Using Market Mechanism to resolve High Grain inventory

Among them, the high stock of grain has reached an unprecedented level.

According to estimates by industry insiders, by the beginning of July this year, the total stock of rice stored by the state is expected to exceed 60.5 million tons, of which early indica rice and middle and late indica rice totaled about 25 million tons, and japonica rice about 35.5 million tons. As of mid-October this year, the national temporary storage stock of wheat is 1823-19.23 million tons, 1600-17 million tons higher than the same period last year. The policy wheat stock is 3900-40 million tons. In 2014 / 15, the country continued to implement the corn collection and storage policy. By April 30, 2015, the temporary storage corn accumulated 83.2876 million tons, and the total amount of corn collected and stored by the state in 2013 and 2014 was more than 69 million tons. More than 160 million tons in two years, continuous large-scale collection and storage has made the state reserve stocks unprecedented. According to statistics, so far this year, 5.669 million tons of corn have been sold in temporary storage auctions, 148000 tons of imported corn, and only 18800 tons of corn transferred to other provinces. After nearly two years of auction, 30.83 million tons of temporary stored corn sold 21.37 million tons in 2012 and 9.15 million tons in 2013, while 69.19 million tons in 2013. So far, China's corn, wheat and rice stocks add up to about 230 million tons, accounting for 76.7 percent of the 300 million tons in China's state-owned granaries, ranking first in the world.

The problem caused by the higher and higher grain stocks is very serious.

The shortage of storage capacity has been shown.

This year, China's summer grain output reached a new high of 282.1 billion jin, an increase of 8.9 billion jin over the same period last year. Due to more imperfect wheat grains in some provinces, as of September 30, 11 major producing areas, including Hebei, had purchased a total of 132.6 billion jin of wheat, a decrease of 14.6 billion jin over the same period last year, while eight major producing areas such as Jiangxi had purchased 15.9 billion jin of early indica rice, a decrease of 1.1 billion jin over the same period last year. Autumn rice and corn production situation is good, has been on the market one after another. The implementation plan for the minimum purchase price of rice has been launched successively in Anhui, Sichuan, Henan, Hubei, Jilin, Jiangsu, Heilongjiang and other provinces. The temporary corn reserve policy of "three provinces and one region" in Northeast China has been introduced. The third-class quality of the national standard is 1.00 yuan per jin, which is 10% lower than last year, but still higher than the market price. It has become an indisputable fact that a large amount of autumn grain has been put into policy storage.

According to media reports, Changsha City, Hunan Province, is expected to purchase about 300000 tons of middle and late rice. According to the requirements of the implementation Plan for the minimum purchase Price of Wheat and Rice in 2015, which is mainly set up in the depots of state-owned grain enterprises, it is proposed to arrange 20 outlets at the lowest price, a decrease of 12 over the same period last year, a shortfall of 115000 tons, a shortfall of about 35000 tons, and a serious uneven distribution. There are no warehouses in some grain-producing areas. Can not meet the needs of farmers to sell grain nearby.

According to the analysis of the conservative purchase of more than 140 billion jin of new grain in the next grain harvest season, there will be a warehousing shortfall of 120 billion jin. "

According to the data of the State Grain Administration, during the purchase period of 2013 to February 28, 2014, the state has purchased 32.2 million tons of japonica rice and 29.73 million tons of medium and late indica rice in major producing areas, an increase of 8.55 million tons and 9.03 million tons respectively over the same period of the previous year.

On September 30th, the State Grain Administration, the Ministry of Finance and the Agricultural Development Bank jointly issued a paper to confirm that the temporary storage corn acquisition scale of COFCO, COFCO and AVIC is 10 million tons of COFCO, 4 million tons of COFCO and 4 million tons of AVIC. Last year, the scale of the three companies were 10 million tons of Cofco, 2 million tons of China Textile, and AVIC did not participate.

Without sufficient storage capacity, the problem of "difficulty in selling grain" for farmers will be difficult to solve.

Heavy financial burden

At present, an important aspect of the main measures to protect the interests of grain farmers in China is the policy grain purchase policy.

The acquisition cost is not cheap. According to the regulations of the Ministry of Finance, the state has to pay a purchase fee of 0.025 yuan for every jin of policy grain purchased. For every additional 1 million tons of grain purchased, it will cost an extra 50 million yuan.

The cost of safekeeping is huge. According to the current state policy, the annual storage fee for policy-oriented grain is 0.047 yuan per jin per year, and for every 1 million tons of grain collected, the annual expenditure will be increased by 94 million yuan.

Interest payments are something to be reckoned with. According to the current national benchmark loan interest rate of 4.6 per cent per annum, for every additional 1 million tons of grain purchased, it will cost an extra 9.2 million yuan a year.

Taking the above three items together, for every 1 million tons of grain collected, it is necessary to pay 153.2 million yuan in interest and expenses every year.

The difference in quality and price is huge. According to the life cycle of grain, generally speaking, the storage life of corn, rice and wheat is 2 years, 3 years and 4 years respectively. If it cannot be auctioned out of the warehouse during the storage period, the quality will decline. When it comes to the aging stage, it can not be used as rations, but can only be sold as feed. The loss of the quality of a jin of grain is not a matter of a few cents, but a matter of a few cents. The huge price difference loss of grain varieties is a huge loss!

Serious waste of grain resources

The waste of resources caused by high grain inventory is equal to the waste of cultivated land resources.

In addition to the special geographical environment in Northeast China, which can only grow one crop a year, grain production in other parts of China consumes a lot of resources. At present, the use of chemical fertilizer in China may be the highest in the world. In 2012, China used 58.39 million tons of chemical fertilizers, 1.8 million tons of pesticides and 2.38 million tons of agricultural film, and about 1 million tons of debris remained in the soil every year. All kinds of pollutants emitted by agricultural production account for about half of the emissions of various pollutants in the whole country. A certain degree of land pollution and the decline of soil fertility have something to do with the pursuit of high grain yield. In addition, food production also consumes a lot of water resources, energy and other resources, as well as labor resources. The cost of waste caused by high grain stocks is incalculable.

With the rapid development of industrialization and urbanization, the distribution of grain production in China is becoming more and more uneven. In the past, the transfer of grain from the south to the north has been transformed into the transfer of grain from the north to the south. From the perspective of regional distribution, the grain output of China's 13 major grain producing areas accounts for 76 percent of the country's total output, of which seven northern major producing areas, such as Hebei, Inner Mongolia, Liao, Jilin, Heilongjiang, Shandong and Henan, account for nearly 50 percent of the country's total output. Grain stocks in the main producing and selling areas account for 71% and 9% of the country's total, respectively, and consumption accounts for 62% and 17%, respectively. The logistics cost of grain is very expensive when it is transferred from the concentrated producing areas to the main selling areas. In recent years, it has paid a huge cost for the state to arrange the northeastern corn to move southward.

A series of social problems brought about by high grain stocks have come to be solved urgently. Grain as a general commodity attribute, we need to use the market mechanism to solve the problem of high inventory.

Use "subtraction" to resolve high inventory

According to China's current policy, grain purchased by policy must be sold at a reasonable price by public auction. In this way, the grain in stock is difficult to sell. The main reason is that at present, the price of policy grain purchased in China is generally higher than the market price, and the auction turnover rate is very low, which can not achieve the desired results.

Under the condition of market economy, the sales of both general and special commodities should follow the law of market economy. When the market is in short supply, the market price rises; when the supply of goods exceeds the demand, the market price naturally falls. If the oversupply of goods does not comply with the market situation, there will be a long-term backlog. Over time, the cost of inventory will rise greatly, and the use value will be greatly reduced, resulting in the loss of use value.

At present, the cost price of grain with high inventory in China is not only higher than the domestic market price, but also much higher than the international market price. Judging from the situation of domestic and foreign grain markets in recent years, if there are no major natural disasters or relatively large-scale international disputes or wars in the next few years, it is unlikely that grain market prices will rise. In order to resolve the crisis of high grain inventory in our country, it is necessary to use subtraction. When selling in line with the price does not work, we should decisively adopt the method of referring to the market price, appropriately determine the auction floor price of policy grain, and actively organize the auction. On the one hand, let buyers make profits and dare to participate in bidding; on the other hand, let high inventories be reduced relatively quickly, reduce interest expenses, quality price differences, free up storage capacity, alleviate the problem of farmers'"difficulty in selling grain", and be in line with the international market. enhance the competitiveness of the domestic grain market.

Use "addition" to dissolve high inventory

The policy grain stored in the national treasury is basically raw grain. Digesting these raw grains mainly depends on grain processing enterprises. Under the background of "strong rice and weak rice" and "weak wheat", grain processing enterprises do not pay attention to the raw grain auctioned above the market price.

The continuous low grain prices in recent years have caused many domestic grain processing enterprises to go bankrupt, and the large and medium-sized grain processing enterprises that can barely support them are also in a state of instability. After the purchased raw grain is processed into finished grain, there is no profit return for a long time, which enterprise is more than half a step?

In order to enable grain processing enterprises to actively participate in the auction, we must dare to use "addition". In this regard, the method of Jilin Province should be used for reference.

On October 14, Jilin Province introduced the subsidy policy: in the fourth quarter of 2015, subsidies continued to be given to corn processing enterprises with an annual processing capacity of more than 100000 tons. For the temporary collection and storage of corn and the rotation of provincial reserves for auction (before the end of the year) and self-processing, it is proposed to raise the original subsidy standard of 150 yuan / ton to 350 yuan / ton, of which the difference between the state subsidy of 100 yuan / ton and 250 yuan / ton is subsidized by the provincial government. on the other hand, the provincial government subsidizes all 350 yuan / ton of corn rotated by provincial reserves. Enterprises purchased for their own use in the province in the fourth quarter will be subsidized by the provincial government for 250 yuan / ton according to the actual processing consumption.

Some of the main grain producing provinces in China, such as japonica rice and corn in the northeast, have a market in the south. However, buyers are deterred by the high cost of transportation. In this regard, the method of transport subsidies can continue to be adopted to encourage southern enterprises to buy.

The use of "addition" method can effectively stimulate the enthusiasm of grain processing enterprises to produce at full capacity. This method is worth popularizing in other provinces and cities.

China is a large oil import country. With the steady development of social economy, the degree of external dependence of oil is increasing day by day. It is a good way to make full use of domestic resources and alleviate the problem of oil shortage.

In the period of food shortage, China restricts the production of energy products using grain as raw materials. Now, the high inventory of policy grain has reached the time when we have to deal with it. Instead of letting these precious grains go to waste, it is better to let them play a full role.

With reference to the experience of developed countries, the production of fuel ethanol from grain, mainly corn, is an effective way to resolve policy grain. The United States is the largest producer of fuel ethanol in the world. At present, the United States accounts for about 33% of the world's fuel ethanol production. According to the US Department of Energy's plan, biofuels produced from renewable materials will replace 75 per cent of oil imports from the Middle East by 2025 and 30 per cent of current gasoline use by 2030. The US government encourages the further development of fuel ethanol and plans to increase the addition of fuel ethanol from 10% to 15%. A bill was passed to restrain big oil companies from adding fuel ethanol on a regular basis and to try to distribute profits to ethanol production plants and farmers. According to the data of previous years, an average of 35% of the total corn production in the United States is used for fuel ethanol production, 34% for livestock raising and 12% for export.

As early as 2006, Chinese authorities approved the construction of four designated production plants of Jilin fuel ethanol, Heilongjiang China Resources Alcohol, Henan Tianguan fuel ethanol and Anhui Fengyuan fuel Alcohol. These manufacturers with good production conditions, together with those that were later put into production, should now let them operate at full capacity.

The production of fuel ethanol from corn not only increases the domestic automobile fuel supply, but also reduces air pollution. The state should give corresponding policy support to fuel ethanol production, which can not only increase fuel supply, but also solve the problem of high grain inventory.