China does not have to worry too much about rising global food prices

According to a report recently released by the Food and Agriculture Organization of the United Nations, global food prices continued to rise in September and are close to the level of the 2008 food crisis.

In September this year, French President Hollande and FAO Director-General Silva jointly suggested that this year's World Food Day (October 16) convene the G20 Agriculture Ministers’ Meeting in Rome to discuss a common response to the food crisis. On the same day, a ministerial meeting of the Rapid Response Forum for the Agricultural Market Information System was convened to discuss the issue of establishing strategic grain reserves. Abasian, an FAO senior economist, said that on the 16th the Group of 20 Agriculture Ministers meeting will be held as scheduled.

In its monthly food price index report, FAO said that the price index of food, including wheat, sugar, milk and meat, climbed to 216 in September, up from 213 in August. The increase was mainly reflected in the rising prices of milk and meat, while the growth rate of wheat prices has slowed down. The main reason is that the United States suffered the greatest drought in half a century this summer, and the prices of corn and soybeans hit a record high. With the continuing drought in Russia and other food-exporting countries in the Black Sea, there is concern that the world is facing a new food crisis.

So, will rising global food prices affect China's price level?

Wang Yongqian, a senior media person, believes that ordinary people have concerns that they are normal. Indeed, food inflation is likely to export inflation globally through trade channels. U.S. corn exports account for half of the world's total, and this kind of supply in the U.S. will affect global agricultural commodity prices. The drought-induced reduction in production will increase the panic among farmers. This will inevitably boost food and meat, including milk. The prices of products have risen, and food prices have continued to rise. The most important thing is that they will be redirected to other areas, increase the economic costs of food importing countries, and increase the pressure on developing countries’ imported inflation. Although China is an important country for grain exports, I do not think that our country’s grain pricing mechanism is in line with international mechanisms. At the same time, after years of development, our country has already formed a relatively good mechanism for adjusting food prices. Once food is affected by the international situation, the country will take measures to invest in large-scale production of the grain market and ensure the production supply mechanism. In addition to guiding market prices, and then providing effective subsidies to difficult citizens, farmers need not worry about income, at least not worrying too much.

For China, the food pricing mechanism is not integrated with the international market. The integration does not mean that the price of grain in the world is as much as the amount of food in our country. It is more necessary to understand some domestic and international market information, and to seek future production and development in accordance with international grain prices.

Researcher Cheng Guoqiang of the Development Research Center of the State Council: Preparing to Cope with Food Price Fluctuations Early Researcher Cheng Guoqiang of the Development Research Center of the State Council recently wrote that China should prepare for food price volatility early. The article said: From a realistic point of view, although there are some risks and problems that threaten the world's food security, compared with 2008, the possibility of a global food crisis this year is not likely.

First, this round of food price fluctuations is preceded by rapid increases in the prices of corn and soybeans. Wheat stocks, which are directly related to food security in developing countries, are relatively abundant. The price of rice is relatively stable. The rise in food prices has a phased and anticipatory nature.

Second, the main reason for the increase in grain prices this time is that financial speculation has magnified the speculation of crop output reduction in the United States. Therefore, once the late drought relief in the United States and the actual reduction in grain production are better than expected, futures speculators will return to rationality, and the speculation will continue. It is difficult to exceed the growth cycle of crops.

Of course, in the recent period of time, the world food situation also faces some complicated problems and challenges that need to be highly valued. For example, droughts occurred in many grain-producing areas such as South America, North America, Russia, Ukraine, and Australia in the same year, and they are rarely seen in history. In addition, if the trend of drought deterioration in the world wheat producing areas occurs later this year, the global food supply and demand pattern may be reversed, which will pose a real challenge to world food security.

For China, due to the abundant inventory of wheat and rice in recent years, the current round of global food prices will rise and will not impact China's grain supply and market in the short term. However, China is currently the world's largest soybean importing country. In 2011, soybean imports reached 52.64 million tons, accounting for 60% of the global soybean imports, and the foreign dependency was 80%. In the past two years, the structural needs of grain varieties such as domestic corn and wheat have also been solved through the international market. Therefore, we must be highly vigilant and prevent the adverse impact of rising global food prices and changes in the supply and demand situation on China's domestic food markets and even the macroeconomic operations.

In one, through the import chain of soybeans, grains, etc., the rise in international food prices will be directly transmitted to the domestic market. The main impacts include: First, the transmission of vegetable oil will increase the pressure on food prices in the latter part of the second half of the year. Second, since soybean meal is irreplaceable as a protein feed, if soybean meal prices are high, the cost of downstream farming will be directly increased. Suppression of aquaculture recovery; Third, the cost of soybean imports rose to a historical high, the domestic crushing industry continues to be in a state of loss, the company operating risks are increasing.

Both of them inhibit China's grain imports and may cause insufficient supply of domestic soybeans, feed, and other raw materials. This year, the quality of wheat in local areas has been reduced due to diseases. In order to supplement domestic supply, China has increased the scale of imports. However, starting from July, due to the sharp rise in international prices, it will become increasingly difficult to continue importing wheat and corn later. From the perspective of soybean imports, due to the early domestic and foreign soybean price difference of 300 yuan per ton (a loss of 300 yuan per ton of soybean imports), there has even been the so-called "washing" phenomenon, that is, some companies to avoid the risk of import losses, reduce the import of soybeans to Goods, soybeans that have been shipped for shipment are directly returned or resold to other countries.

In particular, it is necessary to pay attention to the fact that with the expansion of the domestic and international spreads, unreasonable export demand for grain and agricultural products will be formed, further aggravating the domestic supply-demand conflict.

Therefore, China must make preparations for policy response as soon as possible on the basis of further increasing the overall food production capacity, doing everything possible to mobilize the enthusiasm of farmers for grain production, and ensuring the stable development of grain production.

First, since the impact of global food price increases may be transmitted to the domestic market in the later part of this year, it is necessary to suspend the regulatory auctions for soybean and other food reserves, and to slow down the release of policy grain reserves, so as to reserve sufficient space and means for later adjustment and control policies. .

Second, we must seize the current relatively loose macroeconomic environmental opportunities, avoid administrative restrictions on agricultural products as much as possible, reduce the distortions in the prices of agricultural products, and gradually establish domestic and foreign agricultural product price linkage mechanisms to guide the return of agricultural product prices to the equilibrium level of the market. At the same time, it is necessary to step up exploration and establishment of a directional food subsidy system to reduce the impact of food price hikes on low-income families, especially the poor, by granting subsidies for food purchase, food stamps, or targeted supply of low-priced food, so as to guarantee poor people and low incomes. The basic needs of the class for food.

Third, according to the changes in the international grain situation and the new pattern of China's grain supply and demand, the grain industry policy will be adjusted in a timely manner. Strengthen food demand management, firmly control the development of the grain deep processing industry, and especially strictly control the use of food in the production of non-food chains such as industrial alcohol, fuel ethanol, and paint, and completely eliminate export tax rebates and collect environmental taxes on high energy-consuming and highly polluted grain deep-processed products. And export tax, promote the structural adjustment of deep processing industry.

Fourth, support the joint international cooperation and policy co-ordination action to cope with rising food prices. The key point is to avoid food exporting countries adopting export restrictions, hoarding, curtailing or even stopping corn and other grain and oil resources for bio-energy production and other international policy coordination. Actively support and participate in the international cooperation of UN agencies in assisting low-income and poor countries in food security.