Major reform of agricultural subsidy policy at the central level is coming
From the pilot target price subsidy, to the integration of the three subsidies (improved seed subsidy, direct grain-growing subsidy, agricultural input subsidy) into the agricultural support and protection subsidy, and then to the adjustment of the fishery fuel oil subsidy. China's agricultural subsidy policy at the central level is undergoing a series of major reforms.
From the “target price” subsidy pilot, to the integration of the “three subsidies” (improved seed subsidy, direct grain-growing subsidy, agricultural input subsidy) into the “agricultural support and protection subsidy”, and then to the adjustment of the fishery fuel oil subsidy. China's agricultural subsidy policy at the central level is undergoing a series of major reforms.
According to an expert close to the Ministry of Agriculture, there are currently more than 50 kinds of agricultural subsidy programs at the central level in China, and in the upcoming reform of agricultural subsidy policy, the vast majority of agricultural subsidy policies will undergo major reform and adjustment. The “target price” subsidy that the industry is watching will be extended from soybeans and cotton to the three major staple grains, while the pilot integration of the “three subsidies” will be implemented nationwide in 2016.
At present, China's agricultural subsidies basically operate on a “general preference” basis, and the general direction of the next round of reform will be to favor large grain growers, skilled grain growers and other new types of agricultural business entities. Simply put, only those who farm the land and grow the grain will receive subsidies from the state. It is not like now, where anyone who contracts cultivated land in rural areas can enjoy all kinds of farming and grain-growing subsidies.
However, judging from the “target price” subsidy pilot launched last year by the relevant departments for cotton and soybeans, and the pilot integration of the “three subsidies” implemented this year, the new agricultural subsidy reform also has some problems and contradictions. The contradiction of the “target price” subsidy is that, theoretically speaking, the direction of reform is very right, but in actual operation it is very difficult, and it even raises the cost of subsidies; the problem brought about by integrating the “three subsidies” is that many farming households with contracted land have all begun planning to raise agricultural land rents.
The aforementioned expert close to the Ministry of Agriculture said in analysis that although both types of pilot reforms, the “target price” subsidy and the integration of the “three subsidies”, have produced some contradictions and problems, the overall general direction of agricultural subsidy reform - favoring large grain growers, favoring new types of agricultural business entities, and favoring scaled operations - is correct, and in the future it will still be necessary to accumulate experience from some pilot areas before a major reform of the entire agricultural subsidy policy can be carried out.
The drawbacks of the “general preference” system
At present, the various subsidy policies implemented by the central finance for agriculture are mainly carried out in a “general preference” manner, such as the improved seed subsidy, direct grain-growing subsidy, comprehensive agricultural input subsidy and agricultural machinery purchase subsidy (referred to as the “four subsidies”) successively implemented by the state since 2002, as well as the minimum purchase price for grain and the temporary storage policy for major agricultural products (referred to as the “market support policy”) rolled out successively since 2004. These policies have all played a relatively large role in promoting the increase of farmers' incomes.
Minister of Agriculture Han Changfu said at the 2014 National Two Sessions that in 2013 alone, for the “four subsidies”, the central finance's direct subsidies to farmers reached more than 160 billion yuan. And in implementing the “market support policy”, the various subsidy-type incomes paid by the central finance to grain-growing and farming farmers, and to rural breeding households, totaled an even more enormous amount. If the various other agricultural subsidies under numerous names are added, the central finance's annual subsidies to agriculture now already exceed 1 trillion yuan.
The “four subsidies” and the “market support policy” have been implemented for more than ten years, and by now many contradictions and problems have been exposed. The main problem with the “four subsidies” policy is that as long as a farmer has policy-based contracted land, regardless of whether they farm the land or grow grain, for each mu of land they can basically receive about 90 yuan in state subsidies each year. The result of this is that some farmers, after receiving the subsidies, turn around and go to the cities to work as migrant laborers, while those who rely on renting land to grow grain cannot enjoy grain-growing and farming subsidies.
The contradiction that has arisen with the “market support policy” is that the state raises the minimum purchase price of major agricultural products year by year, and now the prices of major agricultural products in China, including the two, are much higher than international prices, while the grain stored by the state cannot be sold for various reasons, causing the entire domestic grain market to become distorted, grain and oil processing enterprises complaining endlessly, and the state finances also being severely damaged as a result.
In addition to the “four subsidies” and the “market support policy”, the agricultural insurance subsidy, agricultural product processing subsidy, fishery diesel subsidy, livestock improved breed subsidy and other agricultural policies promoted by the state in recent years have also produced various contradictions and problems. The relatively consistent view in the industry is that the “general preference” subsidy method should be vigorously reformed as early as possible.
At this year's National Two Sessions, Zong Qinghou [Weibo], a deputy to the National People's Congress and chairman of Hangzhou Wahaha Group, proposed that the state should change the “general preference” agricultural subsidy method as soon as possible, reduce the heavy burden on state finances, and at the same time let the entities that truly grow grain and farm the land benefit from it.
The aforementioned expert close to the Ministry of Agriculture told Economic Observer that among the motions and proposals of representatives at the National Two Sessions in recent years, quite a few suggested reforming the “general preference” agricultural subsidy policy as soon as possible. The National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture and other parties also successively conducted a large amount of research, and on that basis successively launched the “target price” policy pilot for cotton and soybeans, the pilot integration of the “three subsidies”, and the adjustment of fishery fuel oil subsidies and other policies. It is expected that a broader reform of agricultural subsidy policy will unfold in 2016.
According to an expert close to the Ministry of Agriculture, there are currently more than 50 kinds of agricultural subsidy programs at the central level in China, and in the upcoming reform of agricultural subsidy policy, the vast majority of agricultural subsidy policies will undergo major reform and adjustment. The “target price” subsidy that the industry is watching will be extended from soybeans and cotton to the three major staple grains, while the pilot integration of the “three subsidies” will be implemented nationwide in 2016.
At present, China's agricultural subsidies basically operate on a “general preference” basis, and the general direction of the next round of reform will be to favor large grain growers, skilled grain growers and other new types of agricultural business entities. Simply put, only those who farm the land and grow the grain will receive subsidies from the state. It is not like now, where anyone who contracts cultivated land in rural areas can enjoy all kinds of farming and grain-growing subsidies.
However, judging from the “target price” subsidy pilot launched last year by the relevant departments for cotton and soybeans, and the pilot integration of the “three subsidies” implemented this year, the new agricultural subsidy reform also has some problems and contradictions. The contradiction of the “target price” subsidy is that, theoretically speaking, the direction of reform is very right, but in actual operation it is very difficult, and it even raises the cost of subsidies; the problem brought about by integrating the “three subsidies” is that many farming households with contracted land have all begun planning to raise agricultural land rents.
The aforementioned expert close to the Ministry of Agriculture said in analysis that although both types of pilot reforms, the “target price” subsidy and the integration of the “three subsidies”, have produced some contradictions and problems, the overall general direction of agricultural subsidy reform - favoring large grain growers, favoring new types of agricultural business entities, and favoring scaled operations - is correct, and in the future it will still be necessary to accumulate experience from some pilot areas before a major reform of the entire agricultural subsidy policy can be carried out.
The drawbacks of the “general preference” system
At present, the various subsidy policies implemented by the central finance for agriculture are mainly carried out in a “general preference” manner, such as the improved seed subsidy, direct grain-growing subsidy, comprehensive agricultural input subsidy and agricultural machinery purchase subsidy (referred to as the “four subsidies”) successively implemented by the state since 2002, as well as the minimum purchase price for grain and the temporary storage policy for major agricultural products (referred to as the “market support policy”) rolled out successively since 2004. These policies have all played a relatively large role in promoting the increase of farmers' incomes.
Minister of Agriculture Han Changfu said at the 2014 National Two Sessions that in 2013 alone, for the “four subsidies”, the central finance's direct subsidies to farmers reached more than 160 billion yuan. And in implementing the “market support policy”, the various subsidy-type incomes paid by the central finance to grain-growing and farming farmers, and to rural breeding households, totaled an even more enormous amount. If the various other agricultural subsidies under numerous names are added, the central finance's annual subsidies to agriculture now already exceed 1 trillion yuan.
The “four subsidies” and the “market support policy” have been implemented for more than ten years, and by now many contradictions and problems have been exposed. The main problem with the “four subsidies” policy is that as long as a farmer has policy-based contracted land, regardless of whether they farm the land or grow grain, for each mu of land they can basically receive about 90 yuan in state subsidies each year. The result of this is that some farmers, after receiving the subsidies, turn around and go to the cities to work as migrant laborers, while those who rely on renting land to grow grain cannot enjoy grain-growing and farming subsidies.
The contradiction that has arisen with the “market support policy” is that the state raises the minimum purchase price of major agricultural products year by year, and now the prices of major agricultural products in China, including the two, are much higher than international prices, while the grain stored by the state cannot be sold for various reasons, causing the entire domestic grain market to become distorted, grain and oil processing enterprises complaining endlessly, and the state finances also being severely damaged as a result.
In addition to the “four subsidies” and the “market support policy”, the agricultural insurance subsidy, agricultural product processing subsidy, fishery diesel subsidy, livestock improved breed subsidy and other agricultural policies promoted by the state in recent years have also produced various contradictions and problems. The relatively consistent view in the industry is that the “general preference” subsidy method should be vigorously reformed as early as possible.
At this year's National Two Sessions, Zong Qinghou [Weibo], a deputy to the National People's Congress and chairman of Hangzhou Wahaha Group, proposed that the state should change the “general preference” agricultural subsidy method as soon as possible, reduce the heavy burden on state finances, and at the same time let the entities that truly grow grain and farm the land benefit from it.
The aforementioned expert close to the Ministry of Agriculture told Economic Observer that among the motions and proposals of representatives at the National Two Sessions in recent years, quite a few suggested reforming the “general preference” agricultural subsidy policy as soon as possible. The National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture and other parties also successively conducted a large amount of research, and on that basis successively launched the “target price” policy pilot for cotton and soybeans, the pilot integration of the “three subsidies”, and the adjustment of fishery fuel oil subsidies and other policies. It is expected that a broader reform of agricultural subsidy policy will unfold in 2016.