China may reduce corn planting area and grain reform has reached a critical juncture.

China may reduce corn planting area, grain reform has reached a critical juncture

The executive meeting of the State Council held on November 11 revealed an important message. In order to solve the increasingly serious problem of farmers selling grain, the relevant ministries and commissions will issue a series of policies and measures to ensure food security and improve the interests of grain farmers.

After this executive meeting of the State Council, the Economic Observer learned from many channels that in recent times, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture and other aspects are actively discussing various policies and measures to solve the "current difficulties for farmers to sell grain","reform the grain price formation and storage mechanism", and "adjust the grain planting structure". At present, no consensus has been reached among relevant ministries and commissions on the implementation of the target price reform of staple grains and the increase of policies such as "transporting grain from north to south".

This year, the contradiction between supply and demand of domestic grain is very prominent, leading to a sharp drop in prices mainly corn.

Experts close to the National Development and Reform Commission said that the next step, around the difficulty of selling grain, grain storage, grain planting structure and other policies and measures, will also be mainly to solve the increasingly prominent contradiction between corn supply and demand.

In terms of alleviating the current difficulties in selling grain, subsidy policies will be introduced in the short term to encourage grain processing enterprises to purchase grain; in terms of grain price formation and storage mechanism, it is mainly to expand the target price reform pilot project, and it is expected that the target price reform will also be implemented for sugar, rapeseed and corn next year; for adjusting the grain planting structure, it is mainly to reduce the planting area of corn moderately by promoting the pilot projects of "grain to feed","grain to beans" and cultivated land rotation fallow.

ease the difficulty of selling grain

On November 19, the National Development and Reform Commission, together with the Ministry of Finance, the Ministry of Agriculture, the State Food Bureau and other departments, jointly held a media "ventilation meeting" in response to the sharp drop in grain prices and the difficulty of farmers selling grain in some major grain producing areas.

This round of grain prices fell the most, while the impact on the income of grain farmers is more obvious is corn. According to the statistics of the State Food Bureau, in late October, the average purchase price of corn per 100 jin in Henan, Hebei and Shandong was 75 yuan, 84 yuan and 89 yuan respectively, down 34.2%, 27% and 22.6% from the same period last year. After entering November, affected by the state's policy of purchasing temporary corn, corn prices in several major corn producing areas in China basically showed a small recovery rise.

In order to alleviate the severe problem of grain sales as soon as possible, this year's corn collection and storage policy started more than 20 days earlier than last year, and the deadline is at the end of April next year. According to Zhou Guanhua, director of the regulation department of the State Food Administration, the move will help farmers in major corn producing areas sell grain in time and reduce losses caused by corn mildew.

At present, the corn prices in the main corn producing areas in Northeast China, Henan, Hebei, Shandong and other places are basically stable, but compared with last year's corn market prices, the decline is still relatively large, and the losses caused to grain farmers are still difficult to make up.

The expert analysis close to the National Development and Reform Commission said that now the most national inventory is corn, such as the corn collected and stored by Jilin Branch of China Grain Reserve, has reached the state of no sales, no adjustment and no storage. Before and after the executive meeting of the State Council on the 11th of this month, the National Development and Reform Commission, the Ministry of Finance and other aspects have been discussing the introduction of policies to encourage corn processing enterprises to purchase grain in the market, initially agreed that the subsidy quota for grain purchasing enterprises is 200 yuan per ton, it is expected that the announcement time of this policy will not be too far away.

There are precedents for the state to subsidize corn acquisition enterprises. It is reported that in the autumn of 2009, the relevant departments expected that the national corn harvest would be a bumper harvest that year. In order to avoid the problem of grain selling difficulties in the main corn producing areas in Northeast China, an exception was issued to encourage some state-owned grain enterprises other than grain storage and large-scale private grain enterprises at the provincial level in the south to purchase corn in Northeast China. At that time, the subsidy quota for grain purchasing enterprises was 70 yuan per ton.

The experts close to the National Development and Reform Commission added that there was a serious surplus of corn production in China this year. In addition to the rapid expansion of corn planting area, there was also an important reason for the substantial increase in imports of corn substitutes such as sorghum and barley. In the short term, it is still difficult to raise the market price of domestic corn simply by implementing the subsidy policy for enterprises to purchase corn.

Difficulties in subsidy reform

In the reform of domestic grain price formation and storage mechanism, the implementation of target price is an extremely important reform new policy.

The National Development and Reform Commission and other parties have made it clear that for wheat and rice, the minimum purchase price policy will continue to be implemented in 2016, while whether corn will continue to implement the temporary storage policy or implement the target price reform, Fang Yan, deputy director of the Rural Department of the National Development and Reform Commission, replied to the Economic Observer on November 5 that it is still under study and has not been finalized.

last year's trial of target prices for soybeans and cotton was a new grain reform policy. Judging from the current pilot progress, the target price system has many problems such as difficult implementation and excessive subsidy amount.

Some experts believe that the conditions for expanding the target price pilot in China are not yet available, and the time is not ripe enough. Once the pilot scope and variety range are expanded, it may lead to large fluctuations in grain prices.

Fang Yan believes that the implementation of the target price pilot should be evaluated more comprehensively, for example,"the target price is implemented very well in the Xinjiang Construction Corps." Her suggestion is that relevant departments should strengthen the study of price insurance for agricultural products, especially the policy research on how to integrate target price and price insurance, so as to solve the contradictions and problems arising in the target price pilot.