Small-scale, low-efficiency agriculture: how to make up for the shortcomings
The Ministry of Finance recently issued guidance to advance appropriately scaled agricultural operations, accelerate the building of a new type of agricultural operating system, and drive the transformation of agricultural development methods and the process of agricultural modernization. To advance appropriately scaled agricultural operations, how can the advantages of comprehensive agricultural development be brought into play? How can the balance of “appropriate” be grasped? Regarding the specific content of the policy and hot issues of public concern, reporters interviewed relevant departments and experts.
Small scale and low efficiency in agricultural operations face the “double squeeze” of costs and prices
“The purpose of advancing appropriately scaled agricultural operations is to safeguard national food security and promote higher agricultural efficiency and higher farmer incomes.” A relevant official of the Ministry of Finance stated that the specific path for advancing this is to base it on the functions of comprehensive agricultural development, identify the focal points and points of connection, and encourage pilot explorations in multiple forms.
The official introduced that one prominent advantage of comprehensive agricultural development is the comprehensive management of fields, water, roads, forests and mountains, and integrated operations across agriculture, industry and trade, and production, processing and sales. In the pilot stage, the main approach is to combine high-standard farmland construction projects with support for new types of agricultural operators; for individual cases with a relatively large area of transferred cultivated land, support can also be established as a separate project outside the project area. At the same time, the scope of fund use will be expanded. In addition to infrastructure construction such as water, electricity and roads, fiscal funds can also provide appropriate subsidies for supporting facilities such as seedling-raising facilities, grain drying and drying equipment, warehousing and logistics, and agricultural machinery and tool sheds. Among the related supporting infrastructure for agriculture, forestry, water, electricity and roads, support can be provided for a certain link or a single measure according to the principle of filling whatever gap exists.
“The guidance issued this time, together with the earlier adjustment and improvement of the three agricultural subsidy policies, sends a clear signal: fiscal funds will be tilted toward new types of agricultural operators, to make up for the shortcomings of China's small-scale and low-efficiency agricultural operations.” said Ye Xingqing, director of the Rural Economy Research Department of the Development Research Center of the State Council.
Ye Xingqing analyzed that China has a large population and little land, and the scale of agricultural production and operations is relatively low, with the average cultivated land area per household less than 8 mu, resulting in a relatively low level of agricultural labor productivity and persistently high production costs. Because the cost “floor” is rising while the price “ceiling” presses down, China's agriculture is under a “double squeeze,” and in the face of globally integrated international competition, our competitive advantage is declining. As industrialization and urbanization advance, farmers' non-agricultural employment income continues to rise, and their willingness to engage in agriculture is declining day by day. “Who will farm the land” and “how to farm the land” have become urgent problems that must be solved. Therefore, to improve agricultural competitiveness and safeguard national food security, it is necessary to develop appropriately scaled operations and to cultivate new types of agricultural operators suited to them, including specialized large households, family farms, farmers' professional cooperatives, and leading agricultural enterprises.
Land scale is not better the larger it is; “appropriate” is the key
The production characteristics of agriculture determine that the family is the basic form of agricultural operation. The key to appropriately scaled operations is “appropriate”; land scale is not better the larger it is. It is generally believed that the core of “appropriate” lies in equal returns for the operator. Where the farming income from the land operation scale is equivalent to the income from working in local secondary and tertiary industries, and the land operation scale is equivalent to 10—15 times the local average contracted land area per household, key support should be given.
The guidance makes clear that through policy guidance and project constraints, support will focus on developing scaled production of important agricultural products such as grain, cotton, oil and sugar, ensuring that appropriately scaled operations do not change land use, do not harm farmers' rights and interests, and do not damage comprehensive agricultural production capacity or the agricultural ecological environment.
“The agricultural social service system is also an indispensable part of appropriately scaled operations, and policy support should be increased.” Ye Xingqing said that agricultural social service organizations cover a very broad range, such as plant protection professional cooperatives and agricultural machinery professional cooperatives in the field of agricultural production, and various production and marketing cooperative organizations in the field of agricultural product circulation. Strongly supporting farmers' cooperative organizations in carrying out social services, doing a good job in agricultural science and technology demonstration and extension services, and strengthening the construction of the agricultural product market circulation service system play an important role in building a three-dimensional, composite modern agricultural operating system based on family operations, linked by cooperation and association, and supported by social services.
Increase fiscal fund support and drive financial and social capital investment
To advance appropriately scaled agricultural operations, how can fiscal funds and social capital form a joint force? On this, the guidance gives a clear answer: break down institutional and mechanism obstacles, give play to the guiding and leverage role of fiscal funds, and through multiple measures such as loan interest subsidies, build-first-then-subsidize, and equity investment, drive financial and social capital investment.
For example, through loans, financing guarantees and other means, attract financial capital investment in high-standard farmland construction. For loans used for high-standard farmland construction, the central finance department will provide interest subsidies. Broaden financing channels: in addition to policy banks, loans from financial institutions such as commercial banks and rural credit cooperatives will also be included in the interest subsidy scope. Allow the use of a “three-in-one” approach of bank loans, fiscal subsidies and self-raised funds, combining loans and subsidies, to attract financial funds into high-standard farmland construction and further accelerate construction progress. At the same time, relying on new types of agricultural operators, establish a new mechanism to advance the integration of construction, use and management and protection of high-standard farmland. Assets formed by fiscal subsidies for high-standard farmland construction shall be held and managed and protected by new types of agricultural operators such as farmers' cooperatives.
Fund support measures also include: increasing loan interest subsidy support to leverage more financial capital into agricultural industrialization development; exploring the use of equity investment funds, equity guidance funds and other methods to guide social capital into comprehensive agricultural development and jointly support and strengthen leading enterprises in agricultural industrialization; continuing to improve the fiscal subsidy and loan interest subsidy policies for industrialized operation projects, and supporting leading enterprises in establishing close interest linkage mechanisms with cooperatives and farmers.
Ye Xingqing emphasized that developing appropriately scaled operations cannot be rushed, nor can it wait. On the one hand, rural scaled operations must adapt to the process of urbanization and the scale of rural labor transfer, to the progress of agricultural science and technology and the degree of improvement in production methods, and to the level of agricultural operating organizations and agricultural social services; on the other hand, agriculture faces great pressure from international competition, and from now on we must actively advance appropriately scaled operations and improve agricultural production efficiency.