How to treat the substantial increase in China's Grain imports in recent years

Over the past few years, China's grain imports, especially rice imports, have increased significantly, and at present it has become the top two rice importers in the world, while China's rice exports remain at a low level. Correspondingly, China's domestic rice production increases and stocks are high, forming a two-way squeeze on China's rice market. This situation has accumulated for three consecutive years, making the current contradiction particularly prominent.

Looking back on the history of changes in China's grain import and export volume, China's rice imports did not change much before 2012, with annual imports generally between 250,000 tons and 750,000 tons (see Figure 1). In 2012, China's imports increased significantly (about 3 times higher than the previous month), reaching 2.368 million tons, and then maintained a relatively high level. In 2014, imports reached a historical high of 2.58 million tons, close to the total corn imports of that year. According to the existing data, rice imports this year will continue to increase on the basis of the previous year.

In addition, China's corn and wheat imports have also remained at a high level in recent years, while rice and corn exports have declined steadily. In 2014, corn and wheat imported 2.6 million tons and 3 million tons respectively, and China's grain imports reached 19.51 million tons in the whole year. In the same year, 419,000 tons of rice and 20,000 tons of corn were exported, and the total export volume of grain was only 710,000 tons. The net import of grain for the whole year was 18.8 million tons.

Reasons for the sharp increase in grain imports in recent years

In recent years, China's rice-based grain imports have increased significantly, both due to quality differences and guided by the changing price gap between domestic and foreign markets, the most important of which is the latter. Taking 2013 as an example, China imported 2.27 million tons of rice, of which 1.5451 million tons (68%) were imported from Vietnam, 579,600 tons (26%) from Pakistan and 175,400 tons (8%) from Thailand. Vietnam's export rice is dominated by early indica rice (white rice), which is far inferior to Thailand in quality.(Although Vietnam is also constantly improving its rice quality), the main varieties of rice exported by Thailand are steamed rice 33%(Africa and Middle East), jasmine rice 22%(Asia) and white rice 22%(Middle East). In 2013, the price of Vietnamese rice containing 5% crumbs was 393 US dollars per ton, 20.4% lower than that of Thai rice of the same grade 494 US dollars per ton. In 2013, the quantity of rice imported from Vietnam far exceeded Thailand, indicating that prices played a leading role.

Comparing the import cost of rice in China with the price of japonica rice in Guangdong in the past ten years (see Figure 2), it can be found that in the years before 2010, the wholesale price of japonica rice in Guangdong was lower than the CIF cost of rice imports in China. Since 2011, the wholesale price of japonica rice in Guangdong has reversed from 644 yuan per ton in the previous year to 807 yuan per ton. In the three years from 2012 to 2014, the wholesale price of japonica rice in Guangdong was 1600-2700 yuan higher than the cost of imported rice. The import volume of rice in these three years is around 2.5 million tons. At present, the C&F price of 5% crushed rice is about US $360/ton in Vietnam and US $414/ton in Thailand. The price difference between imported rice and Guangdong rice remains above 1,000 yuan.

The correlation and causality between the price difference between Guangdong rice wholesale price and China's imported rice cost and China's imported rice quantity are calculated. The correlation coefficient is as high as 0.94, which indicates that they are highly correlated. Meanwhile, the price difference has a guiding effect on the imported quantity, that is, the price factor is the most important reason for the import quantity.

The elasticity of supply and demand of grain products is relatively small, and small changes in supply and demand quantity will cause large fluctuations in market prices. In addition, the high concentration of global rice exports will lead to the prominent characteristics of sharp rises and falls of rice, which also makes the high and low changes of domestic and foreign market prices possible in a relatively short time. In July 2008, the price of Thai rice rose to an all-time high of US $1000 per ton, and fell to US $550/ton in January 2009, a drop of 45%. During this period, the wholesale price of domestic japonica rice dropped from 1.67 yuan per catty to 1.60 yuan, a drop of 4.2%; the wholesale price of Guangdong japonica rice rose from 1.68 yuan per catty to 1.75 yuan. In 2011, the price of Vietnamese rice rose from 421 US dollars/ton in the previous year to 513 US dollars/ton, an increase of 21.9%, Thai rice rose by 11.8%, while the wholesale price of Guangdong rice rose from 2.01 yuan per catty to 2.62 yuan, an increase of 30.3%. It is precisely because of these two wide changes in domestic and foreign market prices that domestic rice prices have been higher than international markets since 2011.

So, is it because of our minimum purchase price policy that the price of rice in China is higher than that in the world? In 2011, Thailand and Vietnam rice prices rose continuously, and China also raised the minimum purchase price of japonica rice from 105 yuan to 128 yuan, an increase of 21.9%. Objectively speaking, the increase of the minimum purchase price produced bottom support for China's rice prices, but this policy was not only implemented in China. Thailand government implements a series of price support policies such as price support plan, price insurance plan and rice mortgage policy, while Vietnam government implements rice purchase price policy. The essence and foothold of the two countries 'policies are consistent with China's minimum purchase price policy. Therefore, it can be said that the global rice market is market-oriented operation on the basis of global general market support, and the market price of each country is basically formulated according to the relationship between supply and demand. In the long run, the relationship between supply and demand still dominates the change of global rice price.