Han Jun: China's dairy industry has reached a moment of life and death.

The picture shows Han Jun, deputy director of the Office of the Central Financial and Economic leading Group. (photo source: photo by Liang Bin of Sina Finance)

Sina Financial News "2015 fourth China International Agricultural and Business Summit Forum" was held in Beijing on May 17th. Han Jun, deputy director of the Office of the Central Financial and Economic leading Group, said in his speech that the current prices of domestic agricultural products are approaching in an all-round way, even exceeding those of international agricultural products. The CIF prices of many international grains are still cheaper than those at home, and because some varieties are subject to tariff quota restrictions, there is no need to worry too much about the impact of cheap foreign grain on China's market in the next three to five years.

But it warns that the self-sufficiency rate of soybeans in China is now only about 18%. "the policy goal we have set now is to be basically self-sufficient in grain. In the past, it was called basic self-sufficiency in grain, which included soybeans. Soybeans can no longer be basically self-sufficient. Rations are mainly wheat and rice, and they should be absolutely safe."

Han Jun gave three reasons for the question of why we should adhere to basic self-sufficiency in cereals. First, determined by China's national conditions, China has a population of 1.3 billion, and its annual grain demand is twice that of global grain trade. if China gives up the goal of basic self-sufficiency in grain, it will have a great impact on the world, and the allocation of global resources will have a great impact. Second, there are still more than 600 million people in China's rural areas, and 200 million people are growing grain, and farmers' livelihood and grain are inseparable. To a large extent, the food problem is the problem of farmers' employment and livelihood. Third, China, as a big country with 1.3 billion people, will be irresponsible to the world if it gives up the goal of achieving self-sufficiency in food at home. On the contrary, China has solved the problem of food security for 1.3 billion people, which has made a great contribution to global food security.

For the dairy industry, Han Jun even said that it is now a matter of life and death. Especially under the impact of melamine, the shadow has not completely dissipated. The European Union announced this year that it would abolish the 31-year-old management of milk production quotas, mainly to deal with the markets of emerging countries, especially China.

On the issue of agricultural subsidies, Han Jun said that although some projects have reached the yellow line stipulated by WTO, there is a lot of room for policy adjustment. As for environmental issues, Han Jun said, the red light has been turned on. It must be transferred to the track with equal emphasis on quantity, quality and efficiency.

The following is a transcript of the speech:

Han Jun: good morning, everyone. Today's theme is very good, ushering in a new era of modern agriculture. The development of our agriculture is faced with many new challenges. In China, we always consider agricultural problems, rural problems and farmers' problems together. Agricultural problems are not like industrial problems and commercial problems. Industrial and commercial problems may mainly be the problems of industrial development. In China, the agricultural problem is not only an industrial problem, but also a farmer's problem, any of our agricultural policies. It is necessary to consider the impact on farmers, on their employment and on their welfare. Our agriculture has indeed entered a new stage and is facing many severe challenges.

General Secretary Xi Jinping pointed out that if China wants to strengthen agriculture, it must be strong, if China wants to be beautiful, it must be beautiful, and if China wants to be rich, it must be rich. This is the most basic principle for us to formulate policies on agriculture, rural areas and farmers. Now we are talking about the new era of modern agriculture. As far as China is concerned, the new stage of agricultural development is facing two of the most severe challenges in formulating policies:

Challenge one, our resource and environmental constraints have reached the limit. In such a context, how can we ensure our country's food security, especially how can we improve the capacity for sustainable development of agriculture? This is a question that we cannot avoid.

The second challenge is that the prices of domestic agricultural products are approaching in an all-round way, even exceeding the prices of international agricultural products. In such a context, whether China's agriculture is still competitive or not is also a question that we must answer.

The self-sufficiency rate of soybean in China is only about 18%.

Next, I can first introduce to you the situation, first of all, the ceiling effect of agricultural product prices. Now we have to face, this is the data by the end of March, there are some price differences in corn, soybeans, wheat and rice. After the international grain is taxed on shore, the CIF price is much cheaper than ours. Soybeans now have no tariff quota restrictions and have come in large quantities. However, because of the restrictions on tariff quotas for corn, wheat and rice, the tariffs within the quotas are very low, but the tariffs outside the quotas are very high. In the next three to five years, we do not have to worry too much about the impact of cheap foreign grains on the Chinese market, because it is very difficult to enter outside the tariff quotas. Last year, our grain self-sufficiency rate was more than 98%, and the soybean self-sufficiency rate is now only about 18%.

What may be more serious now are oil crops and sugar crops. Sugar is quite cheap to import within the April tariff quota. We have earned 50% of the tariff outside the quota, and the imported sugar is 500 yuan cheaper than our one ton. There is nothing you can do about it. It should enter as soon as possible. This is a complete market behavior. Our dairy industry is now facing a great impact. Officials from the Dutch Ministry of Agriculture came to our forum. I asked Mr. Pan Gang, director of Yili, that it is about 2 yuan to buy a jin of fresh milk in the United States and 2.6 yuan in Australia and New Zealand. China's current cost of a kilogram of fresh milk is 3.7 yuan for farmers, and it may be unprofitable for farmers if you are less than 3.7 yuan. Now it has been lower than this price for 16 consecutive weeks, and the production cost of one ton of raw milk powder is more than 10,000 yuan higher than abroad.

Last year, we only imported more than 8 million tons, that is to say, our grain self-sufficiency rate is still more than 98%. Now there are more and more products replacing corn, because the import of corn is restricted by tariff quotas, in order to circumvent the restrictions of tariff quotas, the import of barley, sorghum and corn lees has increased explosively in the past two years. Barley used to make beer, but now half of it is used for fodder. In the first quarter, we imported 2.6 or 700 million tons of sorghum and barley. Last year, our imports of these products alone replaced at least 10 million tons of corn. Corn stocks have risen sharply in the last two years.

Now there is a lot of discussion about why China imports soybeans and can it produce its own? We think that we may not have so many resources for our own production, and one of the most realistic problems facing China is that we lack both edible vegetable oil and feed protein. On the one hand, we import soybeans to meet the needs of ordinary people for vegetable oil. on the other hand, it is also to meet the development of modern animal husbandry, the demand for high-quality protein feed.

When it comes to agriculture, in a country as large as China, food security is a question that we cannot get around and must be answered. since the reform and opening up, there have been many international evaluation indicators of food security. in recent years, the British Economist Intelligence Unit has released a report on global food security knowledge. China ranks very high every year, relative to our per capita GDP and the level of economic development. Our food security index is still very high, ranking 42nd out of 107 countries, and India is about 43th in my impression.

The development of dairy industry is at a moment of life and death.

The problem we are facing now is that the impact of imports on China is inevitable. At present, the management of grain with tariff quotas is better, and the problem is more prominent for products without tariff quota management. At present, the development of the dairy industry is at a critical moment, especially under the impact of melamine, and the shadow has not completely dissipated. This year, the European Union announced that it would abolish the management of milk production quotas that had been in place for 31 years, mainly to deal with the markets of emerging countries, especially the Chinese market. In recent years, as a result of the free trade agreement signed between China and New Zealand, New Zealand's share of the global dairy market has reached 37%, while that of the European Union is only 31%. The EU has also abolished quota management in order to come to the Chinese market and emerging countries' markets. to increase its market share. The capping effect of price this is a hurdle, and we have to get over it.

There is a lot of room for adjustment of agricultural subsidies.

The second problem is the cost of our agricultural production, which we call the floor, and the squeezing effect of it is becoming more and more obvious. it is very clear that in the past, farmers' farming did not count the cost of labor, but now the cost of labor is getting higher and higher. agricultural machinery, chemical fertilizers, these modern elements of more and more input, agricultural production costs are still in a rapidly rising channel.

The third issue is agricultural subsidies, which we call the Yellow Line. When we joined the WTO, we stipulated some measures for the management of tariff quotas and promised online restrictions on agricultural subsidies. When we joined the WTO, we promised that subsidies should not exceed 8.5% of agricultural output value, that is, government subsidies that distort production and trade. Now some of our products have exceeded the limit of the yellow line, but we can have a lot of room for regulation. For example, in recent years, the European Union has adjusted its yellow line agricultural subsidies from 70 billion euros to 7 billion euros. We are also studying this experience of the European Union. For example, we have a major policy adjustment this year. We have adjusted agricultural subsidies (grain subsidies and comprehensive subsidies for agricultural materials). After the adjustment, we can use hundreds of billions of comprehensive subsidies for agricultural means of production, which used to belong to the yellow line subsidy. By decoupling the subsidy from the price of agricultural materials, we have turned it into a green line subsidy. This problem is a potential challenge for policy formulation. We have a lot of space, our yellow line is far from being used up, and there is still a lot of room for yellow to green line in the future.

Environmental problems have turned on the red light

The biggest problem is resources, the red light of the environment has begun to light up, some aspects of resources and environmental constraints have reached the limit, people are most concerned about the problems of chemical fertilizers, pesticides and plastic films. Our fertilizer use per hectare is among the highest in the world. For example, the problem of plastic film, the use of thin film in Xinjiang Autonomous region alone reached 4.7 million mu of land, most of these films are not degradable, and now the residue in one mu of land in Xinjiang has reached 16.5kg, and the national average level is much lower. Now how can we use the film that can be reduced to replace the film that cannot be reduced now? This is a big issue for our agricultural environment management.

Now China's agriculture must go through a hurdle, we want to open a new era of modern agricultural development, we must change the mode of agricultural development. For a long time, to some extent, we have relied on resources and environmental factors, mainly to pursue the growth of output, and now we must shift to the track with equal emphasis on quantity, quality and efficiency. This year's Central Committee document No. 1 clearly proposes that we should pay more attention to improving the international competitiveness of agriculture, pay attention to technological innovation in agriculture, and pay more attention to the sustainable development of agriculture. To change the mode of agricultural development is to put equal emphasis on agricultural development (quantity, quality and benefit).

To answer this question and change the mode of agricultural development is not at the expense of China's food security. Our complete policy on food security has three meanings:

The first meaning is to emphasize that we should give priority to ourselves, gain a foothold at home, ensure production capacity, and the core is to ensure production capacity.

The second meaning is, moderate import, we have insurance, release, and control. Because we do not have any advantage in resource endowment, we also need to import some grain, grain and other products appropriately.