Farmers don't make money growing crops; can agribusinesses make money together with farmers?
In recent years, farmers have widely reported that the profits from farming are getting thinner and thinner, to the point that farming no longer makes money. Especially during this year's wheat harvest, due to the impact of extreme rainy weather, the voices saying "farmers don't make money growing crops" have gradually grown louder. It is now the time when farmers in various places are selling grain after harvesting wheat. In order to understand the actual situation of farmers' farming, effectively analyze why farmers don't make money growing crops, and how agribusinesses, which have a close fish-and-water relationship with farmers, will respond, a reporter from China Agri-Production News recently conducted interviews and investigations with distributors and farmers in major wheat-producing areas such as Shandong, Shanxi, Henan, Hebei, Anhui and Jiangsu. Let us hear what they have to say.
Wheat prices won't rise, and farmers don't make money growing crops
Case one: In disaster-hit areas, almost nothing is left after deducting costs
"This windy and rainy weather flattened all my wheat, directly causing the wheat kernels to be underfilled and cutting the yield by more than half." Wang Fuhai, a farmer from Pingdingshan, Henan, told a reporter from China Agri-Production News.
Since the start of summer, severe convective weather including thunderstorms, gales and localized hail has caused a cumulative 630,000 mu of wheat in Henan province to be affected by disaster, of which 580,000 mu suffered lodging to varying degrees due to wind and 50,000 mu was damaged by hail. Because the rainy weather continued, completely lodged wheat also showed varying degrees of mildew and sprouting.
Wang Fuhai said that because of the rainy weather, his family harvested only 500 jin of wheat per mu. Wheat that originally would have been purchased at the state minimum purchase price of 1.18 yuan/jin could only be sold to grain traders who drove prices down, at 80 cents per jin, because its quality did not meet the state minimum purchase standard. At this price, Wang Fuhai did the math for the reporter: seed input per mu of wheat was 50 yuan, fertilizer input was 150 yuan, the cost of the machinery for simultaneous seeding and fertilizing during plowing plus the cost of the combine harvester at harvest was 100 yuan, and adding other labor and material costs of about 100 yuan, total input was 400 yuan/mu. At the local market price of 80 cents per jin, growing one mu of wheat made almost no money.
Xiong Tairu, general manager of Tianhe Agricultural Materials Co., Ltd. in Tanghe County, Henan Province, told a reporter from China Agri-Production News that this year in the high-yield irrigation areas of northern Henan, wheat scab was severe, which not only caused wheat ears to wither and yellow and kernels to be shriveled and thin, but also severely reduced the yield. Wheat of poor quality could only be sold at a purchase price of 0.8-0.9 yuan/jin. In other words, only wheat that met the state purchase standard could be sold by farmers at a relatively higher price; wheat that did not meet the standard could only be sold to individual grain traders, and the price was relatively low. Without a reduction in yield, if each mu produced 800-1000 jin of wheat, after deducting the cost of farming, a farmer's gross income per mu was 500-600 yuan, and almost nothing was left after deducting costs.
Wheat in Henan and Anhui was affected by weather, and its quality was generally low, failing to meet the purchase standard of Sinograin. In previous years, after the wheat harvest, it was basically all absorbed by Sinograin, and grassroots traders who wanted to buy it had to offer a purchase price higher than Sinograin's in order to buy wheat. But this year, although Sinograin's purchase price was 1.18 yuan/jin, farmers could not sell at this price and could only sell to grassroots grain traders at the low price of 0.7-0.9 yuan/jin, or even 0.3-0.6 yuan/jin.
Case two: In areas not hit by disaster
Market purchase prices are on the low side
Because of the disaster, the low market purchase prices in Henan, Anhui, Jiangsu and other places were caused by objective conditions. However, in some places not hit by disaster, wheat prices were also unsatisfactory. Yang Yamin, deputy general manager of Shaanxi Agricultural Science Fertilizer Co., Ltd., told reporters that at present wheat storage in Shaanxi Province has basically ended. Judging from this year's wheat output, the yield per mu was almost around 850 jin, a relatively poor harvest compared with previous years, and the main purchase price of wheat in the province was 0.83-0.84 yuan/jin.
Zhang Yang, deputy general manager of Shanxi Agricultural Materials Group, told reporters that after this year's wheat harvest ended, the general purchase price was 1.05 yuan/jin, and the lower purchase price was 0.80 yuan/jin. Farmers growing wheat made no profit, and even lost money.
Zhang Zhenze, general manager of Shandong Lubei Logistics Co., Ltd., told reporters that this year the wheat harvest situation in the Shandong area was relatively stable. Wheat in most parts of Shandong could reach the state standards for grade two and grade three wheat, with purchase prices of 1.19-1.18 yuan/jin. For wheat that did not meet state standards, in some areas flour mills offered a purchase price of 1.14 yuan/ton, while private grain traders offered a purchase price of 1.1 yuan/jin.
Fang Shaoyun, director of Ruize Crop Planting Professional Cooperative in Leling City, Shandong Province, told a reporter from China Agri-Production News that the cooperative transferred nearly 2,000 mu of land, and this year all the wheat it grew was purchased by Sinograin. After deducting the transfer cost of 80 yuan per mu and the planting cost of nearly 500 yuan, the profit was about 200-300 yuan per mu.
Quality has become a main reason farmers don't make money growing crops
It is understood that this year the state minimum purchase price for wheat is still 2.36 yuan per kg for state-standard grade three wheat, with a grade price difference of 0.04 yuan per kg between adjacent grades. All wheat of quality grades one to five, with unsound kernel content not exceeding 10.0%, falls within the scope of implementation of the "minimum purchase" policy.
Objectively speaking, whether farmers make money growing crops is a very complex issue. Enabling farmers to steadily increase their income is a systematic project involving every aspect. The investigation found that purchase prices varied greatly from place to place, and wheat of different quality had different prices. In disaster-hit areas such as Anhui and Jiangsu, different degrees of disaster led to different wheat quality, and ultimately different prices. The investigation found that in many disaster-hit areas, the wheat grown by farmers could not reach the state purchase grade, so naturally it could not be sold at the minimum purchase price and could only be sold at a low price to local private grain traders, with price suppression occurring, making some farmers lose money while still putting on a show.
From this investigation it can be seen that the current market generally reflects that, whether in disaster-hit areas or areas with a normal year's harvest, differences in quality have led to obvious divergence in market wheat prices. On the one hand, wheat quality in some areas was on the poor side and did not meet storage standards, so large amounts of wheat were excluded from policy-based purchasing, the absorption capacity of minimum purchase purchasing was blocked, and the pace of purchasing was slow. On the other hand, market entities were bearish about the future of wheat, purchasing cautiously and with low enthusiasm, and the market's purchasing momentum for new wheat was also generally weaker than in previous years.
The investigation shows that at the present stage, China's agricultural products are seriously homogenized and lack differentiated, high-quality products. The phenomenon of uneven wheat quality is relatively common in various places, and low quality leads to a lack of competitiveness. This has become a key constraining factor for the sustainable development of agriculture in the vast wheat-growing areas, and it is also a main reason why farmers do not make money growing crops at present.
Agribusinesses explore ways to untie the knot of agricultural product quality
Since ancient times, cheap grain has hurt farmers. That farmers don't make money growing crops hurts farmers' enthusiasm for farming. How can the status quo be changed? How can the knot of grain quality be untied? When farmers' enthusiasm for farming is not high, their input will decrease, directly affecting the agricultural materials market. Facing this situation, how should agribusinesses participate?
The practice of Hebei Langfang Lvyuan Agricultural Development Co., Ltd. gives us inspiration. The company extended its service chain, uniformly provided seeds and fertilizers, trained machine sowing operators, and guided farmers to grow high-quality wheat in a standardized way. From seeds and fertilizers to technical support and purchasing, it provided a one-stop service, achieving increased enterprise efficiency and increased farmer income, and winning recognition from the local government and farmers.
The company connects with purchasing and processing enterprises and directly purchases the high-quality wheat grown by farmers at a price higher than the market price, giving farmers a net profit of more than 500 yuan per mu. Because Lvyuan Company grasped the core link of wheat quality, it not only helped the people increase their income, but also stimulated farmers' enthusiasm for growing grain, while at the same time solving the practical problem of how agribusinesses can transform and upgrade.
Yang Chunhua, general manager of Langfang Lvyuan Company, said frankly: "By guiding farmers to produce in a standardized way and grasping the core issue of wheat quality, which affects the whole situation with a single pull, we have solved the problem of farmers' sustained income growth. Once farmers have enthusiasm, the agricultural materials market becomes stable."
It is not an isolated case. Heilongjiang Beifeng Agricultural Production Materials Group Co., Ltd. started with high-quality rice and established a large-scale Longdao planting base in the core production area of high-quality rice in Wuchang, focusing on building the high-end rice brand "Longdao," determined to become a representative of high-quality rice from Heilongjiang and overturning the traditional bulk grain purchasing and processing model. Through a full-process quality control model of self-breeding and optimized selection of rice seeds, planting by its own operating team, cold-chain fresh rice direct supply, and quality inspection tracking and monitoring, it achieved industrialized operation "from field to table." The price of high-grade rice is more than 20 yuan per jin, while ordinary rice generally sells for only 2-3 yuan per jin.
In 2015, the rice planting base area reached 35,000 mu. In 2016, the rice planting base area had reached 50,000 mu, and there are plans to expand the base area to 200,000 mu within 5 years, realizing Beifeng Group's transformation in business philosophy from "making money from farmers" to "helping farmers make money" and then to "making money together with farmers." (Xu Xiaolei, Li Yang, Song Anyong)