The domestic grain storage price continues to rise, but the processing industry is moribund.

The agricultural market is very bad now. News of layoffs came from Cargill, the world's largest grain maker.

The news, which has been refuted by Cargill, said that Cargill could cut as many as 4000 jobs, or about 2.5 per cent of its workforce, due to the agricultural downturn. Cargill released an official message on Nov. 18 that there were no specific plans, as reported, and that the global workforce rose from 153000 to 155000 in the last quarter.

However, there is an accurate part of the rumor that the global and Chinese agricultural economic situation is now under great pressure.

In the latest fiscal quarter ended August 31, 2015, Cargill's net profit rose 20% year-on-year, but revenue fell 17% year-on-year due to factors such as the sharp drop in agricultural prices.

After seeing the situation of the largest grain merchant in the world, let's take a look at Cofco, the largest grain merchant in China. As a result of the acquisition of double N (Noble Agriculture and Nidera), Cofco's consolidated operating income doubled to about 330 billion yuan in the first three quarters of 2015, but the combined net profit was about 360 million yuan, compared with a profit of about 1.15 billion yuan in the same period in 2014.

In the international agricultural market, wheat, rice and corn are the three main varieties, among which rice is the staple food of the Chinese people. Take Thai rice, which is more exported in the international market, as an example, since November 2011, the export quotation of Thai rice has plummeted from about US $630 / ton to about US $370 / ton in early November 2015, a drop of about 40%. The situation of wheat and corn is different, but it has also declined in recent years as a whole, with the average price in the international market falling by more than double digits in the last year.

Compared with the sharp decline in international agricultural products, the prices of China's relatively closed agricultural products market have been rising continuously since 2008. In order to support agricultural production, the parties concerned have continuously raised the minimum purchase prices of wheat and rice and the temporary collection and storage prices of corn for many years, and walked out of the independent market.

Over the years, the continuous increase in collection and storage prices has reached an unsustainable stage, there is too much grain to put, and the domestic grain processing industry is moribund.

Wang Wei, director of public affairs of Yihai Kerry Group, said when attending the "2015 (third) China Food and Food Security Strategy Summit" that in recent years, the "strong rice and weak rice" and "weak wheat" caused by the acquisition of the market in recent years have made the food processing industry even worse, and the whole industry is generally in a state of loss and shutdown. If this situation continues to deteriorate, China's grain processing industry will fall into a desperate situation, and the consequences will be very serious.

The purpose of market support and acquisition is to ensure the income of farmers. if we say that farmers are the palms of China's hands, the grain processing industry is the back of hands, and "palms" and "backs of hands" are all meat. Farmers are in the upper reaches of the agricultural industrial chain, and the grain processing industry connects farmers with consumers in cities. As a "bridge", there is an "obstruction" in the grain processing industry, and there is a general loss in the whole industry. In the end, the whole ecosystem will inevitably collapse.

Wang Wei said that due to the late opening of China's grain market, the low degree of liberalization, many regulation and control measures, and great policy impact, the grain processing industry is not attractive to large social capital.

The bosses of the domestic grain processing industry are few on the rich list, which can vividly illustrate the current situation of the industry. From 2006 to 2015, only three of the top 100 people on the Hurun rich list were in the dry grain and oil industry. One of them is Shao Zhongyi of Chenxi Group, and the other two are condiments, Pang Kang of Haitian Flavor Industry and Meng Qingshan family of Plum Blossom Group. To say the least, even if you include the bosses of the feed industry and well-processed enterprises, such as Liu Yongxing and Liu Yonghao brothers, among the starry Chinese tycoons, the rich in the grain and oil industry are pitifully few, and the ranking is declining. At the top of the list are more Internet and real estate bosses.

Without wealth effect and sufficient social capital investment, the only hope for the modernization of grain processing industry is to rely on the support of the state.

According to official data, science and technology investment in the grain processing industry accounted for only about 0.2 per cent of sales income in 2010, much lower than the average of 2 per cent to 3 per cent in developed countries. The chain of processing industry is short, the level of comprehensive utilization is low, the comprehensive utilization rate of grain processing by-products such as rice husk, rice bran and wheat bran is low, the industrial chain is incomplete, lack of in-depth development and utilization, and the added value of products is low. The proportion of rice husks used for power generation and direct filling of boilers is only about 30%; the proportion of rice bran used to produce edible vegetable oil is less than 10%; and the effective utilization rate of processing by-products such as miscellaneous grains and soybeans is low.

Some people in the industry told reporters that China's grain processing is still at a primary level. For example, rice is processed into rice. Although rice bran can also extract oil, the technology of refining rice bran crude oil lags behind. Low refining grade, low yield, high cost, and much loss of effective nutrients. In foreign countries, the grain processing industry chain is longer, the degree of comprehensive utilization is higher, the waste is less, and the value-added of comprehensive grain processing is high. According to statistics, the processing value of agricultural products in China is only 1.2 times, while that in developed countries can reach 2-4 times.

To improve the efficiency of grain utilization and realize the modernization of grain processing industry, we need the force of market, and it should be based on the market mechanism.

When there is a bear market in agricultural products at home and abroad, we need to save farmers, but also to save the grain processing industry.

The healthy and dynamic grain processing industry can reverse pull the upstream planting industry from the middle and lower reaches, and the market-oriented grain processing industry is also willing to spend a lot of money to obtain high-quality agricultural products from the upstream.

For the state's collection and storage, Jingui Wuchang rice and ordinary northeast rice are a collection and storage price, and the only thing that can set a "sky-high price" for Wuchang rice is the grain processing industry.