Agricultural price reform: Markets are gradually liberalized


With the deepening of marketization, the drawbacks of China's original collection and storage system have gradually emerged, and it is necessary to implement a market-oriented price formation mechanism. Guide production and regulate supply and demand through market price signals.
Agricultural prices have been reformed.
Recently, some media reported that the Ministry of Agriculture has determined to implement differentiated support policies for different varieties in view of the direction of the next step of agricultural product price reform. For the two grain varieties of rice and wheat, the minimum purchase price will continue to be adhered to, while for corn, soybean, cotton, rapeseed and other varieties, production will be guided through market price signals to regulate supply and demand.
In fact, as a large agricultural country, the market-oriented price of agricultural products has been continuously reformed and deepened for more than 30 years of reform and opening up.
Relevant data show that from reducing the scope of agricultural product price management, expanding the proportion of market regulation, to comprehensively liberalizing the market and prices of agricultural products, the role of market mechanism in resource allocation has been clearly brought into play.
Ensure food security and promote the healthy development of agricultural products
Why do we continue to apply minimum purchase prices for rice and wheat, while market-forming prices are used for crops such as corn, soybeans, cotton, and rapeseed?
"The minimum purchase price for rice and wheat will continue to be implemented, in order to ensure the absolute security of the country's grain." Lu Le, a researcher at the Excellent Financial Research Institute, said in an interview with the "China Sankei News" reporter that at present, the core of food security repeatedly emphasized by the state is "ration security", that is, in the grain to ensure the basic self-sufficiency of grain, rice and wheat are China's main grain varieties, so by implementing the minimum purchase price for the above two types of varieties, it is conducive to protecting the interests of farmers and mobilizing farmers' enthusiasm for planting.
Some media reported that rice and wheat, which are agricultural products related to the vital interests of farmers and the actual lives of residents, and to national food security. After liberalizing the prices of agricultural products, the state did not let go of the agricultural product prices, but established a market-oriented agricultural product price control system, covering measures such as minimum purchase prices, temporary storage and collection, agricultural subsidies, and import and export regulation.
"With the deepening of marketization, the drawbacks of China's original collection and storage system have gradually emerged, mainly manifested as on the one hand, the price of domestic agricultural products is significantly higher than that of foreign countries, and the price of agricultural products has been seriously distorted; On the other hand, the inventory pressure accumulated in the past few years is greater, which has led to the current financial difficulties. Therefore, it is necessary to gradually implement a market-oriented price formation mechanism. Lu Le said.
Chen Xiwen, deputy head of the Central Rural Work Leading Group and director of the office, recently told the media that this adjustment is to let the market play a decisive role in the allocation of resources, and the government must also play a good role. The other is to address some actual problems, including the contradictions such as land income is still low for farmers, inverted prices of imported agricultural products, and tight domestic grain stocks.
The reporter also learned in the interview that in recent years, grain prices in the international market have fluctuated sharply, but under the combined effect of the above policies and other regulatory measures, domestic grain prices have risen steadily, grain output has achieved "eleventh consecutive increases", and agricultural product prices have seriously inverted.
Hu Bingjing, associate researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, also expressed his views in an interview with the "China Sankei News" reporter.
Hu said that the minimum purchase price for rice and wheat is due to historical reasons, mainly because of stocks. On the basis of target price subsidies for soybeans and Xinjiang cotton, Northeast China may further promote target price subsidies for corn and rapeseed, shifting from traditional reserve-based to market prices, in order to make the market mechanism decisive for resource allocation. In the process of forming the market price mechanism, the policy distortion effect of agricultural products should be minimized, the role of the market mechanism should be better played, and the role of the process and subsidies should be better improved.
It can be said that the price differentiation of agricultural products is an adjustment in the face of the objective status quo of China's agricultural products.
During the interview, the reporter noted that on July 10, 2015, in the reply to Recommendation No. 1480 of the Third Session of the 12th National People's Congress, he responded: "On liberalizing the prices of agricultural products of major crops." It is clearly mentioned that for the two grain varieties of rice and wheat, we should continue to adhere to the minimum purchase price, but we should change the market expectation of rigid price increase, so as to better play the role of the market mechanism, weaken the function of the minimum purchase price policy to "guarantee income", reduce the excessive dependence of farmers on the increase in grain market prices, and at the same time make overall use of price support and subsidies to protect farmers' interests.
For corn, soybean, cotton, rapeseed and other varieties with high demand elasticity, long industrial chain, and high degree of correlation between domestic and foreign markets, we should pay attention to the decisive role of the market in forming prices, guide production through market price signals, regulate supply and demand, and promote the sustainable and healthy development of the industry.
Improve quality and reduce prices, and improve international competitiveness
In fact, for agricultural products such as corn, soybeans, cotton, and rapeseed, guiding production through market prices is undoubtedly conducive to the healthy development of agriculture in the long run, but when competing with the world, the industry cannot help but have certain worries.
In the interview, the reporter found that at present, the average price of some agricultural products in China is about 30% higher than the import price.
Hu Bingbing said that this situation is mainly due to the increase in the cost of agricultural products, which is caused by relative efficiency, that is, in the process of China's rapid urbanization, industrialization and the synchronization of the four modernizations, the rate of technological progress in the industrial sector and the service sector has increased, so that the cost component in the formation of all agricultural products in China is rising, which is composed of relative efficiency. It is also a question of stage of development.
Hu Bingbing believes that for developed countries such as Canada, the United States, Brazil and other countries, they have both resource endowment advantages and cost advantages. As the rate of progress increases, we will increase the scale of cultivation through scale and modernization, as well as technological advances, which may reduce prices.
"For higher costs and lower competitiveness, this is a historical inevitability. Japan, South Korea and Taiwan all exported agricultural products as early as after World War II, and then in the process of rapid industrialization, agriculture became a counter-supplement. Therefore, according to experience, including the experience of developed countries, up to now, according to the current resource endowment is unsolvable, and, from the perspective of China's resource endowment advantage, we do not necessarily have to fully use domestic resources to meet domestic consumption demand, we can use the international and domestic markets, two resources can better ensure China's food security and agricultural product demand, which is an important measure. Hu Bingbing told reporters.
Lule has different concerns. He said that when China's agricultural products participate in international competition, they are mainly worried about the quality of agricultural products. China's original agricultural product standards focus on the total supply, and total output and yield have become the core value of the standard system. Under this standard system, the quality of China's agricultural products is generally not high, there are many general varieties, few famous varieties and special varieties, and the requirements of post-processing are rarely considered, and some agricultural products even have food safety problems. To a certain extent, these problems will affect the competitiveness of China's agricultural products in the international market.
According to the reporter's understanding, at present, less than 50% of China's agricultural products meet international standards, while the United States and other developed countries' products meet the standard rate of more than 80%.
Lu Le believes that in order to improve the international competitiveness of China's agricultural products, the fundamental measure lies in strengthening quality supervision, adapting measures to local conditions, establishing a new agricultural product quality standard system, and producing and managing in accordance with international standards.
In fact, China's agricultural products participate in international competition, not only product quality competition, but also price competition, only cheap and high quality, cost-effective, in order to have a greater competitive advantage in the international market competition.
The liberalization of agricultural markets has become a trend
With the continuous adjustment of the price mechanism of agricultural products, what will be the development direction and trend of China's agricultural product prices in the future?
Hu Bingbing believes that under the current new strategy of food security, on the one hand, the price of rations is still guaranteed by the government's minimum purchase price, but other agricultural product markets will be gradually liberalized, which will improve the efficiency of market resource allocation. Also, reduce fiscal distortions.
Hu Bingbing further explained that the rise and fall of agricultural product prices should be played more by the market, if an agricultural product remains stable for a long time, it may not be a good thing, if the price of agricultural products fluctuates in a certain range, it reflects a change in supply and demand, and this price signal will guide agricultural production to gradually optimize, which is an inevitable phenomenon. However, agriculture has weak qualities, and the Third Plenary Session of the 18th Central Committee also proposed that industry feeds agriculture, cities feed back rural areas, functional reciprocity, and urban-rural integration.
Lu Le also expressed a similar view, in the future, the price of most of China's agricultural products will be mainly formed according to the market-oriented mechanism, and gradually integrate with the international market, while for core grain products such as rice and grain, the minimum purchase price will continue to be implemented, or subsidy measures will be implemented.
"Since the vast majority of agricultural products do not involve food security, the introduction of market-oriented mechanisms will help guide production, achieve production and marketing matching, and improve production efficiency, while for categories related to food security, the state will continue to implement protective measures." Lule told reporters.
Lu Le finally told reporters, "For the target price reform of agricultural products that China is promoting, the varieties that have been implemented so far are cotton and soybeans, although they will gradually expand to other varieties in the future, but we believe that it will be a slow process, on the one hand, there will be a process of summarizing experience for the early pilot varieties and pilot areas, on the other hand, the price reform of agricultural products is related to the vital interests of hundreds of millions of farmers, so only when the reform conditions and foundation are mature, will the reform of the product category be gradually expanded." ”
In fact, any reform is not a one-time process, and it is necessary to constantly adjust the reform measures and intensity in the face of changing circumstances. The same is true of the price reform of agricultural products, and there may be policies and measures introduced in the future, but in any case, under the conditions of market economy, the gradual liberalization of agricultural markets should be a trend.

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