How to improve the effectiveness of agricultural support and protection policies

In recent years, the central government's fiscal investment in agriculture and rural areas has continued to increase, effectively ensuring consecutive years of abundant grain harvests. However, as economic and social conditions have changed, the effectiveness of past agricultural support and protection measures has declined. In response to this problem, the General Offices of the CPC Central Committee and the State Council, in the "Comprehensive Implementation Plan for Deepening Rural Reform," clearly proposed to improve the effectiveness of agricultural support and protection, perfect the incentive mechanism for agricultural production, and accelerate the formation of an agricultural support and protection system that is comprehensive in coverage, clear in direction, prominent in priorities, complete in supporting measures, and simple to operate.

At present, against the overall backdrop of a year-by-year improvement in China's agricultural situation, agriculture faces the constraints of two “ceilings” and two “tightening bands.” The prices of major domestic agricultural products are higher than import prices, and further price increases have hit a “ceiling”; some agricultural subsidies fall within the category of “amber box policies,” and further subsidy increases have hit a “ceiling.” The costs of agricultural production, including labor, agricultural machinery operations, and land transfers, are on an upward trajectory, further squeezing farmers' planting returns. At the same time, the ecological environment has been damaged, its carrying capacity is increasingly approaching its limit, the intensity of resource development and utilization is too great, and the string is being pulled tighter and tighter, severely constraining the long-term development of agriculture. To change this situation, it is necessary to accelerate the modernization of agriculture and promote the transformation of the agricultural development model. This requires giving play to the positive guiding role of agricultural support and protection policies to drive the development of modern agriculture.

Establish a mechanism for stable growth of investment in agriculture and rural areas. In recent years, the central government's fiscal policies supporting agriculture and benefiting farmers have been continuously strengthened. Although the current downward pressure on the economy is relatively great, the central government still treats agriculture and rural areas as a priority area for fiscal expenditure, ensuring that investment in agriculture and rural areas only increases and does not decrease. Therefore, it is necessary to make good use of central fiscal funds supporting agriculture, optimize the structure of fiscal expenditures supporting agriculture, give play to the guiding and leverage role of fiscal funds, and, through measures such as rewarding instead of subsidizing, government purchase of services, guarantee interest subsidies, and risk compensation, drive financial and social capital to invest in agriculture and rural areas.

Improve the price formation mechanism for agricultural products and the market regulation system for agricultural products. The minimum purchase price for grain and the temporary purchase and storage policies successively implemented since 2004 effectively mobilized farmers' enthusiasm for growing grain. However, the current price formation mechanism for agricultural products can hardly adapt to the new situation of changes in domestic and international supply and demand, and problems such as high grain inventories have emerged. This requires reducing the distorting impact of price support policies on the market and giving play to the decisive role of the market in allocating resources. The target price subsidy policies for cotton and soybeans currently being explored and implemented are positive means of advancing the separation of prices and subsidies. In the future, on the premise of ensuring food security and farmers' interests, the purchase and storage policies for agricultural products should be gradually reformed and improved.

Improve the agricultural subsidy system. At present, while maintaining the continuity and stability of agricultural subsidy policies, adjusting and improving “amber box policies” and gradually expanding the scale and scope of implementation of “green box policies” have become an important orientation for the reform of agricultural subsidy policies. This year, China carried out pilot agricultural subsidy reform in 5 provinces, including Anhui, Shandong, Hunan, Sichuan, and Zhejiang, merging the “three subsidies” - the subsidy for improved crop varieties, the direct subsidy to grain farmers, and the comprehensive subsidy for agricultural inputs - into “agricultural support and protection subsidies,” optimizing the direction of subsidy support and improving the precision of subsidies, with priority support for the protection of cultivated land fertility and appropriately scaled grain operations. This will help promote the transformation from traditional agriculture to modern agriculture.

Establish a mechanism for sustainable agricultural development. In the past, the heavy use of agricultural chemicals such as pesticides, chemical fertilizers, and plastic film led to prominent agricultural non-point source pollution. In the transformation and development of agriculture, it is necessary to increase compensation for reducing and improving the efficiency of agricultural inputs, guide producers to promote input-reduction and cleaner agricultural production models, and develop ecological circular agriculture. At the same time, by deepening innovation in the rural financial system, accelerate the establishment of a modern rural financial system that is multi-tiered, broadly covering, sustainable, appropriately competitive, and risk-controllable, effectively alleviating farmers' “financing difficulties.”