Chapter 24 1. Financial subsidy: the straw that falls in the rain will become heavier

Financial subsidies are the biggest burden on China's finances.In the planned economic system, the market attributes of commodities are distorted, and the price and value are seriously deviated. The government has to spend a lot of money to maintain a low-income, low-consumption consumption pattern. It must subsidize both production and consumption. .From food, cooking oil, pork, and vegetables to coal, liquefied gas, electricity, housing, transportation, and even elementary school textbooks, soap for a few cents... almost everything is included and supplemented.According to statistics, before the implementation of the socialist market economic system in our country, the state finances used more than 100 billion yuan for various subsidies a year, accounting for 1/3 of the national income.

Among all subsidies, food subsidies have naturally become the largest financial expenditure in China because they are most closely related to people.With the implementation of the market economy system, many subsidies have been cancelled, but grain subsidies not only have not been cancelled, but more and more subsidies have reached the point where the national finances are overwhelmed. In the 18 years from 1961 to 1978, the state subsidized an average of 2.406 billion yuan per year for grain commercial operations at affordable prices. After offsetting the profits of 255 million yuan realized by the grain and oil industry, transportation companies, and bargaining operations, the state’s net subsidy was 2.151 billion yuan.

After 1979, with the sharp increase in the purchase price of grain, the sales price did not increase at the same time, so that the state financial subsidies increased year by year. In 1979, it reached 8.539 billion yuan, four times that of 1978; in 1979, it broke through the 10 billion yuan mark, reaching 11.359 billion yuan;By 1984, it exceeded 20 billion yuan, reaching 23.429 billion yuan. After offsetting with the operating profit of the grain and oil system, the net state subsidy was 20.9 billion yuan.The price subsidy of the national finance in that year was 37.3 billion yuan, accounting for 25.5% of the fiscal revenue of the year, and the net subsidy of grain and oil accounted for more than half of the total amount of the national price subsidy.During the 12 years from 1971 to 1990, the state provided a total of 190.5 billion yuan in grain and oil financial subsidies.

This is only a subsidy for food price increases. If the food system's loss subsidies are added, it will be a huge number.Regardless of whether it is an operating loss or a policy loss, the state has to make up for it anyway.Beginning in 1961, the state began to subsidize losses in the food system. The subsidy amounted to 1.86 billion yuan that year.By 1989, the total state subsidies for grain reached 34.37 billion yuan; in 1990 it reached 47.7 billion yuan, accounting for half of all financial subsidies and 1/10 of all fiscal revenue. In 1992, my country implemented the socialist planned economic system, and many commodities went to the market, so subsidies were gradually eliminated.However, due to the special status of grain, my country continues to implement the policy of buying at high prices and selling at low prices. In addition, the grain system does not distinguish between government and enterprises, and policy losses and operating losses are mixed. Financial subsidies have not decreased, but have increased.So far, the central government's annual budget is only 300 to 400 billion yuan, while grain subsidies have reached 70 billion to 80 billion yuan.Among them, the storage fees and interest subsidies used by the central government for special grain storage, the subsidies used by the central and local governments to jointly establish risk funds, and the interest subsidies for the old accounts of grain enterprises amounted to 29.2 billion yuan.

70 billion to 80 billion yuan, what a huge number, and what a heavy number.No wonder the newly elected Premier of the State Council, Zhu Rongji, took the first step to reform the grain distribution system when he took office.He frankly admitted that the operating losses and financial liabilities of the food system have increased sharply, "beyond the country's fiscal capacity." China's finances are like straws after falling rain, and the burden is getting heavier and heavier. But in any case, China's finances can no longer be carried.We are still a developing country whose economy has just started, and our fiscal revenue is limited. How can we afford such a heavy burden?We need money for economic construction, and money for basic construction, and a single grain subsidy takes away 1/5 of our fiscal revenue.This situation cannot but arouse our great concern.

Because food is an important strategic material related to the national economy and the people's livelihood, many countries have formulated food subsidy policies in order to encourage the development of food production, ensure the effective supply of food, and maintain the stability of the food market.Generally speaking, there are three types of subsidies: the first is to implement price subsidies for the input factors of food production, such as fertilizer subsidies in India; seed subsidies in Indonesia; agricultural tractors, combine harvesters and fertilizer subsidies in the former Soviet Union, etc., through Make farmers reduce production costs and promote food production.The second is to support and subsidize grain producers, that is, the government sets the lower limit of grain prices, restricting the free market from infinitely lowering prices when grain supply exceeds demand.The United States is one of the countries that implemented this policy earlier.Their form is that commodity credit companies accept farmers' agricultural products as collateral and pay farmers financing funds.If the market is favorable, the farmers can sell the mortgaged agricultural products to return the principal and interest; if the market is unfavorable, the farmers can transfer the ownership of the mortgaged agricultural products, that is, the commodity credit company uses the financing funds to purchase the farmers' surplus products.This is also the form adopted by the French government, which pays an annual price subsidy of about half of the total value of grain production in that year.The third form is subsidizing food consumers.This is the most common form.According to the situation of 37 developing countries studied by the Food and Agriculture Organization of the United Nations, 31 of them implemented food price subsidies for consumers between 1968 and 1980.Food price subsidies in the former Soviet Union were also relatively high, accounting for more than 9% of the state budget from 1976 to 1980, rising to 12 to 13% from 1981 to 1985.However, in recent years, many countries have found that the implementation of this policy has not only increased the financial burden of the country, but also increased the pressure on domestic supply on the other hand, so that these countries have to seriously study how to reduce food subsidies.This is most prominent in many socialist countries of the past.And some developed capitalist countries also implement price subsidies for food consumption, but they mainly subsidize the low-income poor and the sick and disabled.For example, in the United States, about 10% of low-income residents and the sick and disabled enjoy food price subsidies.

What does China's food subsidies supplement?It is difficult for us to have an accurate statement. Generally speaking, there are support subsidies for food producers, indirect subsidies for input factors of food production, and more price subsidies for consumers.There is also a category of loss subsidies for grain operators that most countries do not have. Whether it is policy-related losses or operating losses, the country embraces it in its arms and makes up for it all. The result is that the subsidies will naturally increase. The more, the heavier the financial burden.What's interesting is that the state subsidizes nearly 1/5 of its fiscal revenue into grain every year, but few people appreciate it: farmers don't get obvious benefits, and consumers don't feel the existence of subsidies. As a national grain operator China's food system is even more complaining: insufficient subsidies, serious losses, hard life... thankless work, what is the reason?We might as well go back to the source and take a serious look at the ins and outs of China's food subsidies.

China's price subsidy policy began in 1953, but at that time it did not include grain, but only limited to cotton wool. The unified grain purchase and sales policy introduced in 1953 was carried out in line with the principle of the state’s principle of no loss, no gain. Both the unified purchase price and the unified sales price were basically the market prices at that time, and there was no such thing as subsidies. In 1953, the average unified purchase price (raw grain) of six kinds of grains was 6.76 yuan per 50 kg, and the unified sales price was 11.68 yuan (finished grain), which was basically balanced with a slight surplus.Until 1960, although the unified purchase price was raised several times, the unified marketing price was also adjusted accordingly. The state-run grain system not only did not lose money, but also made a slight profit (including processing profit).

Real food subsidies came about in 1960.The immediate reason for the emergence of grain subsidies is the inversion of grain purchase and sale prices.In general, the state’s grain subsidies have generally gone through three stages: (1) 1953-1960 was a period of no subsidies, when the state’s grain operations were slightly profitable; (2) 1961-1978, the state’s main Subsidize the operating expenses of grain; (3) After 1979, the state not only subsidized the operating expenses of grain, but also subsidized the inversion of grain purchase and sale prices.The specific process is as follows: In 1953, my country implemented the unified purchase and sales system of grain, and the planned purchase price and planned sales price of grain were basically determined according to the purchase and sale prices at that time.The State Council clearly stipulates in the "Order" on the planned purchase and supply of grain: "The planned purchase price is basically in accordance with the current purchase price." "The planned supply price is basically in accordance with the current retail price." That is to say , whether it is the unified grain purchase price or the unified marketing price at that time, it is the market price at that time.During the five years from 1953 to 1957, the unified purchase price of grain in some areas and varieties was adjusted, but the range was not large. The unified purchase price of grain was basically stable and was basically close to the market price at that time, so it was easy for farmers to accept. It is also in line with the principle of exchange or nearly equivalent exchange.The unified marketing price is also determined on the basis of the retail price at that time, and the unified marketing price changes with the change of the unified purchasing price, and there is always a certain purchase and sale price difference between the purchase and sale prices. In 1957, the average unified purchase price of the six kinds of grain was 6.78 yuan per hundred catties, while the unified marketing price was 11.92 yuan.At this time, the grain operation has a certain profit, and the state does not need to subsidize it.According to the statistics at that time, from 1953 to 1960, the country made a total profit of 1.658 billion yuan from the operation of par grain and oil, with an average annual profit of 208 million yuan. The profit part was mainly the profit of grain processing enterprises.

In 1958, due to historical reasons and changes in economic development, the situation of low grain prices and unreasonable price comparisons between regions became more and more serious. In order to achieve a further balanced and reasonable national grain price, from 1958 to 1965, the country successively Raised the unified purchase and marketing price of grain 4 times.The first time was in 1958, when the prices of unified grain purchases and sales in six provinces and autonomous regions in Northeast China, Inner Mongolia and the South were raised, equivalent to a national average increase of 3.1%; then, in 1960, the unified grain purchase prices in seven southern rice-producing areas were raised , which is equivalent to a 2.6% increase in the national unified grain purchase price; in 1961, due to natural disasters, grain production was greatly affected. In order to mobilize the enthusiasm of farmers for production, the state raised the grain purchase price for the third time, and the national average increased by 25.3% %, the fourth time was in 1965, when the unified grain purchase price in seven rice-producing areas in the south was raised again, equivalent to a 1.5% increase in the national unified purchase price.After the above four adjustments, compared with 1957 in 1965, the price of grain purchases increased by an average of 35%.

When the unified purchase price of grain was raised three times from 1958 to 1961, its sales price did not change accordingly. Therefore, when the unified purchase price of grain was raised for the third time in 1961, the first time since the founding of the People’s Republic of China that the price of grain purchased and sold was inverted.The practice at that time was to include the price difference in the operating losses of grain enterprises, and the government would subsidize them, and grain subsidies originated from this.But at that time, the scale was small and the number was small. In 1963, the state adjusted the sales price of grain, increasing the sales price of rural grain and the price of grain used in urban and rural industrial and commercial industries, so that the sales price was equal to the purchase price. In 1965, the sales price of urban grain was raised again to make it equal to the purchase price. Compared with 1957 in 1965, the average price of grain distribution increased by 9.6%.In this way, the grain price inversion is gradually eliminated, and the grain and oil price subsidy is also consequently?Unfortunately, the finance only subsidizes the loss of circulation costs of grain enterprises. On June 8, 1966, the state once again increased the purchase price of grain significantly. The average purchase price per hundred catties of six major grains including rice, wheat, corn, sorghum and soybean increased from 9.24 yuan in 1965 to 10.82 yuan. The price range is 17.1%.At the same time, the selling price of grain has been raised accordingly. The principle is that the selling price of raw grain shall be raised to be equal to the purchase price regardless of urban and rural areas, and the selling price of flour, rice, millet and other finished grains and soybeans shall be adjusted according to the purchasing price in large and medium-sized cities. The price plus processing fee will be mentioned a little bit more, and the county-level market will add processing fee according to the purchase price.In this way, although the purchase price of grain has increased, the sales price has also been increased simultaneously, and the purchase and sale price has remained at the same level.In order not to affect the living standards of employees, the state implements food price subsidies for employees, which are paid to the employees themselves along with their wages, which is what we call explicit subsidies, and the living expenses of employees have not been affected by the increase in food sales prices. During the ten years of turmoil, under the influence of leftist ideology, measures were taken to freeze market prices.Even after the grain price adjustment in 1966, until the Third Plenary Session of the Eleventh Central Committee in 1978, only in 1971 and 1978, the purchase price of soybeans was increased by 9% and 23.4%, and in 1972, the purchase price of buckwheat, red bean, and mung bean was increased by 3%. The purchase price of each variety has increased by 17-23% respectively, and the unified purchase price of major grains such as rice, wheat, and corn has not been adjusted for 12 years.During this period, the cost of agricultural production has risen significantly, and the unreasonable low price of grain purchase has become increasingly prominent.According to the survey at that time, in 1976, the production cost of six major grains plus agricultural tax in 1,296 production teams across the country averaged 11.6 yuan per hundred catties, while the average unified purchase price at that time was only 10.75 yuan, which was 0.85 yuan lower than the cost.Although there were not many financial subsidies in the past ten years, farmers basically made contributions.Therefore, increasing the purchase price of grain and increasing the income of grain farmers became an urgent task to increase farmers' enthusiasm for growing grain. In 1979, in accordance with the proposal of the Third Plenary Session of the Eleventh Central Committee, the State Council once again substantially increased the purchase price of grain. The average purchase price of six kinds of grain was raised to 12.86 yuan per 100 catties, an actual increase of 20.86%.After this adjustment, the situation of low national grain purchase price has been improved. This increase in the unified purchase price of grain is an important measure taken to change the difficult situation of slow development of grain production and sharp contradiction between production and demand.But at that time, the society was quite sensitive to prices. In order to maintain the basic stability of market prices and not increase the economic burden of urban residents, therefore, in the case of a substantial increase in the unified purchase price, the grain sales price was not raised at the same time. Who will make up the difference in the situation where grain purchasing and selling prices are upside down?Of course it can only be the country.As a result, the state began to subsidize the sales of grain. The form of subsidy was not to pay with wages, but to subsidize the sales price secretly by appropriating to the grain department.This is why until 1992, we could still eat rice at 0.294 yuan per kilogram. In 1979, the state generally subsidized 0.1 yuan for every catty of grain sold. In 1984, the state subsidized 0.13 yuan for every catty of grain sold. In 1961, when the purchase and sale prices of grains were inverted for the first time, the resulting price difference was included in the operating loss of the enterprise, and the finance subsidized it. However, for the difference between the purchase and sale price inversion around 1979, the profit and loss of the enterprise was no longer included, and the finance Special subsidies are provided according to the grain sales volume.This means that food subsidies have become a relatively fixed financial expenditure item, which is included in the scope of the national financial expenditure budget. For food and other important materials related to the national economy and the people's livelihood, the state implements the policy of increasing the purchase price, keeping the selling price unchanged, and subsidizing it from the state finance, which has indeed played a certain role in maintaining the basic stability of market prices and stabilizing people's lives.However, the upside-down of purchase and sale prices is not a normal phenomenon in economic life. It not only causes a heavy burden on the state's finances, but also brings some problems in grain management. Fraud, false claims and other violations of law and discipline. In 1985, the state canceled the unified grain purchase policy that had been implemented for more than 30 years, and implemented the contract order system, that is, it abolished the past practice of the state assigning compulsory purchase tasks to farmers, and the grain needed by the state was signed with farmers on a voluntary basis. Purchasing in the form of operating contracts, and purchasing the insufficient part from the market (the state re-endowed the contract ordering with the nature of "national task" at the end of 1985).The state implements the "inverted three-seven" ratio price for the grain ordered by the contract, that is, 30% is calculated according to the original unified purchase price, and 70% is calculated according to the "dual-track system" of the original over-purchase price. Purchase and sale of grain to stabilize food supply; another part of the purchase and sale of grain is carried out by producers, consumers and distribution organizations for complete commodity exchange, regulated by the market mechanism.In this way, grain management is far more complicated than the simple unified purchase and marketing in the past. Correspondingly, grain subsidies have also appeared in various forms.According to Mr. Yuan Yongkang's statistics in the book "China's Grain Situation: Changes in the Circulation System", there are at least 8 relatively fixed subsidies. One is food price increase and price difference subsidies.Grain price increase refers to the price paid by farmers for the grain sold in excess of the requisitioned amount in accordance with state regulations, at a price higher than the unified purchase price. In 1985, the No. 35 document of the State Council canceled the purchase of grain, and changed it to implement contractual ordering from farmers at a proportional price.Therefore, the current grain price increase refers to the part where the proportional price is higher than the unified purchase price.According to the current regulations, the scope of the price increase paid by the central government: (1) contract order; (2) on-the-spot "negotiating leveling"; (3) inter-provincial leveling transfer. The price difference payment, also known as the price difference payment, is a kind of grain price difference subsidy given by the central government to the local grain department after the central government implemented the purchase, sale, and transfer of grain to the localities in 1987.According to the current regulations, the scope of the price difference given by the central government falls into the following three categories: (1) Each province, autonomous region, and municipality directly under the Central Government "discusses and flattens" the grain contract quota on the spot, which is used to make up for the gap in grain revenue and expenditure.In addition to the grain settlement price increase ordered by the central government according to the local contract, an additional 0.128 yuan per kilogram of trade grain is added; In addition to the price difference between the unified purchase price and the price increase transferred to the region, an additional 0.128 yuan per kilogram of trade grain will be added; (3) The state determines that the grain imported from local foreign exchange will offset the grain transfer quotas of provinces, autonomous regions, and municipalities directly under the central government. 0.128 yuan per kilogram of trade grain is supplied to the local government as a contract, and the foreign trade department implements import agency. The second is the food price difference subsidy, which is also the most common food price increase subsidy.The state raised the purchase price of grain, but the sales price did not increase accordingly, so that the purchase and sale price of grain appeared upside down, so the finance had to implement a price difference subsidy separately in the sales link.Specifically, it is the difference between the unified purchase price and the unified purchase price before the price adjustment in 1979.The method is to provide subsidies according to the actual sales volume of grain and different subsidy standards, and the subsidies will be paid by the central finance. The third is extra-price subsidies.Due to the sharp increase in the grain price of “negotiable leveling” (including local leveling, inter-provincial leveling, and local foreign exchange imports), the central government’s contracting quota is insufficient, and the difference in price borne by the local finance is grain extra-price subsidies . The fourth is the national reserve fee subsidy and over-reserve fee subsidy.The national grain reserve subsidy is a subsidy given by the central government to the local government to store grain for war preparations and control grain handling.The subsidy amount for excess storage fees shall be allocated by the central finance. The fifth is the subsidy for grain enterprises to withdraw from the warehouse at a loss.This subsidy is mainly for the commodity circulation expenses (including transportation and miscellaneous expenses, depreciation expenses, repair expenses, wages, interest, enterprise management expenses, storage expenses) and the net amount of non-operating income and expenses of grain enterprises in the process of operating cheap grain. subsidy.Loss subsidies are all borne by the local finance. The sixth is to allocate operating expenses subsidies.It is a kind of fee compensation that the country stipulates that the area where the grain is transferred to pay the area where the grain is transferred out, and the standards vary from region to region.borne by local finance. The seventh is grain pre-purchase deposit loan subsidies.It is the central finance that subsidizes the loan amount and interest rate of the contract advance purchase deposit loan calculated according to the contract order quantity. The eighth is the special national wheat reserve subsidy. It's hard to say whether the above-mentioned subsidies should be compensated, but this is also compensated, and that is also compensated, no matter how big the family is, it cannot be compensated.Besides, with the development of society, many subsidies have lost their role when they were set up at that time, and instead brought some negative effects.For example, the price of a large number of grain sales keeps the price of grain supply at an extremely low level, so that the normal value of grain is distorted in the minds of many consumers, which not only expands the demand for grain consumption, but also causes serious waste; due to the high purchase price According to the sales price, some farmers even bought grain from the market and handed it over to the state as ordered grain, so as to obtain the price difference, which affected grain production; there is another disadvantage that is often overlooked by us. Subsidies have affected the independent development of grain enterprises, resulting in chaotic management and ineffective operations, and even led to many violations of discipline and law such as falsification and false claims. Under the highly centralized financial system, the grain finance is also concentrated in the central government. Correspondingly, the grain and oil subsidies are all supported by the central finance alone. This not only overwhelms the national finance, but also causes fraud and false reporting under the influence of local protectionism. False claims to obtain central financial subsidies. In 1995, Anhui Province conducted a major inspection of 758 independent grain accounting units, and found out that a grain enterprise used ordered grain and specially stored grain for profit-making purposes, and used methods such as hollowing out, false reporting, and fraudulent claims to obtain state subsidies. Wait.In order to change the malpractice of local governments vying for central financial subsidies, after 1979, with the formation of the financial system of "separate kitchens for meals", food subsidies were also included in the new system, and the subsidies were shared by the central and local governments.At that time, the grain and oil subsidies mainly consisted of three parts, namely: price increase, grain and oil price increase subsidies, and enterprise operating loss subsidies.Among them, the price increase is borne by the central government, and the price increase subsidy and enterprise operating losses are borne by the local government.In the future, due to changes in grain and oil purchase, sales, and allocation policies, some newly added subsidies will also be included in the current financial system, and will be borne by the central finance and local finance respectively.Generally speaking, the subsidy items borne by the central government mainly include interest discounts for advance purchase deposits, subsidies for price increases, subsidies for state grain reserves, and subsidies for grain over-quota inventory costs.The subsidy items borne by local governments mainly include price increase subsidies, extra-price subsidies, allocation of operating expenses and subsidies for enterprise operating losses. Divide the scope of responsibility of the central and local governments in terms of food subsidies, and ended the 30-year-long "big pot rice" system, which was the general trend of economic and financial system reform at that time; from a management point of view, it was also more conducive to local finance Supervise and control food subsidies, be a good family and live a good life within the scope of one's own rights and responsibilities. While the grain subsidy has changed from central and state burdens to central and local burdens, since 1982, the state has implemented a contract system for grain purchases and sales for many times. The first time was a three-year contract from 1982 to 1984. The second was a one-year lump sum in 1986, the third was a one-year lump sum in 1987, the fourth was a three-year lump sum from 1988 to 1990, and the lump sum system continued in 1991.In conjunction with the grain contract system, the finance also implements a contract system for grain finance. The purpose is to ensure that the grain purchase, sales, and allocation plans are completed while controlling fiscal expenditures.In the previous financial contracting, the state took corresponding measures based on the grain situation at that time and the outstanding problems in the allocation of grain purchases and sales, so that the contracting system was continuously improved and perfected. The characteristic of the financial contract from 1982 to 1984 was the adoption of the method of contracting the procurement base ratio, that is, according to the actual amount of the procurement base completed by each province in the past few years, a contract ratio was determined respectively, and the local government must guarantee the completion. If not completed, the local government will pay For the price increase of the unfinished part, if the lump-sum ratio is overfulfilled, the central finance will pay the price increase, and the benefits will be reserved for the local governments.This approach not only increased the completion rate of the acquisition base, but also correspondingly controlled the price increase payment. For the financial contract in 1986, in order to ensure the completion of the contract ordering task, the central finance implemented a 10% discount on the local settlement, that is, 90% of the ordering task was calculated according to the "reverse three-seven" ratio, and the remaining 10% was based on the actual purchase volume The original over-purchase price is calculated and allocated to increase the price, leaving the benefits of the difference between the original over-purchase price and the proportional price to the local government.If the local government fails to complete 90% of the contract order tasks, it will reduce sales accordingly, or make up for the purchase gap with bargained grain, and the local government will be responsible for the price difference. In 1987, the central government implemented contractual ordering and on-the-spot "negotiable flattening" for the total amount of the price increase and price difference for the local government. The scope of the contract includes: contract ordering tasks, on-site negotiable flattening of grain, and local foreign exchange imports within the national plan. Food price increases and price differences.The price difference is settled at 0.128 yuan per kilogram for local negotiation and local foreign exchange imported grain.After the total amount is contracted, if there is a surplus, it will be returned to the local finance, and if there is an overrun, it will be resolved by the local financial resources. In addition, there is another very important reform of the financial contract, that is, the policy loss is changed from the original reimbursement to the fixed contract. Since 1979, the purchase and sales prices of par grains have been completely inverted, and the grain operation needs to be subsidized by the state for the purchase and sales of the inverted part, circulation costs and other expenses. The losses incurred by grain enterprises due to the implementation of the grain and oil policy are called policy losses.For this part of the losses, it has been basically reimbursed for actual expenses for a long time, and the disadvantages are very obvious, which is not conducive to mobilizing the enthusiasm of local governments and enterprises for operation and management.In order to solve this problem, in 1980, the Ministry of Grain and the Ministry of Finance jointly approved and issued the "Trial Measures for the Policy-Based Loss Quota Subsidy of Grain Commercial Enterprises", which required all provinces, municipalities and autonomous regions to approve the subsidy quota according to the average advanced level and according to the planned sales of grain and oil and the approved subsidy. The total amount of subsidy is calculated in a fixed amount to control the subsidy, and the areas where the fixed amount subsidy is implemented try to share the loss reduction. In 1986, in order to mobilize the enthusiasm of grain enterprises to improve their business management and control state financial subsidies, the Ministry of Finance issued the "Measures for Policy-Based Loss Quota Subsidies for Grain Enterprises". The net loss of grain enterprises operating par grain and oil is determined after excluding unreasonable expenses and adding or subtracting new factors of loss increase or decrease.The approved quota can be approved according to the grain and oil sales and storage volume, or the grain and oil business volume.This method has been implemented since 1987 and has been improved year by year since then. In 1988, it was further proposed to implement fixed quota management and total amount control on commodity circulation fees; in 1989, it was required that grain enterprises should actively implement the contract responsibility system, and for the loss subsidies of par grain and oil, implement contracting on the basis of insisting on and improving fixed quota subsidies, support and improve expenses The management method of fixed amount subsidy or total amount control strives to save various expenses. In order to adapt to the management system of separate meals and financial responsibility, the financial management has gradually changed from the management of the system to the management of the block.Its main purposes are, first, to increase the importance of local governments on food issues and strengthen their sense of responsibility; second, to incorporate food finance into the county (city) budget and implement hierarchical management, which is conducive to the supervision, management and control of food subsidies by finance. Avoid the passive situation of enterprises and local finances under the "big pot rice" system, relying on, and needing, and the difficulties caused by the abnormal growth of subsidies caused by this. The system of financial contracting, in which each eats separately and assumes his own responsibilities, has given full play to the enthusiasm of the central and local governments, and restrained the abnormal growth of loss subsidies.However, after all, this is only a patchwork of small reforms, without involving the internal structure of the grain circulation system, especially without clearly separating policy losses from operating losses, and thus failing to completely control the loss subsidies. Unreasonable growth, at most, is to hang this kind of loss in the name of the central and local governments.In fact, local governments can neither control the occurrence of non-policy losses nor fully make up for the gap of policy losses. In the end, the burden is still on the shoulders of the food system.The food system is naturally unable to bear this heavy burden of losses, so they hang this burden on the banks.As a result, the losses of grain enterprises are still increasing day by day, grain and oil subsidies are increasing, and financial liabilities are gradually expanding, eventually reaching the point where the country's finances cannot bear it.Obviously, if we do not carry out a comprehensive reform of this rigid grain circulation system, the grain system will be crushed by losses, banks will be dragged down by bad debts, and finances will be crushed by subsidies...