Futures Market promotes the New "Grain Bank"

Liu Quanjiang, a trainee reporter of this newspaper, gives full play to the due function of futures serving the real economy, which is an important proposition of the commodity futures market. "We should give full play to the role of market mechanism in resource allocation and explore a new type of 'grain bank' business that effectively connects the futures market with the traditional 'grain bank' business, which is a new inevitable choice for 'agriculture, rural areas and farmers' services under the new situation." At the recent "Seminar on Futures Market promoting the Development of 'Grain Bank' held by Dalian Commodity Exchange (hereinafter referred to as" Dashan "), Cofco and CIC Zhonggu Futures Company, the new" Grain Bank "business, which is closely integrated with the futures market, has been concerned by representatives of relevant state ministries and commissions, local governments, agriculture-related enterprises, financial institutions and major grain growers. The participants enthusiastically discussed the new changes and vitality brought about by futures for the development of the traditional "grain bank" business.

"Grain Bank" is a necessary Exploration to serve "Agriculture, Countryside and Farmers"

China is a large agricultural country, and the issues of "agriculture, rural areas and farmers" and food security have become major topics of strategic significance. However, in recent years, some policies adopted by the state in the field of circulation to increase farmers' income and ensure food security have not only played a positive role, but also affected the normal role of the market mechanism, but also caused a waste of resources, finance and other aspects. Based on this, it is necessary to explore new ways to solve related problems by market-oriented mechanism such as "grain bank". At the seminar, experts opened the topic for the "Food Bank" from the perspective of "agriculture, rural areas and farmers" services and food security.

At the seminar, the participants calculated an account for the collection and storage of grain at present. For example, in terms of corn collection and storage, at present, the state collects and stores corn at a price of 2240 yuan per ton in the three eastern provinces and four provinces and regions of Inner Mongolia. if the collection and storage is calculated at 70 million tons, the total cost will be 156.8 billion yuan, and the financial price of public assessment fee, storage fee and interest rate of more than 20 billion yuan will be paid. Moreover, the long-term storage of grain, the change of new grain into old grain and the increase of mildew rate have led to a waste of food resources, which has become one of the factors threatening food security to a certain extent. The collected and stored grain does not circulate in accordance with the market law, resulting in a lack of processing raw materials for processing enterprises, which can only obtain high-priced raw materials through auction, forming a vicious circle. If the "grain bank" business is promoted, this situation can be effectively alleviated.

"Grain Bank" is a new grain management model for agricultural enterprises, which provides a series of value-preserving and value-added services to farmers, such as deferred point purchase, short-term financing and grain price insurance, on the basis of providing traditional business operations such as grain warehousing and purchase, relying on enterprise credit and taking farmers' grain storage as the carrier. The development of "grain bank" can not only ensure that enterprises can obtain the raw materials needed for continuous operation, but also reduce the loss of stored grain, save farmers' grain storage cost, and play a positive role in increasing farmers' income.

According to the person in charge of the relevant departments of the State Grain Administration, China began to pilot the "grain bank" in 2008. As of June last year, through incomplete statistics on the "grain bank" business carried out by more than 10 provinces and more than 200 enterprises across the country, the business has accumulated 12 million tons of grain, increasing farmers' income by 1.2 billion yuan.

Futures Market innovates the Model of "Grain Bank"

While seeing the win-win effect brought by the "grain bank", the participants should also see that at present, the pilot mode of the "grain bank" business in China is still relatively simple and has a large risk exposure. this has become an important bottleneck restricting the large-scale development of the "grain bank", which requires the support of financial markets, including futures, options, insurance and banks. We will form a new type of "grain bank" that adapts to the current market economic environment of our country.

Representatives of pilot enterprises attending the meeting said that in addition to insufficient inventory, business supervision and other factors, price fluctuations are the most important risks in the development of the "grain bank" business. According to reports, according to the current practice of pilot enterprises, if the listing price of farmers on the settlement day is lower than the daily price of grain delivery, the enterprise will settle at a price of 10 yuan per ton higher than the daily price of grain delivery. if the market price drops sharply, the subsidy of 10 yuan per ton is only a drop in the bucket for farmers, while the increase of subsidies by enterprises will have a greater impact on operation, and the downside risk of overall market prices will still make farmers face unexpected losses. If the market price rises, it will not only benefit the farmers, but also increase the purchasing cost of the enterprise, which will affect the production and operation of the enterprise to a certain extent. Therefore, the use of futures, options and other hedge tools has become the focus of attention of the participants.

Because the futures market has the unique function of price discovery and risk aversion, it can not only provide benchmark price support for the purchase and sale of "grain bank" and stabilize the financial cost of enterprises, but also through targeted measures such as enhancing the convenience of enterprise delivery. Reduce the turnover cost of stored grain and improve the efficiency of operation. The close relationship between the futures market and the operation and development of the "grain bank" will also promote finance, banks, insurance and other financial institutions to help farmers and enterprises resist market risks through measures such as price insurance and pledge financing. Therefore, the new "grain bank" needs to be protected by a financial system composed of futures markets, insurance companies, banks and so on.

Complete value chain promotes the New Development of "Grain Bank"

At the forum, participants held that the third Plenary session of the 18th CPC Central Committee proposed to "give full play to the decisive role of the market in the allocation of resources." the new exploration of supporting the "grain bank" business with financial services is precisely to give full play to the role of the market in the field of grain circulation, to use modern financial means to evade risks for farmers and agriculture-related enterprises, and to protect their income and enthusiasm.

With regard to the support work of the grain bank in the future, the relevant person in charge of the big business said that the overall goal of the new "grain bank" is to provide the market with price risk management tools while supporting insurance and banks to provide risk management services to the "grain bank" service.

It is understood that on the basis of giving full play to the two major functions of the futures market price risk and risk aversion, the large trading house is studying and improving the futures market to serve a new type of "grain bank." This includes actively issuing options trading tools to enable grain enterprises and insurance companies to carry out "reinsurance" through option trading to broaden the ways of risk management; to study the establishment of delivery warehouses in the main grain producing areas to facilitate grain enterprises to generate warehouse receipts, collect and sell grain; and to provide commercial banks with the necessary information about futures warehouse receipts and support them to carry out futures warehouse receipt pledge business in combination with large commercial bank cooperation projects.

Industry insiders said that through the above work, exchanges, United Insurance companies, banks and other financial institutions can add risk management wings to the traditional "grain bank" business, so that it is no longer limited to the traditional form of grain collection and storage, thus forming a complete chain of price, credit, and run risks.