How Can Traditional Agriculture Be Saved? An Analysis of the Way Forward and Countermeasures
The State Council executive meeting on July 22, 2015 arranged to accelerate the transformation of the agricultural development model and take the path of safe, efficient and green development. Li Keqiang pointed out that, looking across the development paths of agricultural modernization in developed countries, they generally develop agriculture in an industrial way. If agriculture does not develop toward industrialization, agricultural modernization loses its support; conversely, only by fundamentally transforming the agricultural development model can farmers' income growth and efficiency gains be guaranteed.
At this State Council executive meeting, Premier Li Keqiang recounted a past experience: more than 10 years ago, when he visited Canada to study modern agriculture, he particularly noticed that when introducing the situation, the other side never simply said “Agriculture”, but always used a complete phrase, “Agriculture Industry” (literally translated as “agricultural industry”).
“At the time I found it very strange, how could it be both agriculture and industry?” the Premier said. “After they took me around for a look, I understood: from seed selection, planting and harvesting to storage, and on to processing and marketing, they develop agriculture entirely in an industrial way, connecting every link of the whole agricultural industry chain, with the final products sold all over the world!”
“To keep farmers' income growth in step with GDP growth, we must, on the premise of ensuring food security, truly transform the agricultural development model,” Li Keqiang said. “A very important point among this is that, on the basis of respecting farmers' wishes, we should promote moderate-scale operations in multiple forms without rigid uniformity.” Promote the transformation of low- and medium-yield farmland and increase the effective irrigated area
At the State Council executive meeting on July 22, Li Keqiang pointed out that the principles for transforming the agricultural development model are, in order, safety, efficiency and greenness. “We must transform the agricultural development model on the premise of ensuring safety; food security has always been the foundation of stability for the country.”
Agricultural structural adjustment must be market-oriented and adapt to consumer demand. Li Keqiang said: “When I worked in Henan, I noticed that farmers found it hard to raise their returns by selling grain alone, so we used the local advantage of abundant labor to develop wheat processing on a large scale, producing wheat gluten powder, quick-frozen dumplings and so on, and developed a group of grain processing enterprises.” Li Keqiang said, “Agricultural structural adjustment must further emancipate the mind, be market-oriented and adapt to consumer demand. Only in this way can farmers' incomes truly increase and their living standards improve.”
He stressed that it is necessary to encourage the development of large-scale crop and livestock farming, agricultural product processing and rural services, promote integrated development of production, processing, logistics and marketing, and extend the value chain.
The Premier required relevant departments to seriously study institutional and mechanism issues, truly deliver agricultural subsidies into the hands of grain-growing farmers, and effectively stimulate grain growers' enthusiasm for production. On the basis of respecting farmers' wishes, promote moderate-scale operations in multiple forms without rigid uniformity
Food security has always been a major strategic issue of overall importance concerning national economic development, social stability and national self-reliance. The Party Central Committee and the State Council have always attached great importance to food security and have consistently placed it in a prominent position. At present, China's food security situation is generally very good, the comprehensive grain production capacity has steadily improved, food supply has become increasingly abundant, and grain supply and demand are basically balanced.
With the development of industrialization and urbanization, as well as population growth and rising living standards, demand for grain consumption shows rigid growth, while reductions in cultivated land, shortages of water resources, climate change, and year-by-year increases in the materialized costs of grain production such as petroleum make the constraints on grain production increasingly prominent. Domestic grain supply and demand will remain in a tight balance for a long time, so the challenge of safeguarding food security remains severe.
At the same time, there is also the increasingly prominent “ceiling effect” of domestic grain prices being higher than international grain prices, the rising “floor effect” of grain production costs, and unprecedented contradictions and problems encountered by grain purchase and storage policies. The grain minimum purchase price policy has become a weather vane leading grain prices; its purchasing entity is singular and supervision is insufficient, resulting in policy-related grain inventories being too high. Because of grain quality and prices, as well as artificially created difficulties in releasing grain from warehouses and poor sales channels, auction sales are unsatisfactory.
Although domestic grain prices are higher than international grain prices, and the grain prices appear relatively high, because there are too many intermediate links and downstream enterprises' grain use is unstable, grain-growing farmers actually receive very little benefit. In addition, the level of grain industrialization is extremely low, and farmers simply cannot obtain value-added benefits from the processing and conversion of grain and other agricultural products.
Policy support for the development of grain industrialization is not strong. There has been no effort from the perspective of large-scale agriculture and large-scale grain, especially at the legislative level, to propose scientific and systematic policies and measures to advance industrialized agricultural operations. When formulating policies and supporting measures to promote grain industrialization, preferential policies and measures should be provided in taxation, funding, project construction planning and land use, among other areas, to support the development of grain industrialization.
Stimulate the enthusiasm of local governments and farmers to value agriculture, focus on grain and safeguard security. Major grain-producing areas are important bases for providing commercial grain sources and safeguarding food security. Implementing special protection policies for major grain-producing areas concerns the national economy and people's livelihood and is conducive to long-term national stability.
Implementing compensation policies for major grain-producing areas to protect grain farmland and support grain production conforms to the principles of social fairness and justice. In line with the requirements of main functional zones for grain, increase fiscal transfer payments. The central finance should continue to improve the incentive and restraint mechanisms for major grain-producing areas, increase rewards and subsidies, guide and help localities establish a basic fiscal security system for grassroots governments, and strengthen the ability of grassroots governments in major grain-producing areas to implement public management, provide basic public services and carry out various livelihood policies.
In calculating the standard fiscal expenditure for equalization transfer payments, the central finance should take into account major grain-producing areas that fall within the scope of local expenditure responsibilities, as well as ecological protection expenditure items and nature reserve expenditure items, and increase equalization transfer payments to key grain and ecological function zones, especially the “seven zones and twenty-three belts” functional zones, by clearly raising transfer payment coefficients and other means.
Incorporating major grain-producing areas into the support scope of ecological compensation policies, or adopting compensation policies basically the same as those for prohibited development zones, is both an inherent part of the state's supporting policies for main functional zones and a manifestation of humanity's ecological concern for grain farmland in major producing areas and humanistic care for those who provide food and clothing.
Develop grain industrialization. The fundamental way to safeguard food security and promote grassroots grain economic development lies in grain industrialization. Establish and cultivate regional leading industries. Give full play to local advantages, and in accordance with market demand, select varieties with high output, large market capacity and good economic returns for key development, establish high-quality grain commodity production bases with regional characteristics, carry out specialized and regionalized production, and integrate product production, processing, storage and transportation, and sales.
Support the development of leading grain enterprises. Focus support on processing technology and new product development for grain, oil and their by-products. Improve enterprises' technical level and capacity for multi-level deep processing, and strengthen the radiating and driving capacity of leading grain and oil enterprises. Improve the grain market network. Continue to accelerate the construction of the grain market system and promote the formation of a diversified market structure; vigorously cultivate specialized associations such as agricultural cooperatives, economic consortiums and various intermediary organizations, help farmers enter the market, guide farmers to open up markets, and increase market share.
As Premier Li Keqiang said, China has a large population, and in agriculture and grain issues, food security comes first, followed by efficiency and greenness. Grasping grain production in major grain-producing areas, especially county-level major grain-producing areas, is of vital importance. Relying on policy incentives and implementation of the provincial governor responsibility system for food security, boosting the enthusiasm to value agriculture, focus on grain and safeguard grain security is a pressing task.
On the premise of farmers' voluntariness, appropriately carry out large-scale agricultural grain operations, concentrate cultivated land toward large grain growers, and use intermediary economic organizations or leading enterprises in grain industrialization to purchase, store and process, building a whole industry chain of growing, raising, processing and selling——from field to table, while also taking care to let farmers share in the “secondary dividends” of processing and value-added conversion, so that farmers can increase income through multiple channels.
Accelerate the construction of the social service system. Increase efforts to build the grain service system, improve the multi-level social service network at county, township and village levels, and explore the formation of effective and well-established forms of economic cooperation organizations such as grain and feed cooperatives, forming a service system with county (city, district) service companies as the leaders, townships as the main body and villages and communities as the foundation, and, on the basis of doing well in pre-production and mid-production services, focus on post-production services.