Let farmers produce according to market demand

On the 3rd, the State Information Office held a press conference on the interpretation of "some opinions on strengthening Reform and Innovation and speeding up Agricultural Modernization." Chen Xiwen, deputy head of the Central Rural work leading Group and director of the office, attended the press conference and answered questions to reporters.

Financial Times reporter:

My problem is that you mentioned the problem of inventory just now, because the price of agricultural products is too high, which is higher than that in the international market. China's grain inventory is now quite large, and some people are worried about poor quality. Could you tell us how big the inventory problem is and how to solve it? Thank you.

Chen Xiwen:

The situation you mentioned, in fact, since the spring sowing last year, various localities have reflected to the central government that some places have indicated that the original stocks are full, and if there are new acquisitions this year, where to install them, this is a relatively big problem. I just mentioned that the inventory of some major agricultural products in China is relatively large, which is a prominent problem at present. In fact, the most prominent problem is what I just said. If domestic acquisitions are to be sold, their prices are higher than those in the international market, and marketing and processing enterprises may be more willing to use foreign imports. This has led to a continuous rise in domestic inventory.

Judging from the current situation, we proposed to implement the reform of the price formation mechanism in the past, mainly in order to solve this problem. For example, we have a relatively large quantity of cotton in stock, and we imported a large amount of cotton a few years ago. Our own cotton production is about 7 million tons a year. But at the highest point, the import volume the year before last was about 6 million tons. So there is the problem that most of the domestic acquisitions go into the warehouse.

Implementing the target price reform is also a common method in the world. The government promulgates a target price, but the actual market price, the actual market price, is the equilibrium price formed according to the global and national supply and demand relations, such as the equilibrium price of cotton. According to the current situation, the domestic price is about more than 13600 yuan per ton, which is similar to the international market price, but the government's response to the Xinjiang region Xinjiang is the most important cotton producing area in China, where the target price is 19800 yuan / ton. There is a difference of 600 yuan. Farmers can only sell cotton according to the market price, and the government will subsidize the difference. The level of subsidies in areas other than Xinjiang is not so high, and it is precisely by adopting such a method that the domestic cotton sales price is actually constantly falling, because the temporary selling price of cotton in Xinjiang the year before last was 20400 yuan, and this year's target price is 19800, while the real market price is 13600, and farmers will gradually produce according to the market price.

Judging from the current situation, we also know that cotton farmers everywhere this year are willing to plant less cotton to produce products needed by other markets, which will appropriately reduce ineffective supply and ensure a balance between supply and demand in the market. On the other hand, our country has promised to implement a tariff quota management system for some important agricultural products, such as the three major grains, such as cotton and sugar, after China joined the WTO. It is very clear that the imports within the tariff quotas I have promised will be low, and those who exceed the quotas will be subject to high tariffs. In the past, there were lax enforcement in some places, and objectively speaking, there were a lot of cases of smuggling. Now, from this point of view, we should more strictly implement our commitments to WTO and strictly import these products subject to tariff quotas into formal channels, which will not have such a great impact on domestic supply. Therefore, on the basis of last year's implementation of target prices for cotton, northeast China and Inner Mongolia soybeans, we will further sum up experience and let the market play a major role in price formation. in this way, we will convey to farmers a correct message of market demand, let farmers produce according to market demand, and gradually resolve the contradictions formed in recent years.