidizing herders. Because we have to slaughter 100,000 to 150,000 sheep; if we lose 20-plus yuan per sheep, 150,000 sheep would mean a loss of about 3 million yuan.
During the survey, after hearing Ma Qiang describe the enterprises' difficulties, Wang Yinghu said the banner government would help local meat processing enterprises find sales channels.
Wang Yinghu: We'll hold a meeting as soon as we get back, and see about going to Xilingol first. We also want to understand the situation there, how mutton is sold in Xilingol. After the fact-finding is done, for the matters that need the government to resolve for enterprises, we'll go out and contact large enterprises.
When the reporter interviewed other local meat processing enterprises, some owners argued that if the banner government could let mutton be sold at market prices in accordance with market rules, perhaps the pressure on both meat processing enterprises and herders would not be so great, and it would also ensure that mutton prices recover somewhat over the next two years. So why does the banner government still call on meat processing enterprises to hold the bottom line on purchase prices? On this point, Sai Xi Yalatu, chairman of the People's Congress of Bogd Uul Sum in New Barag Right Banner, had a lot of feeling. He told the reporter that local herders have little awareness of market rules and other specialized economic theories. This year, as mutton prices fell, some herders even attributed the drop in mutton prices to poor government management, and a small number of herders even collectively went to cadres' offices to demand answers.
Sai Xi Yalatu: We hold gacha meetings, and then meet with the gacha party secretaries, and we keep spreading the word, but there are still some who come to ask about the price, a few households in each gacha.
Reporter: When they come to ask, how do they ask?
Sai Xi Yalatu: They just say, beef and mutton prices have fallen, can you raise them a bit? Can the government help a little? Is there any subsidy from higher levels? Occasionally a small number ask.
Sai Xi Yalatu said that with this year's drought, combined with falling mutton prices, the herders are anxious, and he can understand everyone's behavior. Of course, the emergence of this phenomenon has also made the local area reflect on a great deal. How to raise herders' understanding of the market economy, make herders aware of the importance of balancing grass and livestock, and adjust the local animal husbandry industry structure is the top priority for future work.
Wang Yinghu, director of the Development and Reform Bureau: First, make them understand the market; second, we start adjusting the structure. We can't just keep raising small livestock. Sheep are quick to turn around, but in the future we need to instill an idea in them: the structure must be adjusted, and there must be a balance between grass and livestock. Too much of anything is no good. The government will do these things next.
On this point, Li Guoxiang, director of the Rural Development Institute at the Chinese Academy of Social Sciences, believes that the local government's intentions can be understood, but in an environment where the market determines prices, such an approach may put local enterprises at a disadvantage and affect the local economy.
Li Guoxiang: The intention is good, but since the overall environment is now a market economy, if an enterprise raises its original price, and the mutton is not particularly distinctive or branded, then in a competitive market environment it may be at a disadvantage. For agricultural products, the state hopes the market will play a decisive role in resource allocation. This kind of buying and selling, purchasing and sales, should still respect market entities, letting herders form prices through bargaining. To protect herders' interests, the government can generally, beyond the price, give a partial subsidy outside the price to make up for their disaster losses. Or through price insurance, where herders participate in insurance, and if the price falls short of expectations, insurance compensation can be given.
Making meat enterprises give up their interests is also an expedient measure; this trick can't be used every time. In the long run, our country's pastoral areas still have many shortcomings in resisting natural disasters, and their resilience is not strong. Although Hulunbuir City drew up drought defense measures long ago, in actual implementation there are still many difficulties.
What exactly is the deep-seated reason behind this? What improvements do pastoral areas still need to make to resist natural disasters? Li Guoxiang believes this requires fundamentally and vigorously promoting the "balance between grass and livestock" policy, and transforming the industrial structure, to provide more guarantees for stabilizing herders' incomes, thereby strengthening herders' ability to withstand any disaster.
Li Guoxiang: Facing severe drought, multiple approaches are needed. For example, emergency mechanisms, such as drilling wells, can ease herders' temporary difficulties. In the long term, to solve drought, first we must increase insurance support, change herders' loan repayment mechanisms, and extend loan terms. The local government has already made efforts in this regard. From the perspective of future development, to address market fluctuations and protect farmers' interests, on the one hand we must raise farmers' awareness of the market and strengthen market supervision. In addition, when raising sheep, do not expand the scale excessively; according to local leasing conditions and taking disaster factors into account, control the scale of sheep raising well. From the perspective of local industrial development, we must properly integrate the primary, secondary and tertiary industries. While developing sheep raising, we must also form close links with slaughtering enterprises and even future sales, and be able to see our own brand on the market, so that market prices will be guaranteed. In addition, if the local area can develop the tourism industry and develop the integration of agriculture and animal husbandry, it will be very beneficial for resisting natural disasters, increasing herders' incomes, and local economic development.
(Han Xiao, Li Kun)