National Reserve Grain Sources Decreased Food Regulation Capacity Decreased

Control inflation or control food prices?

Unless there is hoarding, deliberate speculation, and abnormal fluctuations in food prices, the government should comply with the basic trend of a reasonable rise in food prices, without the need to intervene. Reporter Liu Lin Xu Shujun First half of 2011, the strong food prices in the streets to tell consumers , boosting the main force of CPI upwards - food prices are still rising.

The National Development and Reform Commission’s Price Department recently made a “four-nine” estimate of the future inflation situation in China, that is, 4% of the inflation rate corresponds to a 9% economic growth rate. But now, it is very likely that the "12th Five-Year Plan" will enter the "May 9th" model, that is, about 5% of the inflation level will correspond to about 9% of the economic growth rate. Behind this is cost-driven China inflation expectations.

At the middle of the year, the research group of the State Council Development Research Center went to Huai'an, Jiangsu, Chuzhou, Anhui and Jingzhou, Hubei Provinces to conduct research.

The results of the survey showed that the total output of summer grain in 2011 was flatly reduced, but affected by multiple factors such as rising costs, unbalanced supply and demand, and weakened state control capacity. In the second half of this year, the price of grain will be seen as a market outlook and is likely to be the Chinese CPI for the next few months. Upstream provides support.

A survey by the "Financial State Weekly" reporter found that rising prices from food prices may become a long-term trend. The price of grain has entered a rising cycle. The main driving factor is the rapid increase in the cost of grain.

Industry insiders pointed out that macro-control policies should comply with the inevitable trend of rising food prices, protect the comparative advantages of agriculture, and promote farmers' income from grain production.

At the same time, the root cause of inflation comes from the proliferation of liquidity, and there is no direct link between rising food prices and overall inflation.

The authorities should weaken the impact of macroeconomic regulation when food prices rise and short-term fluctuations occur. The focus of the policy should be on strengthening the encouragement of food production and increasing effective supply. Regulating inflation should not be understood as suppressing food prices.

Holding the grain, the researcher of the Development Research Center of the State Council, Cheng Guoqiang, told the “Financial National Weekly” reporter that an important factor in the further increase in food prices in 2011 is the significant increase in the cost of grain production.

In Jiangsu and Anhui, compared with 2010, local wheat seed prices rose by more than 30%, compound fertilizers and other fertilizers all increased by more than 20%, while machine tools, machine broadcasts, and machine receipts rose by 15%. The increase in labor costs is even higher, with some areas up to 25%. In 2011, the average cost per mu increased from 80 to 90 yuan in 2010, an increase of 15% to 18% year-on-year.

In order to make up for the rising costs of grain production and to expect a reasonable profit, farmers’ expectations for food prices have gradually increased. At present, at the time of the listing of new wheat crops, farmers are generally expected to have higher food prices, hoping to make up for the rising cost of grain production. Farmers in some producing areas have changed their habits of concentrating grain sales in the past and have turned to holding food, slowing down the rhythm of grain sales, and expecting better prices for selling grain. The price of high-quality rice increased by 6% year-on-year, and the price of japonica rice rose by 4.8% year-on-year.

The rising trend of corn prices is even more rapid, and even anti-corn prices are generally lower than the conventional price of wheat, which is in inverse relation to the price of wheat. Cheng Guoqiang said that corn sales prices in Anhui, Hubei and other places have risen by about 30% from the same period of last year.

At present, grain purchasing and marketing companies and processing companies generally believe that, on the one hand, drought and low temperatures have led to a slight decrease in total wheat production; on the other hand, the price of corn has continued to rise, and feed companies will increase the use of wheat to replace maize and thus increase wheat demand. It may also increase significantly. In particular, the drought conditions in the early months of the middle and lower reaches of the Yangtze River may have a certain impact on the output of autumn grain this year. Therefore, the buying and selling entities are expected to further increase their post-food prices.

In the coming months, the channels for raw grain supply are facing uncertainties, which may prompt food processing companies to increase their self-acquisition efforts.

Cheng Guoqiang said that policy-based food auction sales have become an important source of raw grain for grain processing enterprises. However, in 2010, the amount of policy grain purchases decreased significantly, and the possibility of starting policy purchases in 2011 was relatively small. Therefore, it is inevitable for processing companies to increase their own acquisition efforts.

"The increase in the cost of a series of food production and supply chains will inevitably eventually be transmitted to downstream end products, increase the total social cost, and bring about more stimulus factors to the rise in food prices." Cheng Guoqiang said.

However, due to factors such as the purchase of credit funds in the previous period, the wheat purchase market has been quiet this year. Apart from farmers' expectations of higher prices and relatively slower pace of grain sales, some processing companies and traders have suffered losses due to last year’s looting of grain. Lessons learned that entering the market this year are also more cautious and acquisitions have slowed. Cheng Guoqiang believes that this may be the embodiment of the effect of the minimum purchase price policy: If Sinograin does not conduct a market purchase, other acquisition entities may find it difficult to determine the market benchmark, and the market is expected to be uncertain.

Decreased regulatory capacity In 2010, the government increased the frequency and intensity of food market regulation, and put a lot of policy-related grain and oil, but the adoption of policy-based purchasing and storage into the country's control of food sources is relatively small, resulting in weakened macro-control capabilities.

While grain inventories are at a low level, since 2011, the storage and storage capacity of grain companies has also gradually weakened. As a result of tightening monetary policy, its reserve funds are generally tight.

In the face of this situation, some purchase and sale companies are ready to actively enter the market and bid for prices. In particular, in some areas where policy food stocks are low, some speculators may have stronger hype.

On July 13, a deputy director of the National Development and Reform Commission led a team to Shandong and Hebei to investigate the progress of summer grain purchases. Some agricultural officials in Hebei and Shandong suggested that a differentiated financial policy should be adopted appropriately and that the major grain purchasing and marketing enterprises should appropriately liberalize the issuance of policy funds. In addition, temporary storage measures should be started in due course to supplement the central reserve.

In addition, an agricultural expert who is close to making a decision told this correspondent that to strengthen the country's food control capacity, it should stop the targeted sales plan. On the one hand, the state's measures for collecting and stocking can appropriately increase and regulate grain sources. On the other hand, they can also play a supporting role in food prices and ensure the interests of farmers. However, if it is implemented at a lower-than-market price, it will be hedged to a certain extent.

The one-time sales of policy-oriented grain and oil for targeted sales companies is large, even far exceeding their processing capacity. According to the reporter’s understanding, some grain processing enterprises that enjoy targeted sales have an average daily processing capacity of only about 10,000 tons, but sales obtained during the first two years of the first half of this year have exceeded 2 million tons, enough to supply about three quarters of the time. Processing.

This serious directional “stacking” has led to these companies failing to convert grain and oil into food in a timely and effective manner, and facing the end consumer market. In the context of the state's lack of control of food sources, it has become a waste.

At the same time, because the targeted sales companies are mostly large-scale grain and oil processing companies, they are mainly concentrated in Wudeli, COFCO, Guchuan Group, Tianjin Lida, Zhongkuo Dalian Flour Mill, Yihai Kali, China Textile Group, Jiusan Oil & Fats, Huiyuan. Fu and other nine grain and oil giants. Because the targeted sales price is generally lower than the market price, its production and processing are more cost-advantageous and have a greater impact on the survival of other small, medium, and grain-oil processing companies. "Therefore, in the current situation, whether it is to protect the interests of farmers, the interests of SMEs, or accumulate the country's strength to regulate grain sources, it should stop the targeted sales measures as soon as possible." The above-mentioned expert, who declined to be named, said.

Difficulties in regulation According to statistics released by the National Bureau of Statistics, the CPI in June 2011 increased by 6.4% year-on-year, of which, food prices rose by 12.4% year-on-year, and contributed 0.34 percentage points to the rise in total price levels. At the same time, since both meat, eggs, and milk are converted by food, the indirect effects of rising food prices are even greater. In June, the impact of meat, poultry, and dairy foods on total price levels was 1.94 and 0.16 percentage points, respectively.

The NDRC's price monitoring agency told reporters that because of the high proportion of food prices in China’s CPI, its trend has a great impact on inflation. Therefore, in the second half of the promotion of CPI, food prices may be an important factor.

Since food prices account for the highest weight of CPI among various commodities, previous price increases have always been characterized by the most significant increase in food prices.

This brings a signal to the macro-control departments that the main driving factors for CPI come from food prices, which are the basis of 100 prices. Therefore, regulation of inflation should strengthen food prices and agricultural products (15.52, 0.00, 0.00%). The regulation of prices.

In the first half of 2011, there was news that in response to the situation and expectations of rapidly rising food prices and some food prices, the Development and Reform Commission interviewed the four major grain companies of COFCO, China Grain Storage, Hualiang, and China Textile Group to suspend admission and avoid Promote further rapid increase in food prices. At the same time, it is also possible to adopt ways to reduce food import tariffs and hedge food prices from rising too quickly.

In response, Dang Guoying, director of the Macroeconomics Office of the Institute of Rural Development of the Chinese Academy of Social Sciences, told the “Financial State Weekly” reporter that during the industrialization and urbanization stages, the rising costs of agricultural production including labor and agricultural machinery are inevitable. The rising cost of agriculture is also a long-term trend. An increase in the cost of agricultural products will result in a reduction in supply, which will push up prices of agricultural products. Even if supply does not decrease significantly, the rise in costs will also rigidly push prices up. This has led to an increase in food prices as a general rule in the industrialization and urbanization stages.

However, experts also stated that it cannot be said that there is an inevitable link between the price of agricultural products, food prices and inflation, or that there is an inevitable causal relationship between them. In a stable currency environment, the increase in food prices will cause consumers to cut other expenses, so that the total social demand does not increase significantly, and it will not cause inflation because of the demand side.

"Therefore, unless there are hoardings, deliberate speculations, and unusually volatile food prices, the government should comply with the basic trend of a reasonable increase in food prices, and there is no need to intervene." Cheng Guoqiang said, "To control inflation, we should suppress the rise in food prices. It may harm agricultural production and affect the comparative benefits of farmers' grain production."

One of the main reasons for the increase in food prices in 2011 was due to the substantial increase in the cost of grain production. However, according to a survey conducted by the National Research Center, at present, the rate of increase in food prices is still far from making up for the increase in grain costs. In mid-2011, wheat prices rose only 5% to 7% year-on-year, a difference of about 10% from the cost increase of 15% to 18%.

The increase in food prices did not increase the cost of grain production, and the continued decline in the comparative benefits of grain production severely dampened farmers' enthusiasm for grain production. The research report of the National Research Center pointed out that many farmers feel that the gains from grain production are outweighed by the loss of field management and reduction of investment. This is one of the important reasons for the decline in wheat yield in some areas this year. During the drought, some individual farmers think that even if drought does not make money, and they may lose money, they are reluctant to apply irrigation and drought. The reduction in food supply will make the supply and demand situation of food more strained, thus creating a vicious cycle between rising food prices and tight supply and demand.

Shandong Development and Reform Commission official Zhang Xiaoqiang, deputy director of the National Development and Reform Commission, suggested that the Central Government should better regulate the relationship between price and grain prices, and find the best balance between controlling excessive price rises and guiding the reasonable rise in grain prices. Raise the minimum purchasing and storage price to further protect farmers' enthusiasm for growing grain.

An assistant director of the Crop Management Department of the Ministry of Agriculture said in an interview with the “Financial State Weekly” reporter that at present some of the minimum grain purchase prices have increased, and the country has increased the minimum purchase price of early indica rice by 100 kg per year on the basis of last year. 9 yuan, the standard for early rice seed subsidies also increased from 10 yuan per mu to 15 yuan.

However, in the long run, finding a balance between controlling prices and raising prices is only an expedient measure.

It should be fully realized that rising food prices and rising food prices are the trend of the times. This is an inevitable phenomenon in China's economic development to this stage, and it has no direct relationship with inflation. Moreover, the contribution rate of food prices in the CPI should not affect macroeconomic policies.

At the same time, as food prices are greatly affected by climate and seasonal factors, in addition to the long-term price increase brought about by rising costs, short-term fluctuations caused by force majeure will occur, resulting in food prices and food prices in the short term. Fluctuations. However, these are all irrelevant to monetary policy and are issues that can disappear on their own without monetary policy intervention.

In addition, it should be noted that the current proportion of rural residents’ spending in China and urban residents’ expenditure has fallen by about 10 percentage points and 15 percentage points from the 1980’s. However, the weight of food prices in the CPI has been adjusted less, and the Chinese households' Engel's coefficient should be gradually reduced, and the food price weight should be reduced accordingly.

"The publication of core CPI has become a common practice among governments of all countries. The goal of macroeconomic control policies is also focused on the core CPI." Cheng Guoqiang suggested that officials should start to measure and publish the core CPI as soon as possible so that food prices and food prices are no longer relevant. Confused with overall inflation and its regulatory policies.