Incident: No. 1 central document issued in 2022, entitled “the CPC Central Committee and the State Council on the key to promoting the revitalization of the rural areas in 2022”. The document plans to comprehensively promote the key work of Rural Revitalization in 2022, and defines two bottom line tasks: ensuring national food security and preventing large-scale return to poverty; Three key tasks: rural development, rural construction and rural governance; Promote the realization of “two new”: new progress has been made in Rural Revitalization and new steps have been taken in agricultural and rural modernization.
We will ensure food security and make every effort to do a good job in food production. Document No. 1 emphasizes the full implementation of the same responsibility of the party and government for food security, and the strict assessment of the food security responsibility system to ensure that the sown area of grain is stable and the output remains above 1.3 trillion kg. It also proposes to improve the income guarantee mechanism of farmers’ grain planting, appropriately increase the minimum purchase price of rice and wheat in 2022, and stabilize the subsidy policies for corn and soybean producers and rice subsidies. We believe that document No. 1 has stabilized the grain planting area and profitability from the dimension of program and policy, which is expected to stimulate the enthusiasm of farmers to grow grain, boost the demand and premium space of high-quality seeds, and finally improve the performance of seed enterprises. Continue to encourage biological breeding and promote the tackling of key core technologies. Document No. 1 stressed the need to fully implement the action plan for the revitalization of the seed industry and start major agricultural biological breeding projects. We will accelerate the implementation of key agricultural core technology research projects, implement systems such as “showing leadership” and “ministry provincial linkage”, and carry out pilot long-term R & D projects. Strengthen the construction of modern agricultural industrial technology system. Carry out the pilot of subsidy after R & D and promotion of major varieties. We will implement the seed law, implement the system of substantive derived varieties, strengthen the protection of intellectual property rights in the seed industry, and severely crack down on illegal and criminal acts such as trademark infringement in accordance with the law. We believe that the commercial landing process of biological breeding will continue to be promoted, and the continuous improvement of policy support and intellectual property protection is expected to continue to purify the seed industry market environment and protect the interests of enterprises with R & D and innovative technologies.
Ensure the supply of “vegetable basket” and stabilize the basic production capacity of pigs. Document No. 1 proposed to stabilize the long-term support policy for pig production, stabilize the basic production capacity and prevent the ups and downs of production. However, we believe that for the pig industry, the impact of policy regulation on price and production capacity is limited in terms of magnitude, which can not fundamentally change the supply and demand trend of the industry. We judge that the industry is still in the stage of loss and capacity reduction. The expectation that the pig price will meet the inflection point of the cycle is becoming stronger and stronger, and we continue to recommend the pig breeding sector.
Investment strategy: Document No. 1 lays down the policy program for the whole year and continues to emphasize food security. It is suggested to pay attention to the planting seed industry and biological breeding sector. Companies involved include Shandong Denghai Seeds Co.Ltd(002041) for seed industry, Beijing Dabeinong Technology Group Co.Ltd(002385) , Yuan Longping High-Tech Agriculture Co.Ltd(000998) for biological breeding, and Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) , Heilongjiang Agriculture Company Limited(600598) for planting industry. In addition, we continue to recommend investment opportunities in pig breeding sector.
Risk tips: the policy implementation is not as expected, extreme weather risk, price fluctuation risk, epidemic risk, etc.
