Why have corn prices fallen, and how big is the impact on farmers?
After a heavy snowfall, a grain broker came to the home of corn grower Zhao Jincheng to inspect the grain, “Now it has to be graded as third-class; it doesn't make second-class.” “If it's third-class, after deducting freight and delivering it to the destination, it can only sell for 0.71 yuan.” The corn price fell from 0.90 yuan per jin in 2014 to 0.71 yuan per jin this year. Neighbors and relatives all stored their corn, waiting to see how the price would move. But Zhao Jincheng urgently needed money, so he had to sell even at a low price, because he still had a loan to repay as soon as possible.
The reporter learned that in 2014 the temporary storage price for corn in our province was 1.11 yuan per jin, while this year's temporary storage price for corn was 1 yuan per jin, a reduction of 0.11 yuan per jin compared with 2014. The market corn price also plunged, from more than 0.90 yuan per jin in 2014 to more than 0.70 yuan per jin this year. How big an impact does this reduction of more than 0.10 yuan actually have?
“For ordinary people, this is the only 0.10 yuan they earn. If one mu yields 1,700 jin of grain, then calculated this way, one mu earns 170 yuan less, and 300 mu earns more than 50,000 yuan less.” The farmers did this calculation for the reporter.
Calculated according to the national total corn output of more than 400 billion jin in 2014, a reduction of 0.10 yuan per jin means 40 billion yuan less income. These 40 billion yuan are connected to tens of millions of farmers, and hundreds of billions in income evaporated in an instant. How big is the impact on farmers? “The cost is 1,000 yuan per mu, and then it sells for more than 1,000 yuan, so each mu earns 100 yuan, which is worse than going out to work. Farming so much land for a year, with several people in the family busy working away, earning 30,000 to 40,000 yuan is not even enough for living expenses.” A farmer said this to the reporter in an interview.
⟦NL> Why prices fell
It is understood that in recent years China's grain imports have risen year by year, and by 2014 total grain imports had exceeded 100 million tons, thus creating a situation of domestic and international price inversion. Chen Xiwen, deputy head of the Central Rural Work Leading Group, said at a news conference: “If the international market grain price is compared with 2011, the current international market prices of the three major staple grains have fallen by roughly 40% to 50%; this is the situation globally. Then, from China's actual situation, it should be said that in order to mobilize farmers' enthusiasm and protect farmers' reasonable returns, in recent years the state has in fact continuously and appropriately raised the temporary storage price and the minimum purchase price. In this way, it has run counter to the price trend in the international market. We kept raising prices while the international market kept cutting prices, and after a certain point China's grain price became higher than the international market.”
In addition, the corn sown area has increased year by year. According to the China Statistical Yearbook, in 2007 China's corn planting area was less than 30 million hectares. By 2014, this figure had increased to more than 37 million, especially in our province, where many farmers switched from planting soybeans to planting corn.
“In previous years, corn had protected-price purchasing, at more than 2,000 yuan per ton, so our farmers were very enthusiastic about growing corn, and so it increased year by year.” Corn growers said one after another.
Next step: separate price and subsidy
After corn prices fell this year, the phenomenon in 2014 of rushing to compete for land and contract land also disappeared. Growers said: “If the land rent does not fall, then next year we won't contract so much. Who dares to contract this year? If land prices don't drop and corn prices drop, you'll lose money right before your eyes; no one dares to plant.”
Because prices fell, the cost of contracting land for the next year decreased. After the grain price cut, will farmers' enthusiasm for growing grain be affected? And how should next year's food security be guaranteed?
Chen Xiwen, deputy head of the Central Rural Work Leading Group, said that in order to solve the current situation of grain prices, the next step, in order to stimulate market vitality, China's purchasing and storage policy will be further adjusted. “The principle is to separate price and subsidy. After separating price and subsidy, the market can be activated. Farmers sell grain at market prices, and business entities buy grain at market prices, thus revitalizing the grain market. What if the market price is too low? The government should adopt appropriate policies and directly subsidize farmers, but this must be separated from price.”
Recently, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, determining measures to stabilize grain production, increase income from growing grain, safeguard food security and farmers' interests, and protect farmers' enthusiasm for growing grain. Among these, it required doing a good job in the autumn grain purchase, strictly investigating IOUs and suppressing and delaying prices, and preventing difficulties in selling grain.
With the cut in the temporary corn storage price, farmers immediately felt the pressure of declining income. Following this industrial chain, the reporter sorted through several links and found that a single planting structure, high production costs, and excessive import volume were all hidden problems behind the corn industrial chain. To solve these major problems, adjustments need to be made simultaneously in industrial policy, planting structure, and agricultural technology, so as to improve the overall “constitution” of the corn industry.