It is necessary to set up a long-term mechanism to prevent "cheap grain hurting farmers".

With the gradual integration of China's agriculture into the wave of globalization, domestic grain prices will gradually approach to the low international food prices, and the pressure of global competition in China's agricultural field will gradually increase. Therefore, to improve China's agricultural modernization level and international competitiveness, and gradually return the decision-making power of grain prices to the market gradually is a wise choice to comply with the development of the times.

□ Gu Muqing

It has been reported that with the bumper harvest of autumn grain in various places, the purchase prices of the three staple grains in China have fallen sharply. Among them, the price of corn fell significantly, with the average price of farmers falling by more than 20%, with the highest drop of about 30% compared with the same period last year; wheat fell off a cliff in the first period of October; and the purchase price of rice also tended to fall steadily compared with previous years. Due to the low price elasticity of demand for agricultural products, low grain prices may directly lead to a sharp decline in farmers' income from growing grain. People concerned pointed out that a 20-30 per cent drop in food prices could reduce farmers' incomes by about 100 billion. If the marginal propensity to consume of rural residents is vaguely calculated, it could affect GDP growth by about 1 per cent through consumption channels.

The global commodity price downturn and the mutual superposition of domestic supply and demand mismatch and inventory backlog are the root causes of the current round of food price decline. Due to the double superposition of the global economic stagnation cycle and the debt cycle and the increased risk of deflation, global commodity prices have generally fallen. Recently, the price difference per ton of soybean, wheat, corn and rice at home and abroad is about 50 to 1000 yuan. With the gradual elimination of barriers between the domestic market and the global market, the price gap between domestic and international grain prices has gradually converged, not to mention the steady appreciation trend between the nominal effective exchange rate and the real effective exchange rate of RMB over a long period of time, and China's grain imports continue to increase. In the past, the balance of domestic grain supply and demand was broken, and domestic grain sales were squeezed, which slowed down the process of granary destocking to a certain extent. At the same time, as the State Grain Administration recently announced, "at present, China's grain stocks have reached a new high, and the amount of grain stored by all kinds of grain and oil storage enterprises is unprecedented. The amount of national policy grain stored in open-air and simple storage facilities is also unprecedented. There is a serious surplus of grain storage in China, and the shortage of warehouse capacity makes the grain trading market supply larger than demand, acquisition difficulties, and grain prices have been greatly suppressed.

From the macro level, the decline in domestic food prices may have a certain impact on the national economy. In addition to affecting the current income of rural residents and affecting China's GDP by consumption channels, if based on the perspective of general equilibrium analysis, the decline in grain prices may also cause downward pressure on food prices in downstream industries such as grain, oil and flour; it can cause a downturn in feed prices and reduce breeding costs, coupled with the large-scale fencing cycle of live pigs in the second half of the year, which will also restrain the market prices of pork and other animal products. Food accounts for about 1/3 of the weight of CPI in China, which will exert greater downward pressure on China's already depressed prices through the multi-layer transmission effect of the price system, and then aggravate potential deflation expectations.

However, there are great differences in the employment distribution of rural population in different areas of our country. For the eastern or central provinces with a large population and little land, farmers' income comes largely from migrant workers and operations, and the decline in food prices can have a less impact on their lives; while for the remote and poor areas in the west and some major grain-producing provinces, the decline in grain prices will deal a blow to agricultural production, which is already small profits, and the lives of farmers may be greatly affected. In addition, the economy has been in the doldrums in recent years, and it has become more difficult for farmers to work and operate in cities. in this way, the problems in rural areas may be more serious.

In the face of the impact of the downturn in international grain prices and the imbalance between domestic supply and demand, it is urgent to actively take measures to stabilize grain purchase prices and effectively improve the income plight of farmers in areas affected by falling grain prices. On the one hand, all localities should promptly implement the government protective price policy for grain purchase, effectively curb the sharp decline in the purchase prices of the three staple grains, and effectively safeguard the fundamental interests of grain farmers. On the other hand, as the WTO has certain restrictions on grain subsidies, we should vigorously implement the idea of "accurate poverty alleviation" and give strong support to the lower-income groups of farmers in poor areas who are mainly planting industry. we will raise the minimum living security and pension standards, improve their living and consumption standards, and effectively maintain social stability in poor areas. In addition, in view of the recent surge in potential deflationary pressures and the relatively low speed of money circulation, a stable and loosening total monetary policy can be implemented and targeted and accurate credit for agriculture can be issued.

In the long run, with the gradual integration of China's agriculture into the wave of globalization, domestic grain prices will gradually approach to the low international food prices, and the pressure of global competition in China's agricultural field will also gradually increase. Therefore, to improve China's agricultural modernization level and international competitiveness, and gradually return the decision-making power of grain prices to the market gradually is a wise choice to comply with the development of the times. Therefore, at present, we should actively learn from the experience of developed countries and, on the premise of respecting the wishes of farmers, promote the circulation of rural land in a standardized and orderly manner, promote the construction of a scientific new socialist countryside, implement large-scale agricultural management, and actively carry out deep processing of agricultural products. and establish efficient agricultural information dissemination channels to resolve the plight of information asymmetry between supply and demand in different regions. Thus effectively improve agricultural production capacity and the efficiency of processing and circulation of agricultural products, and finally achieve the leap from a large agricultural country to an agricultural power, and fundamentally improve the situation of low income of rural residents.

Compared with developed countries, the per capita cultivated land area in rural areas of our country is relatively less. In the modern market economy, if farmers are limited to intensive cultivation on a small area of agricultural land, it may be alienated into the embarrassing situation of "less land harms farmers" and eventually evolves into the root cause of poverty in rural areas. Therefore, based on the consideration of their own objective reality, all regions should make great efforts to promote the orderly circulation of rural land management rights, carry out a large-scale and intensive grain production model, gradually and steadily release rural land and agricultural surplus labor, and develop relevant industries in line with regional characteristics to effectively absorb high-quality employment of agricultural surplus labor. At the same time, we should strengthen investment in agricultural science and technology, promote the construction of high-standard modern farmland, earnestly improve agricultural labor efficiency and the quality and output of agricultural products, and develop modern high-end, intensive, and high-quality agriculture. We also attach importance to the deep processing of agricultural products and raise the market value chain of agricultural products. When the per capita farming capacity of the agricultural labor force can reach more than 100 mu of land, China's agricultural production efficiency and farmers' income will be greatly improved; and the rural surplus labor force in the orderly process of urbanization, through its reasonable transfer and related vocational training to become high-end industrial workers, their income can also be effectively improved.

In addition, the information asymmetry in the game of supply and demand is also the key to the regional and structural surplus of grain supply. In the future, the relevant departments can make full use of emerging economic carriers such as "Internet +" to optimize the information transmission channels of the agricultural market, reduce the search costs and transaction costs of the market subjects, and establish a modern grain purchase, sales, processing and circulation system. Effectively bridge the information gap in the market system, promote the improvement of the agricultural industry value chain, so as to promote the integration of agricultural production, processing, sales and circulation. We will form a national and efficient market system to effectively prevent and resolve the possible regional backlog of agricultural products.

(author's unit: economics Department of the Central Party School)