The full text of Document No.1 of the Central Committee issued by Xinhua News Agency 19 requires that the disadvantages of the system and mechanism be eliminated and the basic position of agriculture be unshakable. Not long ago, Lou Jiwei, Minister of Finance, said at the National Financial Work Conference that the minimum purchase price and temporary purchasing and storage policy should be changed to "separation of price and compensation" and a pilot project of target price subsidies for soybeans and cotton should be organized. It is predicted that this is the first time that the government has explicitly proposed to start the direct subsidy policy, and it is very likely that cotton will be piloted in Xinjiang and soybeans will be piloted in three northeastern provinces and Inner Mongolia.

The minimum purchase price policy of grain is a double-edged sword for industrial development.

Since 2004, China has implemented the policy of minimum purchase price of grain, which has protected farmers' enthusiasm for growing grain to a certain extent, but its disadvantages have also emerged, disturbing the price signal of the grain market-due to the continuous increase of purchase price, the prices of many domestic grain varieties have been significantly higher than the international market, which has led to a strange phenomenon. Although China has had bumper harvests year after year, its grain imports have increased substantially.

On the one hand, the market price competition of end products is fierce, on the other hand, the cost of grain purchase is rising, which leads to a hard time for intermediate processing enterprises. Take the rice processing industry as an example. Last year, the whole industry was in a downturn. Manager Tan of Guangxi Guigang Sanhe Rice Company introduced:

Manager Tan: About (processing) 100 kg of rice (profit) is between 2 yuan and 3 yuan. Look at the imported rice 1.7 1 kg, and the rice 1.80 yuan we buy now is ten cents higher than its rice price. Our profit has decreased by about 10%.

The same situation also exists in the field of cotton. At present, the domestic cotton purchasing and storage price is about 5,000 yuan higher than the international market, which greatly reduces the international competitiveness of domestic cotton spinning enterprises. According to industry estimates, 654.38 million spindles were closed for free last year, and about 654.38 million textile workers lost their jobs.

At the same time, with the continuous expansion of reserves, this has brought great pressure to the national finance and inventory preservation. Take cotton as an example. At present, the national reserve stock is100000 tons, while the global annual cotton consumption is only 24 million tons. Chen Jiumei, China marketing director of textile fiber consulting firm pci, is very worried about this:

Chen Jiumei: Who will spend it? This is a big problem. If the inventory starts to sell, it will cause the global price to fall, so everyone is worried that the higher the cotton inventory, the greater the impact on the market. No one knows what will happen in the cotton market, which is quite dangerous. The market will definitely undergo a relatively big adjustment.

Direct grain subsidies will come out soon.

Faced with the dilemma of purchasing and storage, the industry generally calls for the implementation of the "direct subsidy policy". In other words, the state sets a minimum purchase price by accounting farmers' grain cost, cpi and other factors, so that enterprises can follow the market and compete fairly. When the market price is lower than the minimum purchase price, the state finance directly subsidizes the difference to farmers, which not only protects farmers' enthusiasm for growing grain, but also avoids interference with the market.

Li Guoxiang, a researcher at the Institute of Rural Development of the China Academy of Social Sciences, said that the direct subsidy policy proposed by the Ministry of Finance has actually been implemented in the United States for many years and has worked well.

Li Guoxiang: The core is not to distort the market price. Because there is no distortion, the market competition order is better, producers are protected, and the financial burden is sometimes heavy and sometimes light. Generally speaking, it is better than our current situation-subsidies are given regardless of the prices of agricultural products (7.90, 0.03 and 0.38%), and the financial burden will only increase.

Driven by the direct subsidy policy, the main concern at present is that the current decentralized planting model of small farmers in China will bring difficulties to planting area statistics and subsidy distribution. Li Guoxiang believes that Xinjiang, three northeastern provinces and Inner Mongolia will be selected as the pilot sites for this hype. It is precisely because of the high level of large-scale and intensive production in these areas that it is conducive to the development of direct subsidy policy.