In 2016, the temporary corn storage policy was cancelled, and corn prices will drop sharply
On the 28th, Liu Xiaonan, deputy director of the Department of Economic and Trade of the National Development and Reform Commission, said that in 2016, the three northeastern provinces and the Inner Mongolia Autonomous Region will adjust the temporary corn purchase and storage policy to a new mechanism of “market-based purchase” plus “subsidies.” That is to say, starting this year, the temporary corn storage policy will be cancelled, and a new mechanism of separating price from subsidy and market-based pricing will be implemented.
Affected areas: mainly the three northeastern provinces and the Inner Mongolia region, including other corn-growing areas across the country
How it is affected: corn prices will fall
Why is the state no longer purchasing corn?
Answer: Because there is too much. How much corn inventory does our country have? At present, the state's grain reserves hold about 200 million tons of corn. If we do not produce corn in 2016 and only use the stored corn, our corn would still be enough for 1.4 billion Chinese people to consume for a year.
Therefore, the slogan put forward by the central government this year is that supply-side reform must also be carried out in the agricultural sector. Accordingly, the state issued the Guiding Opinions on Corn Structural Adjustment in the “Sickle Bend” Region, planning to reduce the planted area by more than 50 million mu within five years. At the same time, it encourages the development of minor grain crops and the integration of planting and breeding, and adjusts our country's agricultural structure.
Will corn prices fall this year?
They will fall. Last year, the state's temporary corn storage price was 1 yuan/jin. In practice, considering dryness and moisture levels, transportation and other costs, many people sold corn for around 0.8-0.9 yuan. In 2016, the state liberalised corn prices, meaning corn prices will align with the market. So what is the market price?
Based on the current import landed price of corn, a corn price of 0.75 yuan/jin is relatively reasonable. That is to say, this year's corn price will be lower than last year's.
The state says it will subsidise corn growers. How will the subsidies be paid?
This year, the state will provide certain fiscal subsidies to the three northeastern provinces and the Inner Mongolia Autonomous Region. Central fiscal subsidy funds will be allocated to the provinces and autonomous regions, and local governments will coordinate the payment of subsidy funds to producers. The subsidies will all be handled through methods such as public area announcements and one-card payments.
Corn prices have fallen. Will wheat and rice prices also fall?
They will not. The state stipulates that the minimum purchase price for wheat (third grade) produced in 2016 is 118 yuan per 50 kilograms, remaining unchanged from the 2015 level. The minimum purchase prices for early indica rice (third grade, the same below), mid-to-late indica rice and japonica rice produced in 2016 are 133 yuan, 138 yuan and 155 yuan per 50 kilograms respectively.