The State Council has decided to set free in an all round way the grain market this year in order to push forward actively and steadily the reform of grain circulation system. It has published recently "Opinion on Further Deepening Reform in Grain Circulation System" and enacted and implemented "Regulations on Grain Circulation". Will the market become inordinate when the main-body of grain purchase is diversified? Will there be under-grading and under-pricing in purchase, and big fluctuation of grain prices? How to safeguard the interest of farmers and consumers? With such questions in mind, People's Daily correspondent interviewed Liu Xiaonan, head of the Policies & Regulations Department under the State Grain Administration.

Can we have a "lively but orderly" grain market?

After the grain market was set free, the nation encouraged market main-body with diversified ownerships to run grain businesses. However, experience tells that, a liberalized market, if without strengthened market management and control, tends to be inordinate. Therefore, this reform stresses that the government should tighten the management in the grain market, and to achieve a market "liberal but not in muss, flexible yet in order". For this, "Regulation" has an explicit stipulation on the grain purchasing, selling, storage, transportation, processing etc. and clarified the obligation of grain business runners and legal responsibilities upon violation. Meanwhile, the grain authority will tighten management on grain wholesaling and retailing. When there is abnormal price rise, local authorities can control the rate of difference between purchase and sales and that between wholesale and retail to stabilize the price.

How to prevent under-grading and under-pricing?

Grain purchasing is a key part of the entire circulation, which opts to be problematic. If, in an oversupply along with price fall, various grain dealers under-grade and under-price, or do not actively purchase, making farmers hard to sell their grains; When the grain runs short and price rises, there will often be panic buying and hoarding with the purchase in chaos.

This time some measures taken in the reform are: first, to grant direct subsidies to grain-cultivating farmers (including reclamation enterprises and farms), enabling farmers to compensate production cost and get in moderate benefit.

Second, upon great changes in grain supply and demand, the State Council can make decisions out of necessity to practice the bottom line of purchase price in major grain producing areas. And so when the market price is below the lowest purchase price, enterprises designated by the state are supposed to buy in the grain at the lowest purchase price. The state has published the lowest purchase prices for early long-grained nonglutinous rice, middle season rice, medium to short-grained nonglutinous rice and late long-grained nonglutinous rice.

Third, practice market access system in grain purchase, so grain-business runners must be qualified, approved by grain administration and registered through industrial and commercial administrations of county level or above, and be held obliged accordingly.

How to prevent grain price surge?

When the grain market is set free, grain price is motivated by the market. Waves in grain price within some extent is normal, but surge and plunge will affect not only people's lives, economic development but also social stability. From the end of 2003 to early 2004, there have been two big raise in grain price, which were due to some new changes in the supply and demand but it is on the whole a reasonable rebound. with a series of macro-control measures by the state, the grain production witnesses a favorable trend for the moment, bringing along with a stable grain price in market.

In future, the nation will continue to take some measures to encourage the grain production, and rouse the enthusiasm of farmers in grain cultivation so as to promote the development of grain production. Meanwhile China will also make healthier the macro control system for grain and emergency precaution, improve central and local grain reserve system, establish a statistics reporting system for all grain business runners, strengthen the monitoring and analysis on grain market. Provincial government can, based on the grain supply and demand, have stipulation on the highest and lowest stock under normal conditions, for grain wholesalers, finished-grain processing companies, supermarkets to prevent some grain businessmen from hoarding.

Authorities related should punish those lawless violators on regulations harmful to consumers' interests according to the "Regulation". Normal grain price can be achieved and grain supply guaranteed so long as appropriate measures are adopted in proper times.

By People's Daily Online