Major Grain-Producing County Becomes an Impoverished County: Grain or Money?

At present, many major grain-producing counties face the dilemma of large grain contributions, low fiscal revenue and a relatively backward economy. To fundamentally solve this problem, it is necessary to start with aspects such as the benefit compensation mechanism for major grain-producing areas. The goal of establishing a benefit compensation mechanism for major producing areas is to ensure that growing grain in major producing areas does not put them at a disadvantage, and that places that attach importance to agriculture and grain production receive real benefits. At the same time, major grain-producing counties also need to give play to their own initiative, turn policy advantages into development dividends, and turn resource advantages into industrial advantages

Recently, a research institution said that among the 800 major grain-producing counties that account for nearly three-quarters of the national total grain output, more than 100 are national-level impoverished counties, with 36 million poor people. This shows that the phenomenon of “grain and finance being inverted” between China's grain output and county-level fiscal capacity is already very obvious, and may bring hidden dangers to food security.

According to China's regional layout for grain, grain output and the volume transferred out have gradually become concentrated in major producing areas and major grain-producing counties. At present, the output of 13 major producing provinces accounts for 75% of the national total, and the volume transferred out accounts for 90%, while the output of 33 major grain-producing cities accounts for 43% of the national total. However, as major grain-producing areas, cities and counties are generally rather small in fiscal revenue, and the income gap between farmers in major producing areas and farmers in major sales areas is also widening. Some cities and counties even find it very difficult to bear the supporting funds for central agricultural projects. In Beilin District, Suihua City, Heilongjiang Province, the supporting funds for agricultural projects over the past five years have cumulatively reached 140 million yuan, putting great pressure on local finances. At present, many major grain-producing counties face the dilemma of large grain contributions, low fiscal revenue and a relatively backward economy.

Food security must never come at the cost of sacrificing major producing areas. To ensure grain production capacity, it is necessary to mobilize the enthusiasm of local governments to a greater extent. In recent years, the central government has gradually taken measures to change this situation. In 2014, the No. 1 Central Document proposed reducing or cancelling the supporting funds for construction projects directly used for grain production in major grain-producing counties; at the same time, the state increased reward and subsidy support for major provinces producing commercial grain and major counties producing grain, oil and pigs, and encouraged major sales areas to invest in and build grain production bases in major producing areas through various means; many places have also introduced many policies and measures in supporting farmland water conservancy and other infrastructure in major grain-producing counties. These measures have played a positive role in helping major grain-producing counties embark as soon as possible on the path of becoming economically strong counties.

However, to fundamentally solve this problem, it is still necessary to start with aspects such as the benefit compensation mechanism for major grain-producing areas. On the one hand, grain production has obvious positive externalities. Compared with other commodities, grain production occupies more land and water resources, yet its price is relatively low, and the state strictly controls the use of cultivated land, so the construction and development of major grain-producing counties in other aspects will be restricted. On the other hand, major grain sales areas and consumers benefit from it but do not pay the corresponding costs, while major grain-producing areas and farmers lose part of their development rights and interests because of grain production. Therefore, it is necessary to establish a benefit compensation mechanism for major grain-producing areas, and through the compensation mechanism raise the level of economic and social development of major producing areas and increase farmers' enthusiasm for growing grain.

The establishment of the benefit compensation mechanism must rely on the central government on the one hand, and on major sales areas on the other. In recent years, the central finance has increased transfer payments to major producing counties and strengthened agricultural infrastructure construction in major producing areas. But many major sales areas still have the phenomenon of relaxing grain production, neglecting grain circulation, and relying excessively on the central government and major producing areas. In the future, benefit compensation should seek a breakthrough in linking the interests of major producing areas and major sales areas. On the one hand, by improving the grain market price formation mechanism, appropriately raise the grain purchase price to compensate major producing areas for the commercial grain transferred out. On the other hand, through production and sales cooperation, encourage major sales areas to purchase, store, or act as purchasing and storage agents in major producing areas, establish closer production and sales relations, and let grain producers share the benefits of processing and sales. The goal of establishing a benefit compensation mechanism for major producing areas is to ensure that growing grain in major producing areas does not put them at a disadvantage, and that places that attach importance to agriculture and grain production receive real benefits.

For major grain-producing counties themselves, solving the “inversion of grain and finance” also requires them to give play to their initiative, turn policy advantages into development dividends, and turn resource advantages into industrial advantages. From practice, many major grain-producing counties, such as Nanchang County in Jiangxi and Changsha County in Hunan, have not only increased grain output but also become economically strong counties and fiscally strong counties. It can be seen that the “inversion of grain and finance” is not absolute. How can they both give play to the comparative advantage of grain production and shoulder the responsibility of safeguarding national food security, while also gradually freeing local finances from the predicament of “growing grain leads to poverty, and farmers do not become rich”? This requires major grain-producing counties to base themselves on resource advantages, thoroughly understand policies, and figure out the market, seek development by relying on grain, and put an equals sign between grain production and enriching the county. In this way, more and more major grain-producing counties will no longer struggle over whether to “want grain” or “want money.”