“If there were no natural disasters, the income from growing grain would be very stable on the whole.” Liu Song is a big grain grower in Northeast China. Since the establishment of the cooperative to grow corn in 2013, he has basically made a profit every year except “the corn price was 1 yuan and 3 kg (wet grain) in 2016, and he didn’t earn any money”. The net income of a ridge (15 mu) of land, from the initial 2000 ~ 3000 yuan, can reach 7000 ~ 8000 yuan, up to 10000 yuan with the rise of corn price in recent years.
At present, Liu Song is the chairman of Huaze agricultural planting professional cooperative in Beilin District, Suihua City, Heilongjiang Province. The cooperative covers an area of 10500 mu of grain. Among them, 70% are land transfer and 30% are production trusteeship. These two modes, the former is to cultivate land for themselves, and the final income belongs to the cooperative; The latter is to help farmers grow land. The cooperative collects a custody fee of 5500 yuan for a long land, undertakes all production links from planting to collection, and the final income belongs to farmers.
Corn, rice and wheat are also called the three main grains. Taking 2016 as the landmark time node, corn and rations (rice and wheat) show different fortunes. This year, the temporary purchase and storage policy of corn was cancelled and replaced by a new mechanism of “market-oriented acquisition + subsidy”. Since 2004, especially with the support of the temporary corn purchase and storage policy from the second half of 2008 to 2015, the corn price momentum has been growing, and has walked out of the bull market for more than 10 years. In 2016, after a brief adjustment, the price of corn rebounded strongly after reaching the bottom. Especially in 2020, the trend was steep, even exceeding the protection price of wheat and rice, and also exceeding the protection price during the temporary storage period, reaching a record high. As for ration crops, although there are ups and downs, the trend is stable and upward as a whole.
It is in this context that the new agricultural management subjects represented by family farms and farmers’ cooperatives are gradually rising and growing. Corn, or to be exact, the “madness” of grain is not only reflected in the output, import volume, including price, and the “grain hoarders” extended by price, but also reflected in the area of land transferred by large grain growers. Although “big country and small farmer” is still the basic agricultural situation in China, this reality is quietly changing with the evolution of land scale.
Without touching on the premise of land ownership and contract right, the scale effect of agriculture is not only reflected in land transfer, but also in socialized services based on production trusteeship. Behind this is not only the practical footnote of “realizing the organic connection between small farmers and modern agricultural development” put forward by the 19th CPC National Congress, but also the central government’s high attention to food security. For example, “the more we have food to eat, the more we should think of when we don’t have food” and “the rice bowl of the Chinese people should always be firmly in their own hands. We must never let others get stuck in our neck on the basic survival problem of eating”.
Large Grain Growers
Since 2009, Liu Song has been engaged in grain trade, built grain depots in the village and purchased corn and rice. It was not until 2013 that he began to intervene in the planting link at the front of the industrial chain.
At that time, Liu Song also had his own plan: to buy grain, there was work only in winter every year, and no one could stay. In addition, the state has a temporary reserve purchase policy of corn every year, “as long as it can be planted, the National Reserve will collect it”. This method is simple, direct and profitable. Therefore, he immediately set about establishing a cooperative, “planting land in summer and collecting grain in winter”. This also directly provides employment opportunities for cooperative members, otherwise “the young and middle-aged labor force will go almost”.
The area of land transferred by Liu Song’s cooperative has increased from more than 100 mu at the beginning to more than 10000 mu today. In just seven years, it has achieved a growth of hundreds of times. Of course, such a substantial growth in a short time is also in line with market rationality.
In terms of input costs, cooperatives have strong bargaining power when negotiating with suppliers of agricultural materials such as seeds, chemical fertilizers and pesticides, and can reduce costs as much as possible; At the same time, after large-scale planting, it is convenient to use large machinery for operation, and professional organizations provide socialized services, which can not only reduce costs, but also increase grain production.
In terms of sales, after the corn harvest is centrally listed, the price is relatively low. Farmers who are not in a hurry to sell grain will generally store it for a few months before selling it when the grain price rises next year. Of course, there are also grain traders who will choose whether to hoard more according to the opportunity with the help of the tray funds provided by the “gold owner”. Liu Song, who started by doing grain trade, said: “this is much better than the income from directly planting land and selling grain.”
The benefits brought by large-scale land planting also attracted Wang Han to return home and start a business. As early as 2011, Wang Han returned to Guzhen County, Bengbu City, Anhui Province, founded hongtongtong agricultural professional cooperative and served as the person in charge. After 10 years of development and growth, including more than 8000 mu of land just transferred this year, the planting scale of the cooperative has reached 20000 mu. Among them, about 13000 mu of land is entrusted to large local grain growers.
Wang Han said that the loss of local rural labor force is serious, and most people will choose to go out to work and transfer the land, which provides an opportunity for cooperatives to enter the planting link and provide custody services for large grain growers. Coupled with the mature market of agricultural socialized services such as agricultural machinery operation, basically all large grain growers adopt the mode of agricultural production outsourcing. “After large-scale planting, cooperatives can carry out the breeding and promotion of improved wheat varieties and the order production of high-quality special wheat, which can not only ensure the quality, but also increase the income.”
Affected by the natural disasters not seen for many years, Wang Han’s income from farming in 2021 is meager. Although the wheat yield and market price were very stable in the first half of the year, the income was OK. But in the second half of the year, the loss of corn was more serious. With the settlement of claims by insurance companies and the compensation of the income from planting wheat, we can only earn about 100 yuan per mu. Wang Han said, “natural disasters are the biggest variable in agricultural production, and agricultural insurance is the ‘last line of Defense’. This year, local insurance companies are experimenting to cover the costs of rent and agricultural materials. After suffering losses from natural disasters, the amount of insurance will be greatly increased. If it is popularized on a large scale in the future, it will be more secure to grow grain.”
Zhao Yuanyu, who has cultivated land on a large scale for more than 10 years, is a large grain grower in Gaotang County, Liaocheng City, Shandong Province. In 2007, he started from planting cotton on a large scale, with a cotton planting area of more than 900 Mu at the peak. Later, due to the low income of cotton, they began to plant wheat and corn. “The income from farming in the form of family farms (large-scale) is good. Otherwise, it will not grow from 500 mu to more than 5000 mu, and it may exceed 10000 mu in 2022.”
In Gaotang County, the local land transfer rate is very high. Although the family farm is required to be “moderately large”, if the operation capacity can keep up, it also supports the expansion of the scale of the transferred land. Zhao Yuanyu said that the reason why there are many large local grain growers is that farming can make money, especially when the price of corn rises in 2020, everyone makes money. At the same time, the benefits of large-scale agriculture can also effectively resist market risks. For example, in 2021, with the price of agricultural materials rising, we can still buy high-end products at a relatively appropriate price. However, the corn production in 2021 is worse than that in previous years. He said, “in previous years, the yield of corn per mu could reach more than 1400 kg, but this year it was only more than 1000 kg, which was mainly affected by natural disasters. In previous years, all the corn was harvested in October. There was more rain in the harvest period this year, and it could not be finished in November. The corn was also affected by moisture and mildew, and the farmers gave up directly.”
Liu Song, Wang Han and Zhao Yuanyu are the epitome of the rise and growth of China’s new agricultural business entities. With the growth of land circulation area, the level of land scale and intensification has been significantly improved. According to the article “farmers and land are getting farther and farther away – land transfer and the practice of the” separation of three rights “system published in the 7th issue of China Social Sciences in 2020, in 2017, the area of cultivated land transferred to cooperatives and agricultural enterprises accounted for about 32.53% of the total area of household contracted cultivated land transferred in the same year, an increase of 10.76 percentage points over 2011.
At the same time, the demand for socialized services of these new agricultural business entities is also increasing. Chen Lin, vice chairman of the academic committee of the first auxiliary think tank and chief economist, told the first financial reporter that the “agricultural socialized service system” in the report of the 19th National Congress should refer to cooperative economic organizations and their service system. Cooperative economic organizations are not only the carrier of mutual assistance and cooperation, but also the best choice for entrusted provision of public services. They are also expected to become the hub organization of rural social governance.
the next step is “competition among large households”
In recent years, the outflow of rural labor force, the increase of employment cost, coupled with the sharp rise of land rent, but the grain price does not rise all the way, and the large grain growers are still at risk.
In 2016, when Liu song called for “no money”, for example, after the implementation of “market-oriented acquisition + subsidy” for corn, the price fell by a cliff. This led to the large farmers who planted corn the previous year. Although they had a good harvest, they ended up losing money and “planted a lonely one” all year round.
For large grain growers, the cost of agricultural planting mainly includes land rent, agricultural materials (seeds, chemical fertilizers, pesticides, etc.), production link services (machine farming, machine harvesting, pesticide spraying, fertilization, etc.). Land rent accounts for the bulk of agricultural costs, reaching about 40%. Taking corn as an example, land rent in Northeast China increased the most. Liu Song of Heilongjiang said that the land transfer started in 2013, with the price of 4500 yuan per hectare of land, and 10000 yuan in 2021. In 2022, the land price is uncertain, which may be 13000 ~ 14000 yuan. Zhao Yuanyu of Shandong said that the rent of one mu of land rose from 800 yuan in 2019 to 900 yuan in 2020, and then to 1000 ~ 1200 yuan today. Although the contract is signed every five years, the rent is still subject to the market.
Since 2021, the price of chemical fertilizer has continued to rise. According to the data of China Chemical Information Center, from January to August, the average ex factory prices of domestic urea, domestic diammonium phosphate, potassium chloride and compound fertilizer increased by 31.4%, 41.4%, 23.2% and 25.7% respectively year-on-year.
Xi Yinsheng, director of the Macroeconomic Research Office of the rural economic research center of the Ministry of agriculture and rural areas, told the first financial reporter that this year’s corn price, the former is expected to increase the cost of catty grain for ordinary farmers by about 0.1 yuan, and the latter is expected to increase the cost of catty grain for large-scale farmers by more than 0.2 yuan.
In fact, the rapid increase in costs in recent years is basically synchronized with the increase in grain income. Lin Guofa, research director of brick Shenzhen Agricultural Products Group Co.Ltd(000061) jigou.com, told China first finance and economics that small farmers have a small scale and do not feel obvious about the increase in cost, which is mainly due to the high opportunity cost of growing food.
As for the large grain growers, Lin Guofa said that their victory lies in the large scale of land transfer. Even if the net income per mu is small, they also have a considerable total income. In addition, although it will also encounter natural disasters, on the one hand, there is a certain probability, on the other hand, there is agricultural insurance, plus the income compensation in good years, in short, it has a certain anti risk ability.
For the rise of land rent, Zhao Yuanyu said, “this is the general trend. It can’t be reduced unless you quit farming. The next step is the competition among large households. If you want to earn money from such a high land rent, you must strengthen management and increase production and efficiency. If you neglect a little, if you don’t do a good job in a certain link, you may lose money.” In Wang Han’s view, “this is also reasonable. Although it will certainly erode the income of large grain farmers, if the money is earned by large farmers, small farmers will not benefit for a long time. If the land rent rises, they will pay if they can accept it. If they feel high, they can be planted by others”.
Different from others who “directly pay the rent to farmers at the beginning of each year’s land planting”, Wang Han adopted a refreshing way: the cooperative cashes the rent before June 1 every year. Otherwise, Lbx Pharmacy Chain Joint Stock Company(603883) has the right to harvest wheat. “In normal years, the local wheat harvest time is around June 5. No matter whether the cooperative is good or bad, it will pay the rent before this time to dispel the concerns of Lbx Pharmacy Chain Joint Stock Company(603883) , the village committee and the local government.”
The reason why this model is formed, Lbx Pharmacy Chain Joint Stock Company(603883) is also willing to accept it, which is based on shrewd practical considerations. Wang Han explained that if farmers are paid rent at the beginning of land cultivation, according to the scale of land circulation this year, cooperatives have to pay nearly 10 million yuan in advance. For Lbx Pharmacy Chain Joint Stock Company(603883) , each household may get 2000 ~ 3000 yuan, which does not play a key role. However, for cooperatives, because the wheat growth cycle is 8 months, it is equivalent to idle this fund, which virtually increases the financial cost.
Most importantly, the value of wheat per mu far exceeds the rent. The rent for land transfer is generally 700 ~ 800 yuan per mu, the wheat output per mu is about 1000 kg, and the national minimum purchase price has been maintained at more than 1.1 yuan per kg for many years. In Guzhen County, the planting mode of “harvesting wheat and planting corn in two seasons a year” has long been formed. Historically, affected by geographical and climatic factors, wheat production is very stable and there are few disaster years. In addition, wheat and corn belong to conventional crops, and the quality can be sold, which is nothing more than “good price and poor price difference”.
(First Finance)
