Corruption scandals
The rise of public skepticism over Sinograin - which has been operating for 13 years but has suffered a series of corruption scandals in recent years - has also prompted concern over the positioning of the State grain reserve manager.
Difficulties faced by the giant agricultural conglomerate in operating its large, complicated system are believed to be intimately associated with a string of corruption cases at Sinograin in 2010 and 2011.
Several officials at the company, including Li Changxuan, general manger of the company's Henan branch, were exposed as having siphoned off money from the firm.
Sinograin should be gradually adapting to the market economy, which would also be in compliance with the nation's future development strategy, Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Co, told the Global Times Thursday.
Stressing that Sinograin's monopoly in the country's grain market is the main reason for the company's corruption scandals in recent years, Ma said massive grain reserves are no longer vital, given the nation's rising grain output. "The possession of too much power would only bring bad side effects," said Ma.
"Entrusted by the State Council, Sinograin's primary mandate is to manage and operate central grain and oil reserves by ensuring grain and oil quality, weight, and safety," Sinograin says on its website.
From 2000 to 2012, Sinograin's total assets rose from 13.68 billion yuan to 415.4 billion yuan, and the number of its employees hit 23,000 by the end of 2012, said the company's website.
Sinograin currently dominates over half of the country's grain market, according to Ma, who said the company's excessive market control and its complex grain circulation system actually result in redundant grain reserves, which results in higher grain prices.
Sinograin is also under suspicion of having cooperated with some regional grain enterprises over its reserve targets in order to gain additional government subsidies, the 21st Century Business Herald reported on June 5, citing an unidentified source from a grain trade enterprise in Central China's Henan Province.
The government pays storage subsidies to Sinograin, which reach 0.043 yuan per year for 500 grams of grain in regions such as Henan Province and provinces in Northeast China and the subsidy figures are even higher in East China, according to the source. This would translate into substantial extra revenue for Sinograin, considering its huge grain reserves.
To maximize the subsidies, the company would make use of granaries owned by some local grain enterprises to outperform its reserve targets, said the source, who revealed Sinograin would take some proceeds from the enterprises that benefit from the government subsidies.
Sinograin has yet to respond to the grain storage subsidy report.
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