How can the structural problems of agricultural mechanization be treated with targeted remedies?

Recently, “supply-side structural reform” has repeatedly appeared in the newspapers, becoming a high-frequency term that government officials pay attention to and that the media and scholars hotly discuss. The reason is that General Secretary Xi Jinping emphasized at the eleventh meeting of the Central Leading Group for Financial and Economic Affairs that “while moderately expanding aggregate demand, we should focus on strengthening supply-side structural reform, focus on improving the quality and efficiency of the supply system, and enhance the driving force for sustained economic growth.” Previously, some domestic economists conducted in-depth research on economic theory and the practical problems of China's economic development. Represented by “New Supply: China's Innovation in Economic Theory” edited by Jia Kang, former director of the Research Institute for Fiscal Science of the Ministry of Finance, and “China's Key: Enhancing Economic International Competitiveness” edited by Huang Jianhui, president of the Research Institute of China Minsheng Bank, they proposed a complete set of new supply-side economics theory and prescribed a “prescription” for solving the problem of sustained economic development under the new normal. The central meeting specifically emphasized “supply-side reform,” signaling that “supply-side reform” is moving from the “scholars' studies” to “high-level decision-making,” and the approach to national economic governance is quietly changing.

As agricultural mechanization workers, what we care about more is: what significance does strengthening supply-side structural reform, this grand proposition, have for the development of the specific industry of agricultural mechanization?

On the one hand, strengthening supply-side structural reform is conducive to meeting the growing demand for mid- and high-end agricultural mechanization and promoting the transformation and upgrading of agricultural mechanization. At present, the prominent problems of agricultural mechanization are mainly manifested in the operation level as “two highs and two lows,” namely, high in crop farming and low in livestock breeding, forestry and fruit farming, facility agriculture, and agricultural product processing. Within crop farming, the level of mechanization in grain production is high, while the level of mechanization in cash crop production is low. The equipment structure is “three many and three few,” namely, many power machines and few matching farm tools, many small machines and few large and medium-sized machines, many low-grade machines and few high-performance machines. Regional development is “three fast and three slow,” namely, fast in plain areas and slow in hilly and mountainous areas, fast in the east and north and slow in the west and south, fast in dry land and slow in paddy fields. The root cause of these problems is not a lack of social demand, but a lack of effective supply. At present and for some time to come, the main contradiction restricting the sustained and healthy development of agricultural mechanization is still the contradiction between the increasingly urgent demand for agricultural mechanization development and insufficient effective supply. Low-end agricultural machinery production capacity is seriously excessive, while the market for high-end agricultural machinery such as large-feed rice and wheat combine harvesters, large tractors above 200 horsepower, large cotton pickers, and sugarcane harvesters is basically monopolized by foreign enterprises, and the structural contradiction is prominent. Strengthening supply-side structural reform is conducive to eliminating backward production capacity, optimizing the industrial structure, solving the problem of “more low-end and less high-end, surplus low-end and shortage high-end,” and improving the quality and efficiency of agricultural mechanization development. On the other hand, strengthening supply-side structural reform is conducive to creating and releasing new demand for agricultural mechanization and promoting sustained and stable growth of the agricultural economy. In response to prominent problems in agricultural operations such as weak integration of planting and breeding, poor circulation, and an unreasonable structure of grain, cash crops, and feed, the Ministry of Agriculture made a decision and deployment to adjust and optimize the agricultural structure, and made advancing grain-to-feed conversion a key task. Moreover, this year the state substantially lowered the listed purchase price for temporary-storage corn, which greatly affected the returns from planting corn, and farmers also have an urgent need to switch to feed corn and silage corn. However, because farmers are uncertain about the machinery, seeds, and technology for producing feed corn and silage corn, advancing grain-to-feed conversion still faces major difficulties. In addition, some areas are suitable for planting tea, Chinese herbal medicines, and other crops with relatively high economic returns. Because there is no advanced and applicable production machinery, the development of characteristic and advantageous cash crop industries such as tea and Chinese herbal medicines is slow, which in turn suppresses these industries' demand for mechanization. Strengthening supply-side structural reform and making the supply system more adaptable to changes in the demand structure is conducive to releasing farmers' potential demand for production machinery for feed crops and cash crops, and providing strong support for expanding the planting area of high-value-added crops, optimizing the planting structure, and improving agricultural operating efficiency and market competitiveness.

So here comes the question: how should supply-side structural reform be strengthened?

Capital, technology, and labor are the main supply factors. At present, insufficient development funds, backward technical equipment, and low quality of practitioners seriously restrict the sustained and healthy development of agricultural mechanization. To strengthen supply-side structural reform, targeted measures should be taken, focusing on the following three aspects:

Improve support policies and raise the quality and efficiency of capital supply. Closely combine giving better play to the government's role with fully giving play to the market's decisive role in resource allocation, and establish and improve a policy system that integrates fiscal support, financial support, and insurance support to jointly promote the development of agricultural mechanization. Further improve the agricultural machinery purchase subsidy policy, with the incremental part focused on new-type business entities and main production areas, and continuously improve the orientation and precision of the subsidy policy. Further increase the intensity of financial support for strengthening machinery and benefiting farmers, actively promote mortgage loans and financial leasing for large agricultural machinery, promptly establish an agricultural credit guarantee system, explore effective ways for fiscal leverage to spur financial support for agriculture, encourage agricultural machinery information service providers and credit institutions to give play to their respective advantages, innovate financial service models for strengthening machinery and benefiting farmers, promote the gathering of financial resources toward “agriculture, rural areas, and farmers” and the tilting of financial services toward new-type agricultural business entities such as agricultural machinery cooperatives, and effectively solve the problems of difficult and expensive financing for agricultural machinery operators. Further strengthen insurance support, encourage commercial insurance institutions to innovate insurance varieties, explore a model in which financial institutions issue loans, fiscal funds provide guarantees, and agricultural machinery enterprises purchase commercial insurance, promote a policy of fiscal premium subsidies for compulsory traffic accident liability insurance and commercial insurance for large tractors and combine harvesters, and share and resolve the risks of agricultural operators purchasing and operating agricultural machinery through multiple parties.

Implement innovation-driven development and improve the quality and efficiency of technology supply. Deeply carry out “Internet plus agricultural mechanization” and the “Made in China 2025” action, actively promote innovation by all scientific research and technical personnel, frontline workers, and farmers, innovation throughout the entire process from design and production to use, maintenance, and management, and comprehensive innovation in new methods, new materials, and new processes. Adhere to the simultaneous pursuit of multiple types of innovation including original innovation, integrated innovation, and innovation through introduction, digestion, absorption, and re-innovation, pay more attention to original innovation, continuously improve enterprise research and development intensity, form core functional component and complete machine test and detection development and coordinated supporting capabilities, and improve the level of information collection, intelligent decision-making, and precision operation of agricultural equipment. Taking the building of the “Belt and Road” as an opportunity, encourage domestic agricultural machinery enterprises to actively go global, invest and build factories or conduct mergers and reorganizations abroad, introduce high-end foreign experts and technical personnel, and achieve “overtaking on the curve” in technological upgrading. Strive to create a policy and institutional environment conducive to innovation. First, establish a national agricultural equipment industry innovation center to form a research and development innovation system guided by the government, driven by projects, integrated in resources, and coordinated and efficient. Second, provide fiscal subsidies for research and development activities involving basic frontiers, key common technologies, and first-set major equipment. Third, deepen the reform of the fiscal and tax system, improve preferential tax policies for the purchase of new agricultural machinery products and for key components and complete machines, so as to fuel enterprises and loosen their burdens. Fourth, vigorously strengthen intellectual property protection, punish malicious infringement acts severely, heavily, and quickly in accordance with the law, openly encourage and support research and development innovation, and fully mobilize the enthusiasm of scientific research institutions, colleges and universities, agricultural machinery enterprises, and rural capable people for research and development innovation.

Strengthen education and training and improve the quality and efficiency of labor supply. Focus on building a team of agricultural mechanization management cadres with good scientific and technological literacy and strong pioneering ability, a team of agricultural mechanization technical talents with a reasonable structure and proficient business skills, and a large-scale team of high-quality new-type professional agricultural machinery operators who can skillfully operate agricultural machinery and also understand agronomic knowledge, and promote the development of agricultural mechanization from mainly relying on input of material factors to relying on scientific and technological innovation and improvement of practitioner quality. Reform and improve the fiscal support methods for agricultural mechanization, make good use of “green box subsidy” policies in the WTO framework system such as agricultural infrastructure construction, personnel education and training, and technology demonstration and extension, and continuously increase investment in training agricultural mechanization practitioners. Actively promote government-enterprise linkage and joint construction by cooperatives and enterprises, guide agricultural machinery enterprises to fulfill social responsibilities, and continuously strengthen training for new-type professional agricultural machinery operators. Strengthen the training, support, and guidance for returning migrant workers and graduates of agricultural colleges joining the agricultural mechanization ranks to start businesses, explore and implement a plan to strengthen the force of young professional agricultural machinery talents, make income from agricultural mechanization work not lower than or even higher than income from working or doing business, continuously enhance the attractiveness of agricultural mechanization, and cultivate reserve talents and core forces for the sustained and healthy development of agricultural mechanization.