Corn temporary collection and storage price can no longer be "temporary"

The rise of domestic temporary collection and storage prices and the decline of international market prices

In the eighth year of the corn temporary collection and storage policy, farmers have received news that the temporary storage price has been reduced from 1.12 yuan per catty to 1 yuan per catty, the first reduction in eight years. Wang Wuhou, a big corn grower in Inner Mongolia, seems to have been psychologically prepared:

Wang Wuhou: (state purchase price) it is better to give more, but with the change of the market situation, it is impossible to give you more.

Wang Wuhou hopes that "the more, the better" refers to the temporary collection and storage price of corn. in order to prevent the low market price from harming the interests of farmers, since 2007, China has implemented a support policy for corn-- the state has set a temporary price for purchasing corn according to the situation of that year, at which farmers can sell corn to the state storage grain depot. In 2007, the temporary storage price was just over 70 cents per jin, but by 2013, it had soared to 1.12 yuan, an increase of nearly 60%. Contrary to the domestic corn price, the international market price has declined for three consecutive years. At present, the difference between the import price of corn and the domestic temporary storage price has reached about 500 yuan per ton. Li Guoxiang, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, said that the decline in corn temporary storage prices this year is a general trend, and there is no way to go up or down as in previous years.

Li Guoxiang: when the corn (supply) is loose, the price can not be adjusted in time, which will lead to serious surplus. The market distortion caused by the temporary collection and storage policy is its biggest malpractice.

The operation of temporary collection and storage price is drifting away from the original intention.

According to the original intention of the policy design, temporary collection and storage should reflect the concept of "temporary". Whether the state collects or not should be determined according to market conditions, and the purchase and storage price can also be adjusted flexibly, but in recent years, to some extent, it has deviated from the original intention of the policy design, the price has basically only risen, and the quantity has changed from a limited acquisition designed at the beginning to an open acquisition. However, eight years later, price distortion caused market failure, and downstream enterprises, inventory pressure and financial funds were all overwhelmed, so that this "temporary collection and deposit" mechanism could no longer be "temporary".

Let's start with the peasant household side. Since the implementation of the corn temporary storage policy in 2007, farmers have gradually developed the idea of dependence. No matter how the market demand changes, corn will be harvested by the state.

Xu Shengquan, a big grower in Northeast China: the price that we ordinary people sell depends on the national policy. When the national (storage) price is high, we sell high, and when the national (storage) price is low, we sell low. JS9 China Feed Industry Information Network-based on Feed, serving Animal Husbandry

It is downstream enterprises that have a greater impact. Jin Xiubin, the head of an enterprise that needs corn feed in Jilin, sees a bumper corn harvest, but it is difficult to be happy. The temporary storage price is on the high side, so he should pay close attention to the price difference at home and abroad. If there is any carelessness, there will be losses.

Jin Xiubin: now the market is the same every day, making several phone calls a day to contact manufacturers, feed factories, and small farmers. If you don't have a good grasp of the market, you have to lose money.

It is good to beware of losing money. More downstream small business owners of corn deep processing are worried not only about losing money, but also about not being able to start work under the pressure of price differences. Yang Yuling, head of Linghua Group, said that 1/3 of the enterprises in the monosodium glutamate industry have stopped production:

Yang Yuling: two and a half tons of corn produces one ton of monosodium glutamate. Corn prices have risen. 1/3 of the monosodium glutamate industry has stopped production, and only large enterprises are still working.

Even large enterprises with storage capacity cannot afford high domestic cost prices. Cheng Guoqiang, a researcher at the Development Research Center of the State Council, found in the survey that high domestic corn prices put relevant enterprises at a disadvantage in international competition.

Cheng Guoqiang: if corn processing enterprises use domestic raw materials, there will be relatively high costs, and its downstream enterprises will also have relatively high costs, so they will not be able to compete with the international market.

The price of domestic corn is so high that some downstream enterprises have no choice but to buy imported corn. Customs data show that in 2009, China imported only 84000 tons of corn, while this year, in the first eight months alone, the figure was 4.37 million tons. However, there are quota restrictions on corn imports, and some companies are forced to look for alternatives.

Cheng Guoqiang: if you do feed enterprises, be sure to choose a lower price, or a substitute, such as sorghum.

Inventory is under great pressure, and the days of relying on finance to pay the bill will eventually pass.

As long as there is a way to import a large amount of corn and look for alternatives, downstream enterprises will not use domestic high-priced corn. In this way, the direct consequence is two major pressures: one is inventory pressure, and the other is financial pressure.

Data show that China's state reserve corn inventory has reached a record 150 million tons, what is the concept of this inventory quantity? Cheng Guoqiang, a researcher at the Development Research Center of the State Council, explained:

Cheng Guoqiang: our annual output is 200 million tons, and our inventory is close to the annual output or consumption. 20% Mel 30% is very high. 150 million tons account for 60% Mel 70% of the total output, which may be the highest inventory ever. The annual consumption is estimated to be 170-200 million tons.

However, even if the corn purchased at a high price in the grain depot cannot be piled up, it cannot be sold at a low price at a loss. In the end, they can only be financed by finance, and the financial pressure can be imagined. According to data, the financial cost of temporary collection and storage of corn in 2012 was 61 billion yuan, and by 2014, this figure had surged to 180 billion, and fiscal expenditure had almost tripled.

Qin Fu, director of the Institute of Agricultural Economics of the Chinese Academy of Agricultural Sciences: if the market price is getting lower and lower from the temporary storage price, the answer is yes, and the financial burden of reserves will become higher and higher.

A more grim situation is that the corn planting area in China has also increased sharply in recent years. According to the data of the China Statistical Yearbook, the corn planting area in China was less than 30 million hectares in 2007, but last year, this figure has become more than 37 million. It is expected to grow by 1.3% this year. The corn industry has suffered from three high diseases: high output, high inventory and high import.

Taking into account this year, there will be a gratifying situation of increasing grain production for 12 consecutive years in our country. as the third largest grain ration in our country, the temporary collection and storage policy of corn has made a great contribution to increasing grain production and farmers' income year after year. However, it is undeniable that in the past, only rising temporary storage prices were like a thorn stuck in the middle of corn production and marketing channels, making it difficult for market supply and demand to keep pace. The price cut this year has led to a re-examination of the temporary reserve policy.