How to change the target price of agricultural products?

The predicament and Direction of the Reform of the Target Price system of Agricultural products

China's food security implements the strategy of "giving priority to us, having a foothold at home, ensuring production capacity, moderate import, and scientific and technological support", and firmly puts the rice bowl in our own hands. The first document of this year put forward the target price system for agricultural products, and it is of great significance to ensure China's food security to straighten out the relationship between supply and demand through the reform of the price mechanism. What is the target price system of agricultural products? That is, the government sets the target price of agricultural products, subsidizing low-income consumers when the actual market price is higher than the target price, and subsidizing producers according to the price difference when the market price is lower than the target price. In 2014, pilot projects on target price subsidies for soybeans in Northeast China and Inner Mongolia and cotton in Xinjiang were launched, pilot projects of target price insurance for agricultural products such as grain and live pigs were explored, and pilot marketing loans for scale operators of grain production were carried out. If the pilot project is further expanded in the future, we will still face a lot of unsolved difficulties, mainly including:

One is the basis for determining the target price of agricultural products, to what extent should it refer to international prices?

How does the government balance the international price when setting the target price of agricultural products? Should domestic grain prices be higher than international grain prices? Many consumers think that since China is a developing country, the price of grain in our country should not be higher than that in the world. Take rice as an example. in recent years, the wholesale price of northeast rice in the Beijing market is more than 4000 yuan per ton, while in the international market, like Vietnam, the price of rice is less than US $400. if calculated at an exchange rate of 6 US dollars, it is more than 2,000 yuan. this means that the current rice price in China is nearly double that of Vietnam, which is also the main reason for the surge in rice imports and smuggling in China in recent years. However, from a longer period of time, taking the comprehensive price index of 13 kinds of international rice prices as an example, according to the RMB intermediate exchange rate, the international rice price rose from 2 yuan to 4.33 yuan per kilogram from 2003 to 2008, while China's rice price rose from 1.72 yuan to 2.93 yuan per kilogram in the same period, which means that China's grain price is not high compared with the international price. From the long-term trend, the price of rice in China is still expected to rise greatly. At present, the main rice exporters in the world are Vietnam, Pakistan, India, Thailand and so on. With the exception of Thailand, the income of farmers in these rice-exporting countries is less than half of that of our farmers. If sold according to the international price of rice, it is suitable for farmers in these countries, but for Chinese farmers, if sold according to the international price, it is estimated that a large number of farmers will no longer grow rice.

The other two staple crops are wheat and corn. Global corn and wheat are basically supplied by large farms such as the United States, Brazil, Canada and Australia, while China is produced by small farmers with less than 10 mu of arable land per household. If the target pricing of these two crops is also based on international food prices, it is also unfair to small farmers in China. Because the average annual yield per mu in our country is not low compared with them, but the per capita cultivated land in our country is too limited. The target price of these crops should be set not only by international grain, but also by Japan and South Korea, which are also small farmers in East Asia. According to the experience of Japan and South Korea, in order to ensure the self-sufficiency of rice rations, the corresponding rice price is much higher than the international price, which is 5-10 times higher than the international price in the same period. The two major rations of wheat and rice in China can only be compared with small-scale peasant economy countries such as Japan and South Korea. If China's prices are set according to international grain prices, Chinese farmers will give up their land.

If China does not adhere to the strategy of self-sufficiency in grain and adopts a large number of it from the international market, it is estimated that the effect of a big country with a population of 1.3 billion will push up international food by several times. from this point of view, international food prices cannot be viewed statically.

Second, the comparative income of grain should be taken into account in setting the target price. Farmers have opportunity cost in grain production. At present, China's grain is the most emphasized in the official discourse, but the income of grain farmers is the lowest. If this continues in the long run, it will dampen the enthusiasm of farmers to grow grain. The price of grain and other agricultural products, the price of grain and the price of migrant workers, the price of grain and agricultural materials should not be increased too much. In recent years, the production cost of growing grain in China has increased rapidly, the price of agricultural materials has been rising, and the comparative benefit of growing grain has declined rapidly. For example, when farmers grow greenhouse vegetables in Shandong, it is normal for farmers to earn NT $35,000 per mu of land per shed, and at worst they can earn NT $3,000 to NT $5,000. But what about growing wheat on an acre of land? I went to Henan to investigate, Henan farmers told me that growing wheat is basically unprofitable, and the profit is basically zero, especially in northern areas such as Hebei, where wheat is generally irrigated several times, and each irrigation requires 40-50 yuan. if you remove the cost of labor, there is basically no profit for growing wheat. If you ignore the labor cost, you can earn 200 to 300 yuan per mu. Farmers in North China generally grow two crops a year. Summer wheat and autumn corn do not make any money. Corn earns more than 1,000 yuan per mu, and rice mu is about the same. On the other hand, the per capita cultivated land of farmers is very limited. In recent years, the prices of domestic vegetables and fruits have basically increased several times, such as beef more than 50 yuan per catty, compared with this, the price increase of the three staple grains is not large.

The third is the optimal scale of storage. At present, the storage system has led to the dominance of grain storage, and the enthusiasm of enterprises and farmers has been seriously suppressed. As a result, the lowest price acquisition policy brings great pressure on the national finance and occupies an astonishing amount of financial funds. How to break the monopoly and arouse the enthusiasm of enterprises, farmers and localities need to be comprehensively considered.

With the improvement of living standards, the gap between grain production and demand in China is expanding year by year, and grain imports are at an all-time high. China's total grain supply and demand has tightened, the grain self-sufficiency rate has fallen below 90 percent, and more than 77 million tons of grain were imported last year. Chen Xiwen, director of the Central Agricultural Office, believes that "behind the sustained growth of total grain production over the past decade, there has been a faster growth in consumption, and even the supply of some products has failed to catch up with the growth of social demand." In the future, by 2020, it is generally regarded as a period of accelerated urbanization, and the demand for food will be even greater.

How can we better reform the target price system of agricultural products and increase farmers' income by increasing grain production?

One is to continue to increase subsidies to farmers, major grain growers and major grain-producing counties. Because in the case of food prices can not rise rapidly, increasing subsidies can reduce the opportunity cost loss of farmers. At present, the income gap between urban and rural areas, workers and farmers in China is widening. At present, half of farmers' income comes from farming. If the income from growing grain is too low, it will affect the overall improvement of farmers' income and lead to the increasing income of workers and farmers in our country. The excessive income gap will affect the stability of our society, so we should increase the income of farmers through subsidies. Japan, South Korea, the European Union and the United States provide large subsidies to agriculture, so that the income of grain farmers and those engaged in other industries will not be too large. The state should improve compensation for interests in major producing areas and compensation for the protection of cultivated land, and speed up the acquisition of reasonable profits for agriculture. We should continue to increase the scale of agricultural subsidies, concentrate new subsidies on major and advantageous producing areas, and tilt towards new types of production and operation entities such as large professional households, family farms, farmers' cooperatives and so on.

Second, we should continue to raise the purchase price of grain. Although grain is the most important staple food for Chinese residents, it is the least profitable among all agricultural products at present. Its value is not reflected in the price, indicating that the current grain pricing mechanism in China still needs to be improved. When setting grain prices in the future, we should not only look at international grain prices, but also learn from the experience of Japan and South Korea, otherwise it will seriously dampen the enthusiasm of farmers to grow grain, or even cause substantial fluctuations in grain prices and affect social stability.

Grain has never been a simple economic issue, it should be a political and economic issue. Therefore, the target price of grain should not be viewed purely from an economic point of view, but also the income of farmers, price fluctuations and social stability. China is a small-scale peasant economy, in the market-dominated economy, there will inevitably be price fluctuations, which is a great challenge to the small-scale peasant economy. How to let the market mechanism play a decisive role in the allocation of resources, but also let the government assume the necessary responsibility for development needs a comprehensive balance. The target price reform is more suitable for non-staple grain varieties such as cotton, soybean, rapeseed and sugar, but a cautious attitude should be taken with regard to the three staple grains, especially wheat and rice, so as not to affect or even dampen the enthusiasm of farmers to grow grain, which leads to sharp fluctuations in domestic grain prices, leading to social instability.