The price of domestic grain is higher than that of foreign countries due to the four major reasons.

In view of the high grain price gap at home and abroad, there are two views: "one is to stop doing it yourself and import it, and the other is to drive farmers away to engage in large-scale agriculture." however, Chen Xiwen believes that agricultural policy is not a simple industrial policy. It is a social policy related to the survival and development of farmers and the fairness and justice of the whole society.

While the total grain output has achieved "eleven consecutive increases", China is also faced with the situation of "three simultaneous increases" of imported grain and social grain stocks.

At the "2015 China Rural Development High-level Forum" held by the Rural Economic Research Center of the Ministry of Agriculture on July 30, Chen Xiwen, deputy head of the CPC Central Rural work leading Group and director of the office, believes that there are two reasons for the "simultaneous increase in three quantities". On the one hand, the structure of production and consumption is asymmetric, and there is a structural contradiction between supply and demand of agricultural products; on the other hand, the most important reason is the price difference between domestic and foreign grain.

Specifically, in 2014, China's grain imports exceeded 100 million tons for the first time. However, more than 70% of them are soybeans, while domestic soybeans are only more than 12 million tons, and 71.4 million tons of soybeans have been imported. This shows that the supply of soybeans cannot meet the demand. So we have to import, and imports have continued to increase in recent years.

In addition to importing soybeans, China has also imported more than 20 million tons of other varieties of grain. Chen Xiwen said: the entry of low-priced grain in the international market into the domestic market, to some extent, shows that China's grain and some other agricultural products are obviously insufficient in terms of price competitiveness. In terms of the three staple grains, in June this year, for example, the price of domestic rice (late indica rice) was 51.8% higher than that of imported from Thailand, 56.6% higher for wheat and 65.3% higher for corn.

The cause of price upside down is complicated.

This situation of upside-down prices at home and abroad has long attracted the attention of the authorities and the public. Chen Xiwen said that in fact, this phenomenon did not occur for a long time. From the information we have learned, it appeared in less than a year from the autumn of 2012 to the summer of 2013. Before that, most of China's agricultural products, especially food crops, were not higher than the international market. Chen Xiwen believes that there are four main reasons for this phenomenon.

First, the rising production cost of domestic agricultural products leads to an increase in prices. With reference to grain prices in 2011, compared with the lowest purchase price in 2014, the prices of early indica rice, middle and late indica rice, japonica rice and wheat increased by 32.4%, 29%, 21.1% and 24.2% respectively. Temporary storage of corn and soybeans, the former increased by 13.1%, the latter increased by 20%. 'our rate of price increase is obviously higher than that of the international market, and it has played a certain role in promoting the upside-down of domestic and foreign prices, 'Mr. Chen said.

Second, prices have fallen in the international market. According to the prices in June this year, compared with the international food prices in 2011, 2011 is the highest year for corn prices since this century, and wheat prices are also at a high stage. The price of rice in the international market fell 40.4% in June this year compared with the beginning of 2011, the price of wheat fell 39.3% from the peak in 2011, the price of corn fell 49.3% from May 2011, and the price of soybean fell 39.2% from October 2012. Chen Xiwen said that during this period, the decline in international market prices exceeded the increase in domestic grain prices in the same period.

The third is the rise of the exchange rate of RMB against the US dollar. In 2014, the average exchange rate was 6.14 yuan to the dollar. However, before 1994, the exchange rate was 8.62 RMB to the dollar. The overall trend is that the RMB is strengthening and appreciating against the US dollar. Chen Xiwen said, for example, that, excluding any other costs, $500 per ton of soybeans was equivalent to more than 4000 yuan per ton of soybeans imported in 1994. Now, the same ton of soybeans is equivalent to only more than 3000 yuan. The price difference of more than one thousand yuan is the change of exchange rate. "there is nothing farmers can do to deal with it, which has a great impact on producers." He said.

Fourth, the sharp fall in global energy prices in the past two or three years has led to an obvious collapse in the seaborne price of goods. Chen Xiwen said: the price of crude oil has risen from 150 US dollars per barrel during the Iraq war in the past to less than 50 US dollars per barrel recently, with a difference of 100 US dollars in the middle, which has a great impact on freight rates. By contrast, soybeans shipped from New Orleans in the Gulf of Mexico to China cost $138 a ton in May 2005, compared with $34 a ton in May this year. The price difference per ton is 100 dollars.

He believes that through such an analysis, it is to show that the current situation in which China's grain prices are higher than those in the international market is very complicated, and it cannot simply be said that the rise in prices is caused by the increase in the cost of agricultural production in China. Many of these factors are worthy of further analysis. Only in this way can we prescribe the right medicine to solve the problem.

It is worth noting that the formation of such a situation is directly related to the global financial crisis in 2008. At that time, in order to save the economy, governments around the world adopted expansionary fiscal and monetary policies, and China invested 4 trillion yuan. Chen Xiwen said that in fact, as long as the world has the ability, no country will not adopt expansionary fiscal and monetary policies. Subsequently, inflation and deflation appeared alternately, and the global resource commodity prices skyrocketed and plummeted.

With regard to the problem of price differences between domestic and foreign agricultural products, Chen Xiwen said that this is actually a phenomenon brought about by globalization. To make a careful analysis, we should not rashly say that China's agriculture is not competitive. Of course, there are places where we are not competitive, but there are more complicated reasons.

"the ministers think differently."

In view of the high grain price gap at home and abroad, there has been a lot of discussion in society, forming two viewpoints.

One view is that since China's agricultural products, especially staple agricultural products such as grain, cotton and sugar, are obviously not competitive in the world, and the financial investment to subsidize agriculture, the loss seems to outweigh the gain. Therefore, it has been suggested that agricultural subsidies should be reduced to bring the prices of domestic agricultural products in line with international standards, and the resulting gap can be solved by increasing imports.

Another view is that it is obviously not easy for Chinese agriculture to be competitive on such a small scale, so various measures must be taken to encourage more farmers to leave the land before large-scale operation can be carried out and costs can be reduced.

As a think-tank of the central rural policy, Chen Xiwen responded that both views are aimed at the reality that domestic agriculture is indeed not competitive in price, and it is of course reasonable from an economic point of view. However, throughout the agricultural policies of countries all over the world, agricultural policy is not a simple industrial policy, but a social policy related to the survival and development of farmers and the fairness and justice of the whole society.

He said: in formulating agricultural policies, consideration must be given not only to ensuring supply, but also to competition in the international market, as well as to the more than 600 million farmers who still live, produce and live in rural areas. Without this, no matter how good economic policy is, it will not work. Even if we reduce our own production, expand imports or invite a large number of farmers out of the land, and let a small number of people cultivate more land, the increased economic benefits from this process are far from making up for the social problems brought about by such policies.

What is the next step to reform? All sides have their own opinions.

Chen Xiwen said: when the State Council holds a standing meeting, ministers think differently. At least I just made three points. One is to stop doing it yourself and import it, the other is to drive away all the peasants to engage in large-scale agriculture, and another is my point of view. "if people use their brains to figure out a way, they don't know how many viewpoints there are."

He said: if China wants to be a responsible big country, it must shoulder the problem of feeding more than 1.3 billion people, exchange needed goods through the international market, and at the same time cannot cause chaos to the international market. Of course, this is not entirely for the interests of others, but also for the interests of the Chinese people.