Observers have agreed that the new round of market-oriented grain price reform is hurting the profitability of Chinese agriculture, the Global Times reported.
According to Li Guoxiang, a research fellow at the Chinese Academy of Social Sciences' (CASS) Rural Development Institute, the change from the current policy-based pricing mechanism eyes to make local corn prices in line with global prices.
Statistics from the National Grain and Oil Information Center shows that the price of domestic corn is 428 yuan per ton higher compred with imported corn of equal quality.
Ren Zhengxiao, head of the State Administration of Grain, noted that in April, the price difference between domestic and foreign wheat is 823 yuan per ton.
"Since 2004, China's annual grain production has experienced extraordinary growth for 12 consecutive years," the Global Times reported.
Ren emphasized that the growth has even pushed China's grain stocks "to the highest level on record," adding that introducing the market-oriented price mechanism is a way to push forward the market's supply-side.
"Following the principle of letting the market determine prices and delinking subsidies from prices, we will reform in an active yet prudent way the system of corn purchase and storage to ensure reasonable returns for corn-growing farmers," Premier Li Keqiang stated in a government work report released in March.
The said price change has put much pressure on large-scale growers who usually rent land from farmers with land-use rights.
"In China, rural land is under collective ownership while urban land is owned by the state. Farmers belonging to the collective community enjoy certain land-use rights," the article explained.
Zhang Yuanhong, a rural economy expert associated with CASS, shared that "large-scale growers would probably slow down the pace to scale up as they might be most heavily affected by drops in corn prices."
Zhao Guohan, a cooperative director, said that they are planning to return half of their rented land in the next half year. His cooperative has rented 120 hectares of agriculture land in Henan Province's Yanjin County.
Nonetheless, Zhang stressed that there will be no change in the large-scale operation in agricultural production.
Research fellow Li further noted that there is a new model of rural land circulation wherein farmers can utilize their land-use rights to have shares in cooperatives and other farming enterprises. The new scheme is likely to replace the current leasing model.
Back in March 2015, China's Ministry of Agriculture revealed that it will initiate a year-long pilot program about the new rural land circulation paradigm.