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Grain security key to nation's success
By Ding Shengjun (China Daily)
Updated: 2004-02-19 15:13

[The author is director of the Institution of Agricultural Products under the China Market Association.]

Grain security is one of the major factors that may affect China's social stability and economic development as well as its national security.

To ensure grain security, the country needs to strengthen macro-regulation of food production, circulation, reserves and other aspects of the grain security system at a national level.

In a country that feeds 22 per cent of the world's population with only 7 per cent of the world's arable land, grain security stands at the top of the government's agenda.

Thanks to its more than 20 years of reform and opening up, China is now in a good position where its grain supply capability exceeds the demand nationwide. But there are also risks hidden in supply-and-demand relations.

Last year saw the country's grain production decline for the fourth consecutive year, due to a series of natural disasters and reduction of arable land.

To fill the annual gap between production and demand, around 15 to 20 million tons of grain reserves have been put in the market annually, which has greatly reduced the previously over-stocked grain reserves.

This has set off alarms that grain production cannot be reduced any more, and measures should be taken to increase grain production starting from this year.

To this end, while respecting the role of the market in allocating resources, macro-regulatory policies should be adopted to ensure food security in the country.

First, a long-term supply system for grain production should be established.

The nation's current allotment of arable land, which consists of 110 million hectares, must be protected by adopting strict protection policies.

Scientific and technological applications should be promoted to foster improved breeds and increase food production. Water-saving irrigation technologies should also be widely implemented to enhance productivity.

The potential for the country's arable land, especially in its main grain production bases, should be improved.

Medium-yield land, with a benchmark production of 5.4 tons per hectare, accounts for two-thirds of the country's total arable land. China should apply more technical and financial resources to upgrade this into high-yield land, which boasts a benchmark production of 7.7 tons per hectare.

Meanwhile, the agricultural production environment should be protected to ensure a sustainable grain production capacity.

An agriculture-related social service structure should be established to provide technology, information, consulting, marketing, storage and transportation services. This will help farmers improve grain production efficiency.

Second, a complete circulation system for the grain market is needed.

The system should ensure that consumers, even those in faraway regions, can obtain grain products in a timely way. It is a prerequisite for grain security.

To solve local protectionism and market segmentation problems, which have been sources of distress for policy-makers, efforts should be made to foster a unified market.

Farmers and other qualified entities should be encouraged to enter the market's circulation segment. Previously, only State-owned grain purchasing firms have been allowed in that domain.

Regulation should be enhanced to maintain the market order. A credit system should be set up to promote a credit-based culture. A complete grain market structure made up of spot transaction and futures transaction markets should be established to ensure grain security.

Third, grain reserves of a proper scale, structure and geographical layout are needed. It is a necessary measure to protect national grain security.

Fourth, a standard grain quality system is important too. Grain security requires not only quantity but also quality.

Fifth, there needs to be a grain security pre-warning system to ward off potential crises. Based on balancing the supply and demand of grain products in the market, the system should be set up to undertake supervision of the grain market and be able to provide forecasts of any potential risks.

Finally, an institutional protection system should be established to safeguard the interests of grain production regions and farmers.

The nation's grain security hinges on production in major grain areas, and farmers are the major force in safeguarding China's grain security. In this sense, protection of the interests of farmers in major grain production areas should be taken as the fundamental part of the establishment of our grain security-oriented system.

At present, we should emphasize sustainable development in a comprehensive and harmonious way. Balanced development between rural and urban areas should be sought.

Grain production regions should also be given a more favourable allocation of public resources.

The "green box" support policies within the framework of the World Trade Organization (WTO) should be strengthened, such as increasing investment in productivity-enhancing technologies, agricultural infrastructure, marketing infrastructure and quality control of products.

Meanwhile, the mode of subsidy for farmers should be changed. Direct subsidies, which abide by WTO regulations, should be granted for farmers to increase their income levels and therefore further drive food production.

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