The National Grain and Material Reserves Administration of the People’s Republic of China issued the “Notice on Implementing the Management Measures for Food Business Ledger” on December 31st last year. The notice distributed the “Food Business Ledger Management Measures” and required local grain and material reserve departments, as well as units like China Grain Reserves Corporation Limited and COFCO Group Limited, to follow the implementation. The measures will come into effect on April 1 this year and will be valid for 5 years.
The notice clearly states that the legal basis for the implementation of these measures includes laws such as the “Food Security Guarantee Law of the People’s Republic of China” and the “Food Circulation Management Regulations”. The document requires the grain and material reserve bureaus of provinces, autonomous regions, municipalities directly under the central government, and the Xinjiang Production and Construction Corps to implement relevant management responsibilities and promote the comprehensive establishment of a food business ledger system.
According to the measures, all business entities engaged in activities such as food acquisition, storage, processing, transportation, and sales, regardless of their size, are required to establish a food business ledger. Enterprises dealing with feed grains and industrial grains are also included in the scope of application. The ledger must truthfully record information about the source, destination, quantity, inventory changes of food, and cover the entire food business process.
In response to this, Shandong scholar Fu Gang (pseudonym) who is concerned about food security systems, mentioned in an interview that the core of this ledger system is not only to strengthen industry management but also to serve the authorities in overseeing the overall control of food as a strategic resource. He said, “Through continuous and traceable ledger records, the authorities can monitor the flow and inventory changes of food in various stages during normal times. In case of emergencies, they can quickly determine where there are shortages, and where there is excess, thus enabling direct allocation.”
Fu Gang pointed out that within the governance context of the Chinese Communist Party, food has always been viewed as a key resource related to regime security. He stated, “This system design aims to consolidate data scattered across various business phases and can be directly utilized during crisis periods for unified scheduling and mobilization.”
The “Measures” provide more detailed regulations on the content of food business ledgers, requiring the recording of information about food business entities, purchase and sales transactions, financial situations, and policy execution information. The ledger must be truthful, accurate, complete, consistent with the original supporting documents, and stored for a period not less than 3 years. Even if there are no business transactions in a month, relevant data must still be recorded to ensure continuous record-keeping.
Mr. Xue, a retired civil servant who has worked in the Shandong food system, mentioned during an interview that these regulations are evidently aimed at the long-standing problem of food embezzlement in grassroots food systems. He said, “In the past, the theft and selling of food at the grassroots level were very common. Some quietly sold the food in the warehouse and then raised the warehouse bottom using wood and metal barrels to deceive superiors during inspections. After selling most of the food, they might even set the warehouse on fire, making it impossible to find discrepancies during inspections.”
Mr. Xue noted that authorities in Beijing have gradually become aware of these operating methods in recent years. Beginning around 2022, there has been a strengthening of surprise inspections by the central authorities on local food systems. These inspections are often not pre-notified to local governments, “They just show up suddenly, without even notifying the provincial authorities.” He revealed that in just one area of Shandong, over the past few years, more than ten related personnel have been investigated, involving multiple chains of interest related to food embezzlement, with similar situations appearing in Jiangsu and other areas.
Mr. Xue mentioned that authorities are pushing to establish a comprehensive monitoring system covering the entire process of food circulation. This system can connect ledger data to information systems, trace food acquisition and sales down to the grassroots level in China, and use big data analysis to understand the status of food circulation. However, the effectiveness of this system still depends on the cooperation at the grassroots execution level.
Mr. Xue further stated that this ledger system is not a one-time declaration or annual filing but requires business entities to continuously record food circulation based on the order of business occurrence. He said, “This kind of record-keeping is consistent and not retroactive. If there is a discrepancy after some time, it will be discovered. It is very difficult to embezzle as this is the result of long-term data accumulation.”
At the execution level, authorities require the responsible departments for grain and material reserves to carry out routine inspections of the ledger situation, with enforcement authority clearly specified. Business entities that fail to establish or maintain ledgers as required, or engage in activities such as falsifying records, can be dealt with in accordance with the law. At the same time, food business entities need to submit relevant basic data and information to the management department as required.
Some analysts believe that this management approach with the ledger as the core is comprehensively incorporating food circulation into a normalized and traceable regulatory framework. Under this mechanism, food circulation is integrated into a unified data management system, allowing authorities to access relevant information at any time for timely intervention.