Why Are Agricultural Subsidy Policies Being Adjusted? Detailed Explanation of the Reasons
The Ministry of Finance and the Ministry of Agriculture announced on the 22nd that, starting this year, pilot programs are planned to be launched first in 5 provinces including Anhui, Shandong, Hunan, Sichuan and Zhejiang to adjust and improve China's three subsidy policies: the crop improved seed subsidy, the direct subsidy to grain farmers and the comprehensive agricultural input subsidy.
Relevant officials from the Ministry of Finance and the Ministry of Agriculture told reporters on the 22nd that since their implementation in 2004, China's three agricultural subsidy policies have played a positive role in promoting grain production and increasing farmers' incomes and in advancing agricultural and rural development. However, as profound changes have taken place in the situation of agricultural and rural development, the effects of the agricultural "three subsidies" policies have been diminishing, and there is an urgent need to adjust and improve them.
The Third Plenary Session of the 18th CPC Central Committee and the Central Document No. 1 in recent years have both explicitly proposed improving agricultural subsidy policies and reforming the agricultural subsidy system. In response to problems identified in surveys during the implementation of current agricultural subsidy policies, the two departments put forward recommendations for adjusting and improving agricultural subsidy policies, which were approved by the State Council.
The officials of the two departments introduced that the adjustment and improvement of the agricultural "three subsidies" policies this time is mainly divided into two aspects: First, adjust 20% of the comprehensive agricultural input subsidy funds nationwide, plus the pilot funds for subsidies to large grain growers and the incremental funds of the agricultural "three subsidies," and use them in a coordinated way to support appropriately scaled grain operations. The support targets are appropriately scaled producers and operators of major grain crops, with emphasis on new types of business entities such as large grain growers, family farms, farmers' cooperatives and agricultural social service organizations. Second, select some regions to carry out pilot reforms of the agricultural "three subsidies."
According to the introduction, the two departments also require all localities, in the process of adjusting and improving the agricultural "three subsidies" policies, to take active and effective measures to further support appropriately scaled grain operations, including focusing on supporting the establishment and improvement of the agricultural credit guarantee system and striving to solve the "difficult financing" and "expensive financing" problems of new types of business entities in appropriately scaled grain operations; encouraging the use of methods such as loan interest subsidies, direct cash subsidies and subsidies for major technology promotion and services to support appropriately scaled grain operations, and allowing appropriate subsidies of no more than 50% of loan interest to be given for interest on loans to entities engaged in appropriately scaled grain operations.
The two departments said that adjusting and improving the agricultural "three subsidies" policies is an urgent need for transforming the agricultural development model and improving the effectiveness of agricultural subsidy policies. In most places, the agricultural "three subsidies" have evolved into income subsidies for farmers, and some farmers can receive subsidies even if they do not grow grain or do not farm. Yet new types of business entities that truly engage in grain production, such as large grain growers, family farms and farmers' cooperatives, find it very difficult to obtain subsidy support beyond their own contracted farmland. The role of the agricultural "three subsidies" policies in mobilizing enthusiasm for grain growing and promoting grain production has been greatly reduced. Therefore, to enhance the targeting, precision and effectiveness of the agricultural "three subsidies," increase support for appropriately scaled grain operations and improve the effectiveness of the agricultural "three subsidies" policies, there is an urgent need to adjust and improve the agricultural "three subsidies" policies.
In addition, the two departments stated that adjusting and improving the current agricultural "three subsidies" policies is conducive to China's compliance with World Trade Organization rules and to further increasing support for agriculture and rural areas through "green box policy" measures.