The Communist Party of China gave farmers a “big gift”: grain purchase price rose another penny

A farmer holds a parched crop during the Wuhan drought in May 2011.

After the Chinese Communist Party announced that “China will eradicate poverty by 2020,” the authorities issued the “Central Document No. 1” claiming to accelerate the revitalization of rural areas. One of the initiatives proposed by the Communist Party’s Minister of Agriculture and Rural Affairs at the two sessions was to “raise the minimum purchase price of grain by one cent this year,” a “New Year’s gift” to farmers that has caused a public outcry.

Recently, the Chinese Communist Party’s Minister of Agriculture and Rural Affairs, Tang Renjian, responded to a reporter’s question at the two sessions, mentioning that one of the main development goals proposed in this year’s government work report is to maintain grain production at more than 1.3 trillion catties.

In this regard, Tang Renjian said the Ministry of Agriculture and Rural Affairs has made three specific arrangements, among which policy measures include the minimum purchase price for indica rice and wheat, which will continue to increase by 1 cent per pound this year on the basis of last year’s increase of 1 cent per pound.

According to official information, since 2004, the CPC has officially implemented a minimum purchase price policy for rice and wheat in the main production areas. For example, the minimum purchase price of japonica rice was increased year by year from 0.75 yuan/catty in 2004 to 1.55 yuan/catty in 2014. Since 2015, the minimum purchase price of grain has been gradually adjusted downward.

In February 2020, the CCP authorities issued two circulars on the minimum purchase price for rice in 2020. According to the notices, the minimum purchase price for indica rice in China in 2020 was raised by 1 cent per catty.

The CCP authorities set the minimum purchase price for early indica rice, medium-late indica rice and japonica rice produced in 2020 at 121, 127 and 130 yuan per 50 kg, respectively. The corresponding prices for 2019 are 120 yuan, 126 yuan and 130 yuan, respectively.

Zhang Zhi Xian, a senior analyst in China’s rice market, told Futures Daily, “At present, the domestic indica rice market price has approached or slipped to near the cost of cultivation, and any further drop will dampen farmers’ motivation to grow grain.”

Behind the “1 cent increase in grain purchase price”, natural and man-made disasters continue

Like the aforementioned statement by Chinese Minister of Agriculture Tang Renjian, Chinese Premier Li Keqiang also mentioned in his March 5 government work report that “grain production has been bountiful for several years” and “grain output has remained above 1.3 trillion jins.” However, the two officials did not mention the Food crisis caused by the massive “natural and man-made disasters” that occurred last year.

In July 2020, the Communist Party authorities held a meeting on the food issue and asked provincial governors to take responsibility for “food security” in their regions. At the meeting, Vice Premier Hu Chunhua said, “Whether it is the main production area or the balanced production and marketing area, or the main marketing area, we must ensure that the sown area and production of grain will only increase and not decrease.”

Shanxi provincial authorities last year asked Huguan County in Changzhi City to establish a county-level grain reserve of 10 million pounds, but the scale of grain storage in the “national poor county” is still half of the target, making it difficult to guarantee food security in the county. Many places in Shanxi Province, including Changzhi City, experienced heavy rainfall, thunderstorms and hailstorms last year.

Between June and early September 2020, 70% of China’s counties (cities) experienced heavy rainfall, and many provinces experienced flash floods, urban flooding and flooding. Some local governments require farmers to grow grain and even ask them to convert their orchards and fish ponds to grain, or else their contract rights will be revoked.

And under the multiple blows of the U.S.-China trade war, the Epidemic and typhoons, corn prices on the Chinese market rose sharply last October, with the average spot corn price hitting a new high in nearly four years, and the rise in corn prices triggered a series of chain reactions.

According to Caixin, three typhoons swept through the northeast in succession from late August to early September, just as crops were filling, causing some crops to fall over. This not only reduced crop yields, but also caused mold and reduced quality. The Northeast is China’s largest corn-producing region, with Jilin, Liaoning and Heilongjiang accounting for more than 31.6% of the country’s sown corn area.

Xi Jinping, general secretary of the Communist Party of China, said during a visit to Jilin on July 22 last year that “Jilin should give prominence to ensuring food security.” Then a “fierce” campaign to save food began across the country. Various places have come up with strange new terms for food conservation, such as “Operation CD-ROM” and “restoring hunger”. According to the outside world, the CCP authorities have repeatedly emphasized “food security”, highlighting the imminence of the food crisis in the mainland.