Have the Grain Subsidies Arrived? A Clear Guide to the Payment Details

Editor's Note: For stabilizing grain and raising incomes, agricultural subsidy policy has played an indispensable role. However, as agriculture and rural areas undergo profound change, the effects and efficiency of a subsidy policy implemented for more than 10 years are diminishing, making adjustments and improvements urgently necessary.

In response to current practical problems, this year the state is advancing reform of agricultural subsidy policy, piloting the merger of the good seed subsidy, direct grain-growing subsidy and comprehensive agricultural input subsidy - the "three subsidies" - into an "agricultural support and protection subsidy." Has this new policy been implemented in full? What are the expectations of grassroots officials and ordinary people? Please see the reports our reporters sent back from the front line.

1. What do farmers hope for?

Ordinary farming households do not oppose consolidating subsidies to "make a bigger cake," but they worry about "having their cake cut"; large-scale growers hope subsidy policy will be more precisely targeted, "whoever grows more grain gets priority support"

After the wheat harvest, the corn in the fields of Hua County, Henan, is lush and green.

"It's already July, so why haven't this year's subsidies been paid out yet?" On July 16, during interviews, this reporter heard many farmers express such doubts.

According to the guidance issued in May by the Ministry of Finance and the Ministry of Agriculture, this year's pilot merges the three subsidies into one. Of this, 80% of the existing comprehensive agricultural input subsidy funds, plus the direct grain-growing subsidy and the good seed subsidy, are used to protect the fertility of cultivated land. The other 20% of the agricultural input subsidy, plus the large grain grower subsidy and the additional funds from the three subsidies, are concentrated on supporting appropriately scaled grain operations. In 2016, this reform will be rolled out nationwide.

So why have farmers not yet received their subsidies? The relevant official explained that Henan is not a pilot province nationwide this year, and the new subsidy distribution plan has not yet been approved by the province, so although the money has reached the county's account, it has not yet been distributed downward.

Hua County's total grain output has ranked first in Henan Province for 20 consecutive years, and it is the top wheat-producing county in the country. In 2014, the county's total of the three agricultural subsidies was 226 million yuan. However, as of now, the county's actual agricultural subsidy receipts for 2015 total 154 million yuan, a decrease of more than 70 million yuan from last year. "There may also be a second batch, but at least for now, many farmers do not understand and think their subsidies have been cut away and given to large grain growers." A grassroots official said farmers agree to consolidating other subsidy funds to "make a bigger cake," but are unwilling to "have their cake cut."

How much do agricultural subsidies matter? "According to last year's standard, the three subsidies total 134 yuan per mu per year." Lu Zhongmin, director of the Hua County Agricultural Technology Extension Center, said that from tax exemption to subsidies, these have played a positive role in increasing grain output and farmers' incomes. But as farmers' income structure changes, the policy effect is diminishing.

"Now if you go out to work, you earn at least 100 yuan a day. By comparison, the good seed subsidy is 20 yuan per mu per year, like MSG in cooking - it makes no difference whether you add it or not." Chen Jincan, a farmer from Xiaozhai Village, Liugu Town, said he farms 8 mu of land, and one year's subsidy is enough to buy 2 bags of urea, which is not very useful. He hopes the subsidy amount will be increased, or at least "only increased, never reduced."

Can subsidies truly be used for agriculture? "When farmers receive subsidies, it is inevitable that 'money meant for soy sauce gets spent on vinegar.'" Li Shouzhen, deputy general manager of Huafeng Seed Industry Company, said that in 2004, when the good seed subsidy had just begun, the city conducted unified bidding, each county designated three to five seed companies, the government first subsidized the companies, and the companies then sold good seed to farmers at preferential prices, with good seed coverage in the county reaching more than 98%. "Since 2008, the good seed subsidy has been paid directly into farmers' accounts, some people bought daily necessities, and good seed coverage actually declined."

Why was "subsidizing seed" changed to "subsidizing farmers"? Lu Zhongmin said it was for the principle of "respecting farmers' wishes." "At the time, seed quality and safety problems appeared in a few places, which was also one of the reasons for changing the subsidy method."

Others reported that those who do not grow grain get subsidies, while those who actually grow grain cannot get them. Sun Danghui, director of Ruiyang Grain Planting Cooperative, said they had transferred 19,000 mu of land in total, and all the subsidies went to the farmers who transferred the land out. "Whoever grows grain should benefit, but in reality, if the subsidies were really given to us, the land rent would definitely rise." He hopes that in the future subsidy policy will be more precisely targeted, truly reflecting that "whoever grows more grain gets priority support."

Are there large-scale growers who have received subsidies? Such cases are extremely rare, but they do exist. Du Huanyong, chairman of Hua County Huanyong Farmers' Cooperative, transferred 2,000 mu of land, of which 700 mu is from his own village. According to the agreement, villagers give the subsidy to Du Huanyong, and in return he raised the rent from 1,000 yuan per mu to 1,000 jin of wheat, equivalent to an increase of more than 100 yuan. "This model is hard to achieve in other villages, mainly because relations among villagers are hard to coordinate." He worries that with future subsidy policy adjustments, subsidies will be paid directly into farmers' accounts, and the good seed subsidy he previously secured will certainly no longer be available.

2. What do officials hope for?

In the past, the subsidy distribution process was long, with a single good seed subsidy taking 3 months. They hope to optimize procedures, improve efficiency and reduce administrative costs

Grassroots officials also look forward to agricultural subsidy reform.

In Hua County, the three subsidies used to be distributed by different departments and on different bases. According to reports, the comprehensive agricultural input subsidy and the direct grain-growing subsidy were handled by the county finance bureau and distributed on the basis of the agricultural tax assessment area. Because the mu count and amount were largely fixed each year, they were arranged and issued at the beginning of the year and could reach households within two months. However, the good seed subsidy was distributed on the basis of actual planted area and handled by the county finance bureau, the county agriculture bureau and the townships. From reporting, statistics and verification of area to the arrival of the subsidy, it took nearly 3 months.

Qi Ya, section chief of the Agriculture Section of the Hua County Finance Bureau, explained in detail the good seed subsidy distribution process:

First, the county finance bureau and agriculture bureau formulate a plan, then each township and village is responsible for statistics and public disclosure, a process that takes more than half a month. Then the village committee compiles the report forms, which are reviewed by the township government and spot-checked by the county agriculture bureau, after which the county finance bureau allocates the subsidy funds to the credit union, and they are finally deposited into farmers' accounts, which takes another one or two months.

Lu Lin, deputy mayor of Baidaokou Town, admitted frankly that the grassroots workload is very heavy. The whole town has 300,000 farming households receiving the good seed subsidy, and the applicant's name, ID number, account and mu count must be entered into the computer, checked and printed, and then the applicant must sign, confirm and be publicly disclosed. "Sometimes when the bank pays out, it finds errors in numbers or names and cannot make the payment, so we have to check them one by one again." Lu Lin said that for distributing subsidies there is no special funding, and all costs such as printing and consumables are coordinated by the township.

To reduce the workload, Hua County merged the summer and autumn good seed subsidies into a single distribution. For example, last year's good seed subsidy was distributed starting in December last year and did not finish until March this year. "Actually, farmers don't care what it is called or how many times it is paid; they only care how much money they can get per mu per year." Chen Jincan said.

Regarding the "three-in-one" subsidy reform, grassroots officials consider it progress, as it can reduce procedures, lower administrative costs and improve efficiency. But there are still many difficulties in getting the new subsidy policy to take effect:

First, the integration of relevant departmental functions. "In the past, subsidies belonged to different departments; in the future, the agriculture department will be responsible for statistics and verifying land area, and the finance department for distributing subsidies. How to optimize procedures and how to share data are things we have not encountered before." A grassroots official said.

Second, the land area problem. Previously, the direct grain-growing subsidy and the agricultural input subsidy were distributed on the basis of the agricultural tax assessment area, which in reality differs considerably from the planted area. "Hua County's agricultural tax assessment area is 1.59 million mu, while the actual wheat planted area is 1.78 million mu. This is because some wasteland and poor land was improved, and what was not previously included in the tax assessment area has now become cultivated land." Qi Ya said.

The data discrepancy in Baidaokou Town is especially large: the direct grain-growing subsidy and agricultural input subsidy were distributed according to 68,000 mu, while the actual planted area is 128,000 mu. "In recent years, the Baimapo improvement project has turned nearly 60,000 mu of saline-alkali land into cultivated land." Lu Lin said that if the pace of land rights confirmation could be accelerated, it would avoid the annual statistics and verification of land area and reduce administrative costs.

3. How can policy effectiveness be brought into play?

Consolidate funds to accomplish big things; county-level coordination can leverage 5—6 times the amount in loans to support more large grain growers

"In fact, some subsidy policies are hard to implement, and there is a strong need to consolidate them." A grassroots official reported that, for example, the wheat "one spray, three preventions" subsidy is intended to prevent and control wheat pests and diseases and dry hot winds, with an average subsidy of 4.5 yuan per mu. Logically, in mid-April each year, if the subsidy is allocated in place, it would exactly coincide with pest and disease prevention and control. But sometimes fund allocation lags, and by the time the money arrives it is nearly time to harvest wheat, making it hard to play its due role.

He believes that although the per-mu subsidy for "one spray, three preventions" is small, if consolidated, this item alone amounts to more than 8.5 million yuan countywide each year, which can be used for unified pest and disease prevention and control and can accomplish some big things.

Regarding agricultural subsidy reform, Yu Tongqin, a large grain grower who has transferred 2,000 mu of land, believes the key is how to make subsidies produce the greatest benefit. He said farmers who transferred land out believe that giving 20% of the comprehensive agricultural input subsidy to large growers will create conflict. "If this money is given directly to large growers, at just a few dozen yuan per mu, it may also be hard for it to play much of a role. By comparison, if some demonstration-zone improvement, modern agriculture and other infrastructure project funds could be obtained for large growers, that would be more meaningful."

According to the newly issued guidance, agricultural subsidy funds can provide credit guarantees for loans to appropriately scaled grain operation entities. So should this money be coordinated at the county level or the provincial level?

"If it is coordinated at the provincial level, there are difficulties in concrete operation. Verifying the loan qualifications of large grain growers alone would require an enormous workload." Local officials suggest that higher levels increase the devolution of authority and return the adjusted 20% of the comprehensive agricultural input subsidy to the county, which would choose a bank to cooperate with and provide credit guarantees, leveraging 5—6 times the amount in loans to support large grain growers.

According to estimates, based on Hua County's 2014 comprehensive agricultural input direct subsidy of 150 million yuan, 20% would be more than 30 million yuan. If this money were returned to the county, it could leverage a lending scale of 180 million yuan, and at 300,000—1 million yuan per loan, it could support more than 100 farmers' cooperatives and large grain growers.