Farmers' grain-trading permits not in line with market reforms

Pupils play on the ground covered with drying corns in Yuncheng, Shanxi, on October 7, 2012. [Photo/CFP]

The local court in Bayannaore city, Northern China's Inner Mongolia autonomous region, found a farmer guilty of purchasing large quantities of corn without the necessary State permit. We are building a market economy and the old, outdated State monopoly over grain trade should be abandoned, says Beijing News:

What law has the farmer broken? A 2004 regulation on the trade in grain, issued by the State Council, China's Cabinet, said that only those who have a State permit are allowed to purchase grain for commercial use.

It should be noted that this is against the principle of market-oriented reform. Since 1978, China has been trying to break State monopolies and simplify administrative procedures, but the State permit required to buy and sell grain is contrary to that.

Actually, the permit even goes against the regulation itself, as it clearly states that, "The State encourages various kinds of market players to join the grain trade".

That raises another issue, namely that officials who oversee the grain trade are defending their selfish interests at the cost of the market economy. The State monopoly in the grain trade was established in the 1950s, but it still persists today despite repeated attempts to open up the market.

Since the State monopoly was introduced, there have always been doubts about it, as it has proved very inefficient. The market needs opening-up so grain traders can buy grain directly from farmers. That would not only promote greater efficiency, it would also create jobs.

The case in Inner Mongolia should serve as a warning that certain State monopolies are misusing the judiciary for their selfish interests and only further reform can end this state of affairs.