Grain law may leave farmers in the cold: experts

PUBLISHED : Monday, 27 February, 2012, 12:00am
UPDATED : Monday, 27 February, 2012, 12:00am


If a Sino-US deal did not drive home the message that food security is one of Beijing's priorities, Xi Jinping's return to America's agricultural heartland this month surely did.

During Xi's trip to the US, China and the United States signed a five-year agreement to guide talks on food security and safety. The vice-president also revisited the farming family that hosted him in Iowa 27 years ago, quizzing them on the challenges of growing crops.

A few days later in China, the issue came to the forefront again when mainland authorities released a draft of the country's first grain law for public consultation.

The law is designed to guarantee an adequate amount of safe food for the country's expanding population, giving government agencies greater power to intervene in the agricultural market. It sets rules on the production of grain to its storage, sales and processing.

But critics say the legislation neglects the most important factor in the food chain: farmers.

Huang Dejun, general manager of Beijing Orient Agribusiness Consultant, says farmers' enthusiasm for their work has been dampened in recent years by surging costs - something the draft does little to address, failing to tackle the government's long-standing policy of keeping grain prices low.

The authorities do have a safeguard - the official minimum grain purchase price that government-designated food companies will pay farmers for grain if the market price falls below the benchmark - but it doesn't keep pace with costs.

'Every year, the National Development and Reform Commission (NDRC) raises its minimum grain purchase prices by several pitiful fen. Can't it just raise it a bit more?' Huang said.

'We understand that the government keeps the grain price low out of fear of inflation, but it ought to rise properly because you need to encourage farmers to farm.'

Zheng Fengtian, from Renmin University's school of agricultural economics and rural development, agrees. He says that since most of the country's farmland is in the hands of farmers, the key problem of food security lies with them.

Zheng blamed government control on prices for discouraging farming. 'The government gives fixed guiding prices, which grow very slowly each year ... the cost of land leases, farm supplies and labour have all soared, but grain prices are still like a woman with bound feet who takes small steps,' he said.

Zheng cited two migrant workers, who each owned 920 square metres of farmland back home, whom he paid 700 yuan (HK$858) each to paint his house. Their wage for one day's work in the city would take the pair half a year of farming to earn.

'If we can't let grain growers earn an average income, who should we expect to grow grain in the future?' Zheng said.

Huang suggests the government's minimum purchase price should be altered to keep pace with farming costs, and subsidies should be increased to shield the urban poor from price rises.

Huang also expressed worry that the draft law's focus on government intervention rather than a freer market would breed corruption. If the law is adopted, individuals and firms will have to apply for permits from quality supervision departments to become grain processors. 'There is always corruption where there's supervision,' Huang said.

He suggests the provision likely stemmed from concerns about price manipulation and the growing involvement of foreign firms in grain buying and processing in China.

Another potential problem with the draft is the discord on certain issues between the Ministry of Agriculture, in charge of grain production, and the NDRC, which oversees the grain market and has spearheaded the drafting of the law. Analysts worry these disagreements could lead to ineffectual implementation of the law.

Huang Dafang, deputy director of the State Agricultural GM Crop Bio-Safety Committee, says that as a supporter of research on genetically modified crops, the ministry might oppose the ban on GM crops.

'The draft says [any individual or organisation] should not apply GM technology to major crops without official approval. I think it's unscientific to say this because many GM research projects involve the application, dispersal and production [of GM organisms],' he told the 21st Century Business Herald.

He said the ministry should take a clear stand on the issue while it was seeking public consultation.

The grain law was first placed before the National People's Congress Standing Committee in 2004. Drafting began in 2009 under the NDRC and State Administration of Grain's guidance.


China's grain yield, in tonnes, last year, up 4.5pc year on year due to favourable weather, says the Financial Times' China Confidential report