A unified, open and competitive grain market will be set up in
the country, highlighting the role of the market in the
distribution of the vital resource.
A newly approved grain trading regulation, which came into force
on Wednesday, says grain prices will mainly be determined in line
with market supply and demand, while the central government will
intensify its macro control over the grain circulation market.
Introduction of the regulation comes hot on the heels of Premier
Wen Jiabao insisting that liberalizing grain trading and pricing is
the top priority in the reform of the nation's grain distribution
system.
It is high time for China to liberalize grain trading in major
grain-producing areas, and efforts should be made to improve the
grain pricing mechanism, Wen told a national meeting on
Tuesday.
According to the regulation, fair competition will be promoted
by encouraging economic bodies of various forms of ownership to
engage in the grain trading business.
The state-owned trading firms, which dominate the grain market,
are being urged to transform their business mechanisms, improve
their market competitiveness and continue to play the leading role
as the main distribution channel of grain.
The regulation also stipulates the preconditions for grain
trading companies to obtain market access and their application
procedures as well as their responsibilities, saying qualification
checks must be made before they are allowed to enter the
sector.
Meanwhile, they must have the required financing capability,
necessary grain storage facilities, quality checks and qualified
management.
Sources from the Legislative Affairs Office of the State Council
said the regulation aims to encourage fair competition in grain
trading activities as the country liberalizes its grain
business.
According to the regulation, the central government and local
governments at various levels will establish grain risk funds to
provide farmers with subsidies, offer support for grain reserves
and help stabilize the fluctuating grain market.
Emergency measures will be implemented when grain prices are
subject to major fluctuations resulting from natural disasters,
epidemics or other unforeseen circumstances, the regulation
said.
As of this year, China will introduce a nationwide system to
offer subsidies directly to grain growers in leading
grain-producing areas in order to encourage them to grow more.
The reform will encourage grain production, raise farmers'
incomes, stabilize the grain market and ensure national food
security, experts say.
While promoting the reform of the nation's grain circulation
systems, equal importance should also be attached to opening the
grain market and ensuring it operates on an orderly footing, Li
Shenglin, vice director of the National Development and Reform
Commission, told a national grain work conference.
He urged grain administrative departments at various levels to
improve the system of grain market access and intensify their roles
in supervising grain circulation.
(China Daily June 5, 2004)