Online System Creates a Better Prospect for Grain Trading

I. Overview of the Online System

Prior to 2006, the traditional method of on-site auctions played a dominant role in grain trading. However, it is important to acknowledge that challenges and issues persisted within the traditional system, such as multiple Intermediaries, high trading costs, information asymmetry, and low circulation efficiency. Recognizing these challenges, the establishment of the National Grain Electronic Trading Platform aimed to address these shortcomings and promote a more streamlined and fair trading environment. As China’s e-commerce platform emerged, the country began exploring new approaches to grain trading, seeking innovative solutions to improve efficiency and effectiveness. After 2015, a significant milestone was reached with the establishment of a comprehensive national grain trading platform. This platform revolutionized the grain trading landscape by shifting the majority of trading activities online. This transition has brought numerous advantages, including enhanced convenience, expanded reach, and improved transparency in the grain market.

II. Project Development Model

In the early 21st century, e-commerce revolutionized numerous sectors, including the grain industry. This integration gave rise to a novel approach in grain sales known as spot grain sales, transitioning from traditional face-to-face interactions to online transactions. This transformation facilitated swift and efficient trading, allowing buyers and sellers to engage seamlessly through virtual platforms, thereby capitalizing on the benefits of e-commerce within the grain industry.

The national departments concerned have proactively ventured into innovative grain circulation models, propelled by e-commerce and intertwined with modern electronic information technology. They have constructed a grain electronic trading system tailored to the nation's specific conditions, fostering a gradually evolving grain trading market that is equitable, competitive, standardized, well-regulated, and nationally unified.

In 2014, the National Food and Strategic Reserves Administration was approved to establish the Grain Trade and Coordination Center (GTCC) by the State Commission Office of Public Sectors Reform. Later, the administration set up a preparatory group for GTCC and the establishment of the National Grain Unified Bidding Transaction Platform. On Jan 8, 2016, the unified platform was officially launched (which had been upgraded to the National Grain Electronic Trading Platform on Jan 9, 2017), in the meantime, GTCC and 25 provincial national grain trade centers were officially connected through the internet and put into industrial operation. This system marked a new era of grain trading in China.

III. Results, Outputs, and Impacts

1. Support Macroeconomic Regulation of the Grain Industry

Since 2016, the National Grain Trading Platform has orchestrated more than 20,000 grain auctions, resulting in a collective trading volume of 600 million tonnes of grain and oil, with a turnover amounting to RMB1.2 trillion. Through these endeavors, the platform has effectively fulfilled its vital role in destocking grain, fostering enhanced alignment between grain production and sales, and advancing the reformation of the grain circulation system. Additionally, it has provided superior macro-level regulation for the grain industry, ensuring its smooth operation and compliance with established standards.

2. Assist in COVID-19 Pandemic Prevention and Control

In February 2020, breeding enterprises in central China’s Hunan and Hubei provinces suffered from short supply of raw materials for animal feeds due to quarantine caused by the COVID-19 pandemic. A grain trade fair dedicated to solve the problem was held on the National Grain Electronic Trading Platform timely, which sold 3.67 million tonnes of wheat and rice and 2.96 million tonnes of corn stored in local areas, effectively ensuring stable supply of feed ingredients for regions on lockdown.

3. Connect Production and Sales

In January 2020, Changchun, capital city of northeast China’s Jilin Province hosted the "National Trade Fair Dedicated for Feed Grains." Coordinated and organized by the National Grain Electronic Trading Platform, a total of 20.45 million tonnes of grain were put into sales, and the final transaction was 8.71 million tonnes. This initiative successfully helped grain producing areas in northern China to connect with grain consuming areas in southern China, which promoted seamless integration between grain production and sales. By doing so, it effectively alleviated the pressures of market circulation, ensuring a smooth and balanced flow of grain throughout the country.

4. Facilitate Rural Revitalization and Poverty Alleviation

Capitalizing on the platform's extensive resources and membership, concerted efforts have been made to provide active support to impoverished regions, enabling them to attain improved prices and sales for their high-quality grains. Notably, trade fairs dedicated to this purpose have been arranged consecutively, focusing on crops like high-quality wheat from Funan County, eastern China’s Anhui Province, and goji berries from northwest China’s Ningxia Hui Autonomous Region. These initiatives have yielded impressive results, with a turnover exceeding 200,000 tonnes of wheat from Funan and 95 tonnes of goji berries from Ningxia. Such endeavors have played a pivotal role in enhancing market opportunities and economic prospects for these regions, bolstering their overall development.

IV. Recommendations

The grain e-trading model in China couldbe a reference forother developing countries especially which are facing challenges about smallholder market access. Online grain trading withfairness, openness, few circulation links, low costs, strong interaction, and high transaction efficiency can provide various stakeholders with an efficient and effective cooperation platform .