Good Combination Measures for Accelerating Destocking of Corns

Over the years, Heilongjiang Province witnessed the "twelfth consecutive increase" in total grain production, ranking in the first place for five consecutive years in China. However, affected by the international and the domestic markets, the policy-driven grain purchase and inventory in Heilongjiang Province had reached a record high, and all granaries were full. From 2015 to 2016, the total grain purchased was 79.835 million tons, with a year-on-year increase of 7.525 million tons, including 63.865 million tons of policy-driven grain, with a year-on-year increase of 12.465 million tons. With the large amount of corn inventory and the change of policy-driven grain purchase this year, the contradiction between corn purchase and storage was unprecedentedly prominent, and there was a great shortage of storage capacity.It was more urgent for Heilongjiang Province, a large agricultural province, to fight against the "destocking" of corn and improve the situation of"limited storage capacity". General Secretary Xi Jinping proposed a clear request for solving the structural surplus of corns and the limited storage capacity. Especially, Vice Premier Wang Yang made special arrangements for accelerating the reduction of corn inventory and preparing for purchasing autumn grains during his visit in Longjiang County. Heilongjiang Province attached great importance to the inventory issue and made full use of the national policy to reduce corn inventory. It adopted various measures to increase the sales of stored grains, including supporting the construction of storage facilities, improving the marketing ability of grain enterprises, relieving the corn processing enterprises from difficulties, increasing subsidies for grain processing enterprises and promoting corn added-value transformation by biological pathway, and thus good combination measures for increasing the sales of stored corns were formed.

The capacity of storage and drying were fully improved. In order to deal with the limited storage capacity and insufficient drying capacity, Heilongjiang Province actively promoted the construction of grain storage facilities, and incorporated the development of grain storage industry into the "Overall Implementation Plan for the Reform and Pilot of Modern Agriculture in the two Plains". In last several years, a total of RMB 2.815 billion yuan was raised to restore and expand the storage capacity of about 14.498 billion jin (1 jin = 0.5 kg), and 130 drying towers were maintained and built to expand the drying capacity to 11.492 billion jin. Also, various non-governmental forces were mobilized to actively participate in the construction of storage facilities. By adopting the measure of "construction first and subsidizing afterwards", 67 drying towers were built by local cooperatives, which increased the drying capacity by 2.2 million tons and greatly expanded storage and drying capacity. By the end of 2015, the storage capacity and the drying capacity in Heilongjiang Province reached 187 billion jin and 125 billion jin, respectively, increased by 206.6% and 112.7% compared with those in 2012. The standardized management rate of local grain purchasing and marketing state-owned enterprises (SOEs) reached more than 90%.

The purchasing and sales capacity of grain SOEs was strengthened. In order to better meet the development needs of the modern grain circulation industry, Heilongjiang Province accelerated the transformation from focusing on the number of SOEs for grains to developing competitive enterprises by optimizing and restructuring the enterprises, integrating and reorganizing resources, and strengthening operation and management. To this end, the number of grain purchasing and marketing SOEs were reduced from 554 in 2012 to 292 in 2016, which improved the overall strength and market competitiveness of enterprises. In the first seven months of 2016, the 292 local grain purchase and sales SOEs made a profit of RMB 1.6 billion yuan, with an increase of RMB 1 billion yuan over the same period of last year. There were 38 enterprises, with profits exceeding RMB 10 million yuan and 51 enterprises with profits exceeding RMB 5 million yuan. The total assets of enterprises reached RMB 44.9 billion yuan, and the asset liability ratio dropped to 70%. The purchase quantity of corns in the whole province increased significantly year by year. In 2015, a total of 108.9 billion jin of corns was purchased, 1.8 times of that in 2012, among which 93.9 billion jin belonged to national policy-driven grains, 3.5 times of that in 2012. In addition, from 2012 to 2015, Heilongjiang Province sold 78.7 billion jin of corns to other provinces.

Corn processing enterprises were further supported. Heilongjiang Province continuously implemented the "green food industry strategy" and the key actions of promoting grain processing industry project. Therefore, Heilongjiang Province developed a number of leading deep processing enterprises for corns with an annual production capacity of more than 300,000 tons, such as Longfeng Corn Development, COFCO Biochemical Energy and Heilongjiang Chengfu Food Group, with a processing capacity of 10.44 million tons. In last several years, large enterprises, such as Xiamen Xiangyu Co., Ltd., Bright Food Group from Shanghai City and Hubei Fuwa Group Co. Ltd. were introduced to develop grain deep processing and food processing industry, and a number of integrated projects of corn processing, storage and sales already started or were under plan. In 2015, the deep processing enterprises for corns in Heilongjiang Province consumed 11.3 billion jin of raw materials, and thus gaining RMB 13.5 billion yuan of sales revenue, and generating RMB 500 million yuan of profits and taxes. It was not easy to achieve these results as market prices of agricultural products dropped and downstream demands were weak. It was estimated that during the "13th Five-year Plan" period, Heilongjiang Province would achieve 30 billion jin of corn in-situ processing and transformation capacity every year, 2.7 times of that in 2015, and could provide more than 60 billion jin of corn goods to other provinces.

The added value of corns was enhanced by biotransformation. Heilongjiang Province used the increase of corn added value as an important way to reduce corn inventory. Through promoting the development of animal husbandry, Heilongjiang Province transformed grains into meat, eggs and milk, which not only realized the value-added transformation on the spot, but also solved the difficulties in grain sales and storage. In 2015, the output value of animal husbandry in Heilongjiang Province reached RMB 170.5 billion yuan, accounting for 33.8% of the total agricultural output value, and 25 billion jin of grains were converted into feeds, accounting for about 1/5 of the province’s grain output. Furthermore, the storage subsidies of RMB 1 .075 billion yuan were saved, and RMB 6.25 billion yuan of added-value was realized. It was estimated that RMB 3.6 billion yuan of subsidies would be invested in the next three years to support the construction of 1,000 dairy farms with the number of dairy cattle slaughter of more than 300, the construction of 500 beef cattle farms with the number of beef cattle slaughter of more than 300, and the construction of 1,000 hog farms with the number of hog slaughter of more than 1,500. In order to realize the above goals, Heilongjiang Province actively introduced large-scale agricultural and animal husbandry enterprises and capitals, like Zhengbang and Beijing Dabeinong Technology Co., Ltd. to jointly develop animal husbandry. After all the projects reached the production capacity and efficiency, Heilongjiang Province would slaughter 50 million hogs, 3 million beef cattle, 500,000 cows, 300 million broilers and other poultry. It could transform 60 billion jin of grains every year, and thus saving RMB 2.58 billion yuan of storage subsidies and realizing RMB 15 billion yuan of added-value.

Subsidy policies were launched for corn processing enterprises. Aiming at the operation difficulties of corn processing enterprises in Heilongjiang Province, Heilongjiang Province released "Administrative Measures on Policy-driven Grain Subsidy of the Processing Bidding for Corn Deep Processing Enterprises in Heilongjiang Province" in July 2015. Processing subsidies were provided for corn processing enterprises with annual processing capacity of 100,000 tons or more, and the corn subsidies issued in April 2015 were increased from RMB 200 yuan to RMB 400 yuan per ton, which played a certain role in boosting the depressed corn market in the whole province and the enterprises' enthusiasm for purchasing in the market. In this way, the deep processing enterprises for corns were able to regain growth. In 2015, Heilongjiang Province issued the policy subsidies of corn processing of RMB 1.175 billion yuan, and the processing enterprises bided for 2.29 million tons of corns in the provincial market.

Great efforts were made to expand the domestic corn market. Heilongjiang Province grasped the opportunity of reducing corn inventory and organized new business entities to participate in large-scale agricultural products marketing activities, such as Beijing New Year's Fair, the 10th China (Shanghai) International Organic Food Expo, 2016 South Korea International Food Expo, and Heilongjiang Quality Agricultural Products (Shanghai) Exhibition, so as to promote self-production and self-marketing of corns, coarse grains and other agricultural products for new agricultural business entities, such as cooperatives. Each exhibition order was worth more than RMB 100 million yuan. Heilongjiang Province also invited 82 corn processing and trading enterprises outside Heilongjiang Province and 42 enterprises within Heilongjiang Province to take part in the "Ice City Dialogue - 2016 Domestic Corn Market Research and Business Conference" and to jointly analyze the corn market situation, collect the new grain production data, clearly figure out the purchase and storage pattern, and find a sales channel for corns in Heilongjiang Province. The purchase and sale agreements of intent for a total of 15.5 million tons of corns were reached, among which Xiangyu Group signed an agreement of 5 million tons with Heilongjiang Province. At the same time, Heilongjiang Province continuously strengthened and highlighted modern marketing methods. Meanwhile, a number of e-commerce platforms were established, including the "Ecological Longjiang Website" (provincial-level agricultural e-commerce platform) and the "Green Food Micro Mall", which already absorbed 1,469 cooperatives and enterprises, and had a steady increase in the number of registered users and online sales revenue.