How can agricultural machinery subsidies precisely help the transition from small agricultural machinery to large agricultural machinery
It is exactly the season for spring plowing and preparation. In the vast fields of Jiangsu and Anhui, major grain-producing areas, more agricultural machinery is showing its prowess in the farmland.
In recent years, with the implementation of the agricultural machinery purchase subsidy policy, agricultural machinery has replaced human labor as the main tool of labor. The latest published agricultural machinery purchase subsidy policy highlights the inclusive nature of subsidies, which helps increase the mechanization rate of China's agricultural production. How can subsidies be used where they are most needed, so that every machinery buyer can enjoy the sunshine and rain of the subsidy policy? A reporter from Economic Daily recently went deep into the front lines of agricultural production in Jiangsu and Anhui for research——
From small agricultural machinery to large agricultural machinery
The spring wind blows over the green wheat fields, bringing the fragrance of wheat seedlings. In the simple agricultural machinery shed of the Changqian Agricultural Machinery Cooperative in Fuli Town, Yongqiao District, Suzhou City, Anhui Province, a 210-horsepower blue tractor stands out. Chairman Wu Changjin told a reporter from Economic Daily that he bought this tractor in 2013 for 580,000 yuan, with a state subsidy of 180,000 yuan, and it is the only tractor exceeding 200 horsepower in Yongqiao District and even Suzhou City.
⟦NL> Wu Changjin said that since the agricultural machinery cooperative was established in 2011, all newly purchased agricultural machinery and tools have enjoyed state policy subsidies, with cumulative subsidy funds of more than 3.1 million yuan, and operational subsidies of 443,000 yuan for land deep loosening and preparation, wheat straw return to the field, and other operations. Under policy support, the cooperative has developed rapidly. Wu Changjin said that the cooperative now has 32 large tractors of more than 80 horsepower, 30 combine harvesters, and more than 80 sets of various supporting machinery and tools, with an annual agricultural machinery service capacity of 160,000 mu. In 2014, he invested another 870,000 yuan to add two 180-horsepower tractors at one time.
From 2004 to 2014, the central government allocated a cumulative total of 120 billion yuan in agricultural machinery purchase subsidy funds, continuously stimulating farmers' enthusiasm to buy and use machinery. New socialized service organizations such as agricultural machinery cooperatives increased rapidly, and the number of agricultural machinery cooperatives has reached 47,000. The national comprehensive mechanization level of crop cultivation, planting, and harvesting exceeded 61%, providing support for the “eleven consecutive increases” in grain production.
Liu Shaotai, director of the Anhui Provincial Agricultural Machinery Bureau, told reporters that as a major grain-producing province, Anhui's new agricultural machinery purchase subsidy policy this year leans toward key links in grain production, especially weak links such as comprehensive straw utilization, and toward new agricultural operating entities such as large grain-growing households, family farms, and cooperatives in major producing areas. Under policy guidance, medium and large agricultural machinery such as combine harvesters, rice transplanters, and straw crushing and returning machines are becoming the mainstream of agricultural machinery consumption. In 2014, the province subsidized a total of 19,200 medium and large tractors, 19,700 various combine harvesting machines, 1,875 rice transplanters, and 11,800 straw crushing and returning machines.
With the rapid development of large-scale agricultural production and the driving force of land deep loosening operations and straw return operations, farmers' demand for large agricultural machinery is strong. However, purchasing large agricultural machinery requires a large amount of funds, increasing the financial pressure on buyers. In order to ease the financial pressure on buyers, this year the Ministry of Agriculture and the Ministry of Finance will continue to carry out financial leasing pilots for large cotton pickers and sugarcane harvesters in Xinjiang, Guangxi, and other places. At the same time, all localities are actively exploring rural financial services such as agricultural machinery financial leasing and agricultural machinery mortgage loans, supporting farmers in buying and using machinery through multiple channels and forms. This will effectively meet market demand for large agricultural machinery and tools.
From agricultural population to non-agricultural population
When the reporter arrived at the Hongyun Family Farm in Sanhe Town, Hongze County, Jiangsu Province, farm owner Ma Jianguo was organizing workers to spray pesticides and remove weeds. Ma Jianguo previously worked in Hongze County town. In 2013, he resigned and established a family farm, renting 800 mu of land for wheat and rice breeding. Because he has a non-agricultural household registration, he could not enjoy agricultural machinery purchase subsidies, and had to apply for the family farm's business license in his wife's name. This brought him a lot of inconvenience in his work.
Under the new policy, individuals directly engaged in agricultural production can enjoy agricultural machinery purchase subsidies, which gives city resident Ma Jianguo the opportunity to fully realize his ambitions. Ma Jianguo told reporters that when the farm was first established, due to difficulties in capital turnover, he could not afford to buy agricultural machinery and tools, and could only contract agricultural machinery operations such as cultivation, planting, and harvesting to a local agricultural machinery cooperative. Farming seasons wait for no one. For weeding and pest control, the key period is only a few days. Once the farming season is missed, grain output will be affected. He plans to gradually purchase some necessary agricultural machinery and tools to keep the initiative in grain production in his own hands. Last year he purchased 3 grain dryers, and this year he plans to buy a large plant protection aircraft and a laser land leveler.
This year's new agricultural machinery purchase subsidy policy further broadens the subsidy targets, clearly defining subsidy targets as individuals and agricultural production and operation organizations directly engaged in agricultural production. Among them, individuals include both farmers, herders, and fishermen and staff of farms (forest farms), as well as other residents directly engaged in agricultural production; agricultural production and operation organizations include both farmers' cooperatives and family farms, as well as agricultural enterprises directly engaged in agricultural production.
A relevant person in charge of the Ministry of Agriculture said that the adjustment of the scope of agricultural machinery purchase subsidies is mainly because, with the rapid advancement of urbanization and the accelerated pace of rural labor transfer, the main body engaged in agricultural production is no longer only farmers, herders, and fishermen. More and more agricultural production tasks are undertaken by new agricultural operating entities such as cooperatives and agricultural enterprises. In addition, after household registration system reform, farmer is only an occupational classification, and it is difficult to distinguish people anymore by residence or household registration.
Sheng Hai, director of the Planning and Finance Division of the Anhui Provincial Agricultural Machinery Bureau, believes that relaxing the qualifications of agricultural machinery subsidy targets is a major breakthrough in the objectives of the agricultural machinery purchase subsidy policy. Whoever buys gets the subsidy, indicating that the agricultural machinery subsidy policy is transforming from a simple policy benefiting farmers to a policy strengthening agriculture. This will attract more urban residents and agricultural enterprises to invest in agriculture.
Agricultural enterprises have strong financial strength and purchase large quantities of agricultural machinery, which may occupy a large amount of agricultural machinery purchase subsidy funds. Anhui Province has imposed limits on the number of agricultural machinery purchases by agricultural production and operation organizations. In principle, each household may apply for subsidies for no more than 3 units (sets) of agricultural machinery and tools within the year, and agricultural production and operation organizations may apply for subsidies for no more than 10 units (sets) of agricultural machinery and tools within the year. “By limiting the purchase quantity, we prevent agricultural enterprises from occupying agricultural machinery subsidy funds and ensure the fairness of subsidies.” Sheng Hai said.
From selective to inclusive subsidies
For many years, the agricultural machinery purchase subsidy policy has implemented “selective” subsidies, that is, listing a group of agricultural machinery enterprises and products with stable quality and good after-sales service in a catalog for farmers to choose and purchase independently. “This is because the total investment in agricultural machinery purchase subsidy funds is limited, and the country's economic development level is not yet at the point where the government subsidizes whatever farmers buy.” said Zhu Yukui, deputy director of the Industry Development Division of the Jiangsu Provincial Agricultural Machinery Bureau.
As state agricultural machinery purchase subsidy funds increase day by day, the new agricultural machinery purchase subsidy policy highlights inclusiveness and implements open subsidies. Each province, according to the development needs of local advantageous leading industries and the scale of subsidy funds, selects some key-link machinery and tools for open subsidies; major grain-producing provinces (regions) should select some machinery and tool categories urgently needed in key links of grain production for open subsidies; provinces with conditions should, around leading industries, follow the principle of relatively consistent matching between the scale of subsidy funds and machinery purchase demand, and select machinery and tool categories to pilot full open subsidies.
From selective subsidies to open subsidies, the agricultural machinery purchase subsidy policy has taken a key step toward inclusive subsidies. “The inclusive subsidy policy has greatly stimulated farmers' enthusiasm for buying machinery. At present, the level of agricultural mechanization development in Jiangsu Province has reached more than 78%.” said Wang Feng, deputy director of the Jiangsu Provincial Agricultural Machinery Bureau.
At present, central government funds for supporting agriculture are limited, and inclusive subsidies cannot yet be fully implemented nationwide. As an economically developed major grain-producing area, Jiangsu Province, under the condition of local fiscal backing, and on the premise of narrowing the subsidy scope, reducing subsidy categories, and lowering subsidy ratios, implements inclusive subsidies for categories within the subsidy scope. For a major agricultural province like Anhui, fully implementing an inclusive agricultural machinery purchase subsidy policy is even more difficult. “Anhui Province will in the future narrow the subsidy scope, highlight key points, implement open subsidies, and advance inclusive agricultural machinery purchase subsidies in a tiered and focused manner.” Sheng Hai said.
Yongqiao District, Suzhou City, Anhui Province, is a major agricultural district. Driven by agricultural machinery purchase subsidies, the level of agricultural mechanization in Yongqiao District has developed rapidly, reaching more than 80%, but the subsidy funding gap has also become larger. In 2014, the gap reached more than 20 million yuan. In 2015, farmers' enthusiasm for purchasing large agricultural machinery and tools is high, and the annual funding gap is expected to reach about 90 million yuan. In response, experts suggest establishing a benefit compensation mechanism for major grain-producing areas, further increasing the tilt of agricultural machinery purchase subsidy policies toward major grain-producing areas, and promoting the development of agricultural mechanization.
From price-difference machinery purchase to independent machinery purchase
The transition from price-difference machinery purchase to independent machinery purchase is another innovation in this year's agricultural machinery purchase subsidy policy. In so-called independent machinery purchase, buyers have the autonomy to choose and purchase machinery, and agricultural machinery production enterprises and distribution enterprises are gradually decoupled from the operational process of implementing agricultural machinery subsidies. This will force agricultural machinery enterprises to improve their independent innovation capacity and promote scientific and technological progress in agricultural machinery products.
The transition from price-difference machinery purchase to independent machinery purchase has gone through a process of exploration. Initially, the agricultural machinery purchase subsidy policy implemented price-difference machinery purchase, with subsidy funds directly subsidizing enterprises. Buyers could not directly feel the benefits of the subsidies, and it easily led to corruption and benefit transfer. In 2012, Jiangsu Province fully implemented full-price machinery purchase, with agricultural machinery purchase subsidy funds directly subsidizing households, so buyers could directly enjoy the benefits brought by the subsidy policy. However, farmers' purchasing power is limited. In some places, full-price machinery purchase with price-difference pickup was implemented. After subsidy funds were directly subsidized to households, farmers then compensated the price difference to enterprises. This created enormous pressure on enterprise payment collection.
Whether to choose price-difference machinery purchase or full-price machinery purchase is not a perfectly satisfactory choice for either enterprises or farmers. Independent machinery purchase has thus become the most practical choice at the current stage.
It is understood that Anhui Province this year canceled the system linking subsidized products with the support and promotion catalog, and implemented the operation model of “independent machinery purchase, application with machinery, fixed-quota subsidies, county-level settlement, and direct subsidies to households.” Farmers and distribution enterprises follow market rules and independently choose price-difference machinery purchase or full-price machinery purchase. Buyers can break through provincial restrictions on subsidized machinery and tools, can independently choose subsidized product distributors to purchase machinery, and can also purchase machinery through direct enterprise sales. “This fully reflects the decisive role of the market in resource allocation, further reduces administrative intervention, and maintains a fair and orderly competitive order for subsidized machinery and tools.” Sheng Hai said.
Jiang Yitao, deputy manager of the Market Management Department of Zoomlion Heavy Machinery, believes that independent machinery purchase can meet buyers' demand for brand-name agricultural machinery with good quality and good service, gradually guide agricultural machinery enterprises from subsidy competition to technological competition and service competition, and set them on a healthier development path.
In order to promote innovation among agricultural machinery enterprises, starting in 2015, the qualifications of subsidized products were decoupled from the national and provincial catalogs of supported and promoted agricultural machinery products. However, subsidized products must meet two qualification conditions: first, subsidized machinery and tools must be products produced within the territory of the People's Republic of China; second, except for new product subsidy pilots, subsidized machinery and tools should be products that have obtained valid ministerial-level or provincial-level promotion appraisal certificates. “Through the limitation of subsidy conditions, foreign-funded enterprises will be guided to introduce advanced agricultural machinery technology into China for localized production, promoting the transformation and upgrading of the domestic agricultural machinery industry.” Jiang Yitao said.
Changes in agricultural machinery subsidy policy have made agricultural machinery enterprises feel a crisis, and also see opportunities. Jiangsu Qingtuo Agricultural Equipment Co., Ltd. is one of China's important production enterprises of large and medium-horsepower tractors and large agricultural equipment. Company deputy general manager Wang Gang told reporters that since last year, the growth rate of the agricultural machinery industry has declined, especially the tractor industry, which suffered a cliff-like drop, while Qingtuo's sales of large-horsepower tractors rebounded against the trend. “The new agricultural machinery purchase subsidy policy provides a policy environment for enterprise transformation. Our company will increase innovation investment, adjust product structure, and make large-horsepower tractors the company's leading product in the future.” Wang Gang said.