Investigation into the Three-in-One Agricultural Subsidy Reform: Why Can't Those Who Actually Grow Grain Get the Subsidies

Have the grain subsidies been delivered?

Editor's note: For stabilizing grain production and increasing income, agricultural subsidy policy has played an indispensable role. However, as the agricultural and rural situation undergoes profound changes, the effects of subsidy policies implemented for more than 10 years are diminishing and their effectiveness is declining, making adjustment and improvement urgently necessary.

In response to current practical problems, the state this year advanced reform of agricultural subsidy policy, piloting the merger of the improved seed subsidy, direct grain-growing subsidy and comprehensive agricultural input subsidy — these “three subsidies” — into an “agricultural support and protection subsidy.” Has this new policy been implemented in place? What expectations do grassroots cadres and the masses have? Please see the reports sent back by our reporters from the front line.

1. What do farmers hope for?

Ordinary farming households do not oppose integrating subsidies to “make the cake bigger,” but they worry about “having the cake cut.” Large-scale growers hope subsidy policy will be more precise: “Whoever grows more grain should be supported first.”

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

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

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

So why have farmers not yet received their subsidies? Relevant officials explained that Henan is not a national pilot province this year, and the province has not yet approved the new subsidy distribution plan. 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 number one wheat-producing county in China. In 2014, the county's three agricultural subsidies totaled 226 million yuan. However, as of now, the county's actual agricultural subsidy receipts for 2015 amount to 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 believe their subsidies have been cut away and given to large grain growers.” A grassroots cadre said farmers agree to integrate other subsidy funds to “make the cake bigger,” but are unwilling to “have the 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' income. 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 improved seed subsidy is 20 yuan per mu per year, like MSG in cooking — it doesn't matter whether you add it or not.” Said Chen Jincan, a farmer from Xiaozhai Village, Liugu Town. He farms 8 mu of land, and a year's subsidy is enough to buy 2 bags of urea, not very useful. He hopes the subsidy amount will be increased, at least “only increasing, not decreasing.”

Can subsidies truly be used for agriculture? “When farmers receive subsidies, it's inevitable that ‘the money for soy sauce gets spent on vinegar.’” Said Li Shouzhen, deputy general manager of Huafeng Seed Industry Company. In 2004, when the improved seed subsidy was first introduced, the city conducted unified bidding, each county designated three to five seed enterprises, the government first subsidized the enterprises, and the enterprises then sold improved seeds to farmers at preferential prices, with improved seed coverage in the county reaching over 98%. “Since 2008, the improved seed subsidy has been paid directly into farmers' accounts, some people bought daily necessities, and improved seed coverage actually declined.”

Why was “subsidizing seeds” 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.”

Some also reported that those who do not grow grain get subsidies, while those who actually grow grain cannot get them. Sun Danghui, council member of Ruiyang Grain Planting Cooperative, said they have transferred 19,000 mu of land in total, and all the subsidies go 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 future subsidy policy will be more precise and truly reflect that “whoever grows more grain should be supported first.”

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, has 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 replicate in other villages, mainly because villager relations are difficult to coordinate.” He worries that with future subsidy policy adjustments, subsidies will be paid directly into farmers' accounts, and the improved seed subsidy he previously secured will certainly no longer be available.