Warning on grain coupons

PUBLISHED : Tuesday, 21 March, 1995, 12:00am
UPDATED : Tuesday, 21 March, 1995, 12:00am

THE reintroduction of grain coupons will isolate provinces and depress farmers, a liberal economist said yesterday.

It is estimated that at least nine provinces, mostly in the north, have brought back the coupon system to regulate grain prices and food supply since last summer.

They include agricultural bases such as Liaoning, Shandong, Zhejiang, Anhui and Xinjiang.

'The comeback [of grain coupons] will undermine the inter-dependence among provinces and the ability of the market economy to make adjustments by itself,' said Yi Gang, vice-director of the China Centre for Economic Research in Beijing.

'In the end, it will encourage arbitrary controls and hinder provinces from buying grain from neighbouring regions.' With the coupons, households can buy cheaper food from state-run stores. Extremely poor residents can reportedly get a set amount of free food each month.

The practice resembles the rationing system introduced in the 1950s.

Mr Yi blamed the restoration of the coupon system for the self-reliant approach that provincial governors were forced to take in food management.

'The central Government should import more grain and fully relax the market. The market has a role to adjust itself,' the 37-year-old Western-educated economist said.

Mr Yi was worried that the reintroduction of coupons would discourage farmers from growing crops and further reduce output.

'As long as the coupons are used and the prices are kept low, many farmers may not work hard to grow crops because the government procurers won't offer them higher prices,' he said.

The Government was urged to open the grain market and increase imports. Many local officials, however, regard the coupons as an emergency measure, which can be abandoned when prices stabilise.

'We'll not return to the planned economy. We only treat the coupon system as a temporary solution,' an official of Xinjiang's Grain Bureau said yesterday.

Like many other provinces, Xinjiang reintroduced the grain coupons in August when residents could no longer bear the grain prices that had soared by more than 50 per cent.

Meanwhile, figures show China could lack 40 billion kilograms of grain to feed its people this year and may depend on Canadian imports.

According to Xinhua (the New China News Agency), rice, cotton and oilseed will be in short supply this year in east Jiangsu province.

Statistics show the province expects to need 30 million tonnes of grain this year. It produced 30.6 million tonnes last year.