Food security should not only be self-reliant but also open.

China is a country with a large population, and food security cannot all depend on the international market. For the sake of China's food security, one is to have bottom line thinking, and the other is to have market thinking. The latter not only refers to making use of the international market to import grain from abroad, but also includes: further reform and opening up, developing the economy, surpassing the "middle-income trap", making China enter the ranks of developed countries, and making use of the precious time window to step up the determination of farmland rights, speed up the spread of land, enhance the scale of China's agriculture and international competitiveness, and ensure the foundation of China's food security.

Part one: general theory of food security

The Perspective of Market and Governance

The Food and Agriculture Organization of the United Nations is the inventor of the concept of "food security", which has been defined three times. In 1974, at the first World Food Summit, FAO defined food security as "ensuring that anyone has access to adequate food for survival and health at all times."

In 1983, FAO revised the concept of food security for the first time, putting forward that the goal of food security is: "to ensure that anyone can buy and afford the basic food they need at any time."

In 1996, the second World Food Conference adopted the World Food Summit Plan of Action, which stated: "Food security can only be achieved when all people have access to adequate, safe and nutritious food at all times to meet their dietary needs and food preferences for an active and healthy life." This is the second time that FAO has revised the concept of food security.

By compromising the three definitions of FAO, we can get an appropriate definition of food security: (1) to ensure that anyone who has the ability to support himself can buy and afford the basic food he needs at all times; and (2) to ensure that anyone who does not have the ability to support himself can get enough food at all times for survival and health. The two components of this definition reduce the denotation of 1983 definition and 1974 definition respectively, but retain the basic connotation of the original definition.

First of all, this definition can be understood from a higher perspective than food supply security.

Based on this perspective, the above definition (1) says that food security is an ability for people who have the ability to work and can support themselves. These people make up the vast majority of a society. For these people, as long as the price of labor exceeds the price of food to feed it, that is, wages exceed the cost of living, the issue of food security has been replaced by an employment problem. The level of food security can be measured quantitatively by unemployment rate and Engel coefficient. The lower the proportion of food consumption of a person or a family to total consumption, that is, the lower the Engel coefficient, the higher the standard of living and food security, and the more able to accumulate more savings and investment to cope with risks such as unemployment. Ensure a higher standard of living and food security when you are unemployed.

For a rural man, if he can earn more than 10,000 a month as a decorator or courier, far more than his income from farming, then the Engel coefficient under his work will be much lower than that of farming. on the contrary, he is self-sufficient in growing grain and weakens his level of food security. For a country, if it has higher per capita GDP and per capita disposable income, it may theoretically have a higher level of food security. Famine may occur in Africa, but not in the United States and Japan.

(2) it means that for people who lose their ability to work and cannot support themselves due to congenital and acquired reasons, food security is a relief or relief welfare provided by society or the government. Such people have a very low proportion in any society. As long as a country has a basic market economy and public governance order, the rest of the people who have the ability to work and can support themselves will not be unable to afford food relief to support these people. Only in failed states with lack of power and failed governance do these people have food security problems.

To sum up, from the high-level perspective of market system and governance system, the issue of food security is no longer just an issue of food supply security, but has expanded into a problem of the expansion of rights and market order and the improvement of the rule of law and public governance ability. this is the fundamental solution to the problem of food security. For China, it means further reform and opening up, developing the economy, surpassing the "middle-income trap" and making China step into the ranks of developed countries.

From the perspective of supply security

Secondly, the above definition can be understood from the perspective of food supply security.

It makes sense to look at the issue of food security from this perspective, and the worry that "people will starve to death if they don't eat for a few days" will prompt people to adopt this perspective instinctively. This worry cannot be allayed by the simple phrase that "the market will solve everything automatically". In the general sense, food security refers to food supply security, just as energy security usually refers to energy supply security.

To correctly define the security of food supply, we must first have bottom line thinking. Food supply security should refer to taking effective measures from the aspects of food production, trade and reserves to eliminate the risk of famine so that no one will starve to death because of lack of food. What is guaranteed is the basic food needs for living and survival, low-level food needs, rather than how many eggs, poultry and meat everyone has to eat every day, and high-level food needs to ensure comprehensive and balanced nutrition.

A roughly fixed bottom line can be drawn for basic needs. In order to maintain this bottom line, the government needs to mobilize certain resources. If this bottom line is maintained, it should be considered that the bottom line goal of food supply security has been achieved (please note that food supply security also has an issue of improving the competitiveness of China's agriculture, which will be discussed later). With regard to high-level demand, on the one hand, there is no need for the Government to protect it from a moral point of view, and on the other hand, if it is forced to take this as the protection goal, it will greatly distort the allocation of resources and will incur extremely high social costs.

Secondly, we should adhere to the principle of consumer sovereignty. As long as the government keeps the bottom line of food supply security, the rest should be left to the market. Since consumers are economically affordable (the price of labor far exceeds the price of food to feed it), they should open up the market and bring food prices in line with the world market. Under the isolation of the domestic market from the international market, the cost that consumers pay for buying food and food is unfair to domestic producers if it is lower than the international market price, and unfair to consumers if it is higher than the international market price.

The second part: the solution to China's food security.

Domestic grain prices are much higher than those in the international market.

This is exactly what Chinese consumers are facing right now. Since 2010, the price of grain in China has been all-round higher than the FOB price in the international market. According to the calculation of Xu Yuan, a researcher at Peking University, at the end of 2013, the domestic / international market prices of wheat, corn, rice and soybeans were 417, 314, 384, 506, and 780, respectively, in US dollars per tonne. Domestic prices are 32.8%, 88.2%, 16.9% and 60.1% higher than those in the international market, respectively. Based on the weighted average of consumption, domestic grain prices are about 50% higher than the international market. Now, the price difference between the two markets is even wider.

Let's take a look at wheat. On July 30th, wheat for September delivery on the Chicago Mercantile Exchange (CBOT) was 496.5 cents a bushel. A bushel is a unit of volume, and one ton of wheat is equivalent to 36.7437 bushels, which can be converted to US $182.4 per ton. At the midpoint of the current US dollar exchange rate (6.1165), it is RMB 1115.8 / ton.

In 2015, China continued to implement the minimum purchase price policy in major wheat producing areas, with the minimum purchase price of wheat (third-class) at 118 yuan (2.36 yuan / kg) per 50 kg, leaving the 2014 level unchanged. By July 25, Henan Province had purchased a total of 12.87 billion kilograms of wheat, of which 6.7 billion kilograms were purchased at the lowest purchase price and 6.17 billion kilograms at the market price, with an average purchase price of 2.35 yuan per kilogram. It is not difficult to calculate that the average "market price" is 2.34 yuan / kg, which is less than 1% below the minimum purchase price. Both the minimum purchase price and the market price are more than double the international market price.

The minimum purchase price of wheat (third-class) was 112 yuan (2.24 yuan / kg) per 50 kg in 2013 and increased to 2.36 yuan / kg in 2014 and 2015. But the international market price of wheat has fallen sharply over the past year and a half. As a result of this increase and decrease, the current domestic wheat price is more than 100% higher than that in the international market.

And look at the rice. According to the USDA, the export price of Vietnamese rice with a crushing rate of 5 per cent in the week to July 6 was US $350 per tonne, or 2140.8 yuan per tonne.

In 2015, China continued to implement the minimum purchase price policy in the main rice producing areas. The lowest purchase prices of early indica rice, medium and late indica rice and japonica rice (all third-class) produced in 2015 were 135 yuan, 138 yuan and 155 yuan per 50 kg, respectively, leaving the 2014 level unchanged. It can be converted into 2700 yuan, 2760 yuan and 3100 yuan / ton in turn. The lowest purchase price of early indica rice being harvested in mid-late July is about 1x3 higher than that of Vietnamese rice.

Finally, look at the corn. On July 30th, the price of corn delivered by CBOT in September was 373.25 cents per bushel. One ton of corn is equivalent to 39.36825 bushels, which can be converted to US $146.9 / ton or RMB 898.8 yuan / ton. On the same day, Anhui Grain Wholesale Market and its network market held a national temporary storage import corn bidding fair. In 2012, the transaction price of yellow corn on the 2nd of the United States was 2300 yuan per ton. The domestic price of corn is more than 150% higher than that in the international market.

In 2014, China continued to implement the temporary corn collection and storage policy in the three northeastern provinces and Inner Mongolia, with the acquisition period from November 25, 2014 to April 30, 2015. Corn (third class) listed purchase price: 1.13 yuan / jin in Inner Mongolia and Liaoning, 1.12 yuan / jin in Jilin and 1.11 yuan / jin in Heilongjiang. The price difference between adjacent grades is controlled at 0.02 yuan per jin.

Import tariff quota

Domestic consumers have to pay much higher food prices than the international market, to a certain extent, it can be said to reduce rather than improve the level of food security. Interestingly, the original intention of the policy was to ensure food security, but it backfired.

The whole logical chain is as follows: believing that China's food security mainly depends on the domestic market, it is right for → to build high tariff barriers and implement grain purchase policies to protect domestic grain producers, but these policies themselves cannot improve the competitiveness of China's agriculture. → domestic grain prices are much higher than the international market → consumers have to pay more money to buy grain (contrary to the principle of consumer sovereignty), weakening the level of food security.

China has a large population and huge grain consumption, but the level of agricultural production has been relatively low for a long time, so food security is particularly important. In order to protect domestic food production and improve the level of food security, most countries, including the developed countries of the United States and Japan, have formulated some protection policies, such as import quotas and tariff barriers. Of course, our country is no exception. However, with the development of global economic integration, this protection policy is facing the trend of gradually shrinking or even abolishing.

In addition to the low level of production, the tariff quota system of grain import is also an important reason why the domestic grain price is higher than that of the international market.

In 2015, grain import tariff quotas were: 9.636 million tons of wheat, 10% of non-state trade; 7.2 million tons of corn, 40% of non-state trade; and 5.32 million tons of rice, 50% of non-state trade. This import quota accounted for just over 3 per cent of the country's total grain output (607.099 million tons) in 2014.

According to the 2002 interim measures for the Administration of Import tariff quotas of Agricultural products, the annual market access quantity of agricultural products under the administration of import tariff quotas, the import of agricultural products within the quota applies to the tariff rate within the tariff quota, the import of agricultural products outside the quota applies to the additional tariff rate.

Customs import and export tariffs show that the 2015 import tariff quota rates for agricultural products are 1%, 6%, 9% or 10% for wheat, 1%, 9% or 10% for corn, and 1% or 9% for rice and rice, depending on the classification of goods (tariff number). If imported from New Zealand, the zero tariff rate of the country tariff quota shall apply. But tariffs combined with additional rates are scary: imported wheat has a most-favoured-nation rate of 65 per cent, with a normal rate of 130 or 180 per cent; imported corn has a most-favoured-nation rate of 20 per cent, 40 per cent or 65 per cent and a normal rate of 130 per cent or 180 per cent; the most-favoured-nation rate on imported rice and rice is 10 per cent, 40 per cent or 65 per cent, and the general rate is 70 per cent, 130 per cent or 180 per cent. In addition to import duties, these agricultural products are subject to import value-added tax at a rate of 13%. Tariffs in a broad sense include: tariff in a narrow sense, import consumption tax and value-added tax.

Enterprises that have been assigned import tariff quotas for agricultural products are happy. At present, the domestic prices of wheat and corn are more than 100% and 150% higher than abroad, respectively. At the end of July 2015, the sea freight for international grain ships from the United States to the Chinese port was 35 US dollars per ton, and that from Brazil to China was 26 US dollars per ton. After deducting customs duties and import value-added tax, it is basically a net profit.