In February 22nd, the No. 1 central document in 2022 clearly pointed out that "strictly control the processing of fuel ethanol from corn". This is the policy adjustment after the state put forward the "moderate development of grain fuel ethanol" in 2017.
From "moderate development" to "strict control", behind the change in the government's attitude towards fuel ethanol is the significant change in China's corn market from oversupply to oversupply.
In China, although the total amount of grain is basically balanced, structural contradictions are prominent. Among them, the relationship between supply and demand of corn is unbalanced. In the two years from 2020 to 2021, the number of imported corn in China has repeatedly hit a record high, which has attracted attention from the outside world.
The supply-demand relationship of corn has experienced twists and turns in the past decade. From 2004 to 2008, corn gradually oversupplied. In September 2008, with the gradual listing of new corn, there was great downward pressure on the price, while the price of corn in the international market also accelerated to decline in the same period. At that time, in order to stabilize the market, protect farmers' interests and grain planting enthusiasm, the state launched the temporary corn collection and storage policy. Benefiting from the support market acquisition, the purchase price increased significantly, and the corn inventory was high.
In order to solve the problem of phased oversupply, China began to implement agricultural supply side structural reform. In 2016, the state cancelled the temporary corn purchase and storage policy implemented for eight years, and reduced the corn planting area in the "sickle Bay" area, resulting in the reduction of corn output for four consecutive years. At the same time, the processing and transformation market of corn is active, the feed industry has changed from weak to strong, and the overall expansion of starch processing, especially the rapid expansion of the processing and transformation capacity of corn fuel ethanol.
In order to speed up the digestion of stored corn, in September 2017, the general office of the State Council, the national development and Reform Commission and other 15 ministries and commissions successively issued documents proposing the appropriate development of grain fuel ethanol.
In response to the implementation plan on expanding the production of biofuel ethanol and promoting the use of vehicle ethanol gasoline (hereinafter referred to as the "plan") jointly issued by the 15 ministries and commissions, the head of the science and Technology Department of the National Energy Administration explained that the background of the document is "high policy inventory", and relevant local governments and experts have made suggestions and suggested to refer to international experience, Expand the production and consumption of biofuel ethanol, regulate grain supply and demand, and effectively dispose of overdue and excessive grains.
From the perspective of international experience, biofuel ethanol industry is an effective way to dispose of overdue and excessive grains. However, the development of China's fuel ethanol industry is also full of twists and turns.
At the beginning of the tenth five year plan, in 2001, in order to solve the problem of dealing with a large number of "aged grain", improve the quality of atmosphere and ecological environment, and adjust the energy structure, the pilot of biofuel ethanol was launched with the consent of the State Council. Since the eleventh five year plan, the development of grain fuel ethanol has been suspended according to changes in the situation, and a number of non grain fuel ethanol demonstration projects or industrialization devices have been built one after another.
It is noteworthy that, from the guiding ideology and basic principles, the basis and premise of the implementation of the plan is to "ensure national food security" and avoid the problems of "competing with people for food" and "competing with food for land", At the same time, it puts forward the principles and requirements of "focusing on dealing with overdue and excessive grain, enhancing the regulation ability of grain market and improving the level of quality and safety, moderately developing grain fuel ethanol, and scientifically and reasonably grasping the total amount of grain fuel ethanol".
However, as the de stocking speed of corn was faster than expected, the relationship between supply and demand of corn quickly turned from surplus to shortage in previous years.
Lin Guofa, research director of brick Shenzhen Agricultural Products Group Co.Ltd(000061) jigou.com, said that the fuel ethanol, which was originally the consumption channel of aged grain, began to consume normal corn after consuming aged grain. With the rapid development of feed and deep processing downstream of corn, the supply and demand of corn has been tight and the price of corn has been rising since 2020. Even the prices of corn and wheat are upside down. The price of corn exceeds the price of wheat. Some feed enterprises prefer to buy wheat as raw materials.
This is the background of the No. 1 central document of this year, which is "strictly controlling the processing of fuel ethanol from corn." In the face of the reversal of the situation, since the fourth quarter of 2020, the state has tightened the approval of corn deep-processing projects again, strictly restricted the expansion of corn fuel ethanol processing capacity, promoted the balance of corn production and marketing, and ensured national food security.
Cai Hailong, a professor at the school of economics and management of China Agricultural University, told the first financial reporter that China's corn consumption is mainly divided into feed (more than 60%) and industrial consumption (30%). In order to ensure the consumption demand of rations and feed, China has always adhered to the principle of "not competing for food and land with people" when developing corn deep processing. If the corn deep processing industry develops excessively, it will crowd out the normal supply of feed corn and affect the safety of food supply such as meat, eggs and milk.
