New Agricultural Machinery Subsidy Policy Highlights Market Thinking
China's agricultural machinery market has an obvious "policy-driven market" characteristic, which has led to a gradual decline in the marginal effect of agricultural machinery subsidies, while also squeezing the vitality of market entities. The "Guiding Opinions on the Implementation of Agricultural Machinery Purchase Subsidies for 2015-2017" proposes that, through market mechanisms, the subsidy policy should play a guiding role in agricultural mechanization, promote market-based matching between the two sides of subsidized products, and improve the targeting and precision of the policy.
The Ministry of Agriculture and the Ministry of Finance recently jointly issued the "Guiding Opinions on the Implementation of Agricultural Machinery Purchase Subsidies for 2015-2017", which contains many innovations and breakthroughs in the principles, scope and standards of agricultural machinery subsidies, and is an adjustment and improvement of the agricultural machinery subsidy policy based on the current development situation of agricultural mechanization.
Since the implementation of the agricultural machinery purchase subsidy policy in 2004, China's agricultural mechanization development has entered a fast track. Over 11 years, agricultural machinery subsidies increased from 70 million yuan in 2004 to 23.75 billion yuan in 2014, and the level of agricultural mechanization rose from 33% in 2004 to 61% in 2014. At the same time, farmers' dependence on the agricultural machinery subsidy policy has clearly increased, and enterprises have met market demand according to the agricultural machinery subsidy catalogue, so the "policy-driven market" characteristic of the agricultural machinery market has been very obvious. As agricultural machinery subsidy funds have continued to increase, however, the marginal effect of the subsidies has gradually declined, while also squeezing the vitality of market entities.
"Farmers and enterprises should be guided as soon as possible onto the track of market-based resource allocation, fully leverage the role of fiscal input, maximize the leveraging effect of limited fiscal funds, and attract more social capital investment," said Yang Minli, a professor at China Agricultural University and a well-known expert in agricultural mechanization, in an interview with an Economic Daily reporter.
The "Opinions" propose that, during implementation, market mechanisms should be used to give play to the guiding role of subsidy policy in agricultural mechanization, promote market-based matching between the two sides of subsidized products, safeguard the autonomy of purchasers in choosing and buying machinery, and promote scientific and technological progress in agricultural machinery. Improving the agricultural machinery subsidy policy with market-oriented thinking will promote the transformation of China's agricultural mechanization development from "policy-driven" to "dual-driven by policy and innovation".
Ning Xuegui, deputy secretary-general of the China Agricultural Machinery Industry Association, believes that insufficient effective supply is the main contradiction currently facing China's agricultural mechanization development. The agricultural machinery industry has excess mid- and low-end products, while there is a lack of high-end agricultural machinery equipment that meets the needs of deep loosening operations and new agricultural business entities such as cooperatives, and there is also a lack of agricultural machinery equipment for weak links such as sugarcane and cotton. To change this situation, it is necessary to organically combine policy guidance with farmers' needs during the implementation of the agricultural machinery subsidy policy, and guide farmers to purchase agricultural machinery and tools rationally.
The "Opinions" focus on highlighting key points, accelerating the full mechanization of the production of major crops such as grain, cotton, oil and sugar, and improving the targeting and precision of the policy; they require narrowing the range of types of agricultural machinery eligible for subsidies, reducing it from the original 12 major categories, 48 subcategories and 175 item categories of machinery to 11 major categories, 43 subcategories and 137 items; they focus subsidies on machinery needed for key links in the production of major crops such as grain, cotton, oil and sugar, while also taking into account machinery needed for the development of animal husbandry, fisheries, protected agriculture, forestry and fruit industries, and primary processing of agricultural products, and strive to spend about 3 years focusing on raising the level of full mechanization in the production of major crops such as grain, cotton, oil and sugar.
The "Opinions" also appropriately adjust the subsidy recipients, that is, changing last year's "subsidy recipients are farmers and herdsmen, farm (forestry farm) employees, farmer cooperatives and agricultural production and operation organizations engaged in agricultural machinery operations that are included in the implementation scope and meet the subsidy conditions" to "individuals and agricultural production and operation organizations directly engaged in agricultural production". A relevant person in charge of the Ministry of Agriculture said that the adjustment is mainly because, with the accelerated pace of rural labor transfer, those currently engaged in agricultural production are not only farmers and herdsmen; more and more agricultural production tasks are undertaken by new business entities such as cooperatives and agricultural enterprises. In addition, after the reform of the household registration system, farmer is only an occupational classification, and it is difficult to distinguish people anymore by residence and household registration. Each province may, according to actual conditions, independently decide whether to expand subsidy recipients to agricultural production enterprises and others.