BEIJING, CHINA — China is planning to drop its grain price support, allowing the price to be decided by market trends and demand, the People’s Daily, the Communist party newspaper, reported on Jan. 26.
In the past, China has purchased agriculture products, particularly corn, from its producers at inflated prices, leading to excess inventories. A policy change has been expected but when that will take place is unclear.
The government’s purchasing price, which has been far above market value, has encouraged domestic production but also imports, as food and feed producers looked for cheaper alternatives.
Chen Xiwen, deputy director of the Communist party’s Central Rural Work Leading Group, is in charge of leading agricultural reform. He said the market should decide on the price.
Overall, this most recent round of reform needs to achieve at least four goals, he said in the People’s Daily. These goals include limiting imports, avoid adding new inventory, invigorate the market and maintain a reasonable return to farmers.
Agricultural supply-side reform will help increase food production by protecting arable land and developing agricultural science and technology innovation, the Chinese newspaper said.
China needs to pay attention to the development of modern agriculture and orderly utilization of resources. The nation consumers far more water resources than developed countries, said Renhan Jun, Central Financial Work Leading Group.