How will the three agricultural subsidies be adjusted and improved? Detailed explanation by officials of the Ministry of Finance and the Ministry of Agriculture

In order to actively and steadily advance the work of adjusting and improving agricultural subsidy policies, the Ministry of Finance and the Ministry of Agriculture recently issued the "Guiding Opinions on Adjusting and Improving the Three Agricultural Subsidy Policies" (hereinafter referred to as the "Guiding Opinions"). A reporter interviewed relevant officials of the two departments on issues related to the adjustment and improvement of agricultural subsidy policies.

Reporter: Why is it necessary to make appropriate adjustments and improvements to the agricultural “three subsidies” policy?

Since 2004, the state has successively implemented three subsidy policies: the crop improved seed subsidy, the direct subsidy to grain farmers, and the comprehensive agricultural input subsidy (hereinafter referred to as the agricultural “three subsidies”). The implementation of the policies 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 agricultural and rural development situation, the effects of the agricultural “three subsidies” policy have diminished, and the policy's effectiveness has gradually declined, making adjustment and improvement urgently necessary. In order to earnestly implement the spirit of the Third Plenary Session of the 18th CPC Central Committee and the Central Document No. 1 in recent years concerning improving agricultural subsidy policies and reforming the agricultural subsidy system, the Ministry of Finance and the Ministry of Agriculture, in response to problems that have emerged in the implementation of current agricultural subsidy policies, carried out in-depth investigation and research, and on the basis of fully soliciting and extensively listening to opinions from all sides, put forward suggestions for adjusting and improving agricultural subsidy policies. With the approval of the State Council, it was decided to adjust and improve the agricultural “three subsidies” policy starting from 2015.

Adjusting and improving the agricultural “three subsidies” policy is an urgent need for transforming the agricultural development model. China's agricultural production costs are relatively high and the comparative returns from grain cultivation are low, mainly because the agricultural development model is extensive and the scale of operation is small. Constrained by small-scale operation, great difficulties are encountered in the promotion and application of advanced scientific and technological achievements, the provision of financial services, effective connection with the market, the advancement of standardized agricultural production, the improvement of agricultural product quality, the increase of production efficiency, and the enhancement of market competitiveness. Therefore, accelerating the transformation of the agricultural development model, strengthening the capacity for ensuring food security, and building a national food security and agricultural ecological security guarantee system urgently require adjusting and improving the agricultural “three subsidies” policy, increasing support for appropriately scaled grain operation, and promoting sustainable agricultural development.

Adjusting and improving the agricultural “three subsidies” policy is an urgent need for improving the effectiveness of agricultural subsidy policies. In most places, the agricultural “three subsidies” have evolved into income subsidies for farmers; some farmers can receive subsidies even if they do not grow grain or do not farm. Yet truly grain-producing large-scale growers, family farms, farmers' cooperatives, and other new types of operating entities find it very difficult to obtain subsidy support beyond their own contracted farmland. The role of the agricultural “three subsidies” policy in mobilizing enthusiasm for grain cultivation and promoting grain production has been greatly reduced. Therefore, enhancing the targeting, precision, and effectiveness of the agricultural “three subsidies” and increasing support for appropriately scaled grain operation urgently require adjusting and improving the agricultural “three subsidies” policy.

At the same time, adjusting and improving the current agricultural “three subsidies” policy 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.

Reporter: What basic principles must be followed in adjusting and improving the agricultural “three subsidies” policy?

The purpose of this adjustment and improvement of the agricultural “three subsidies” policy is to improve the policy's targeting, precision, and effectiveness, enhance policy effectiveness, and, on the premise that the state's overall level of support to farmers is not reduced, promote the transformation of the agricultural development model, advance appropriately scaled grain operation, promote sustainable agricultural development, and raise agricultural productivity and the market competitiveness of agricultural products. The following principles must be followed.

First, effectively safeguard the basic interests of the broad masses of farmers. Protecting the basic interests of the broad masses of farmers is the bottom line that must be upheld in adjusting and improving agricultural subsidy policies and reforming the agricultural subsidy system; safeguarding and realizing the basic interests of the broad masses of farmers is the primary principle that must be followed in adjusting and improving agricultural subsidy policies and reforming the agricultural subsidy system.

Second, strengthen support for appropriately scaled grain operation. Stably increasing grain production capacity is the key to ensuring “basic self-sufficiency in grains and absolute security of staple food” and is an important measure for ensuring national food security. Adjusting and improving the agricultural “three subsidies” policy and enhancing its targeting, precision, and effectiveness in promoting appropriately scaled grain operation accord with both national interests and the fundamental interests of the broad masses of the people. This is conducive to improving the comparative returns of grain production, mobilizing the enthusiasm of new types of operating entities and farmers for grain cultivation, and stably improving comprehensive grain production capacity with equal emphasis on quantity, quality, and efficiency.

Third, effectively promote sustainable agricultural development. At the present stage in China, the agricultural development model that mainly relies on high inputs of resource factors to achieve high output has already caused great damage to agricultural resources and the environment, making it difficult to guarantee the quality and safety of agricultural products, and making development unsustainable. Adjusting the orientation of the agricultural “three subsidies” policy to protect cultivated land fertility is conducive to protecting China's limited and precious cultivated land resources, water resources, and agricultural ecological environment, and to achieving sustainable agricultural development.

Fourth, maintain the continuity and stability of subsidy policies. Adjusting and improving the agricultural “three subsidies” policy and reforming the agricultural subsidy system concern the interests of the broad masses of farmers and the overall situation of agricultural and rural development, and must be carried out actively and steadily while maintaining the continuity and stability of policies. First, the total amount of the agricultural “three subsidies” will only increase, not decrease, and the intensity of subsidies will not decline; second, earnestly implement the requirements of the Central Document No. 1, and, apart from pilot areas, continue in 2015 to implement the comprehensive agricultural input subsidy, the direct subsidy to grain farmers, and the crop improved seed subsidy policies; third, select some counties and cities in some provinces to carry out pilot reforms of the agricultural “three subsidies”, organically combining top-level design with grassroots exploration to ensure that the agricultural subsidy reform advances steadily.