How Can Agricultural Modernization Break Through Under the New Economic Normal

The full text of Document No. 1, "Several Opinions on Intensifying Reform and Innovation and Accelerating Agricultural Modernization," is divided into 5 parts, with accelerating agricultural modernization drawing particular attention.

New challenges force a top-level design for the “three rural” issues

From statistical data, by 2014, China's grain production had already increased for eleven consecutive years, and farmers' incomes had also grown rapidly for 11 consecutive years. However, in the view of some experts researching the “three rural” issues, this is a mixed blessing.

At a recent forum, Han Jun, deputy director of the Office of the Central Leading Group for Financial and Economic Affairs, expressed his concern. In his view, China's agricultural and rural development faces many problems, and the great test for agriculture has only just begun.

Price is the most obvious manifestation. Almost all bulk agricultural products have shown a price inversion, that is, the prices of domestic agricultural products are far higher than international prices. For example, imported sugar, despite China imposing a 65% tariff on imported sugar beyond the quota, still ends up with an import price lower than the domestic price.

This situation has occurred in the last 5 years. In 2008, only soybeans showed this kind of price inversion.

The direct impact of price inversion is a large increase in agricultural product inventories. Data provided by Han Jun show that in 2013 China's cotton inventory had reached 11.48 million tons, accounting for 60% of global cotton inventories, placing a very heavy fiscal burden.

Cheng Guoqiang listed four major challenges currently facing agricultural development.

First, as the economy shifts from high-speed growth to medium-to-high-speed growth, the external conditions and internal drivers of agricultural development have also undergone profound changes. How can sustained agricultural development be maintained? Where are the new growth points?

Second, agricultural production costs have entered an upward channel, the domestic prices of major agricultural products exceed international market prices, and subsidy policies are approaching their upper limit. Under pressure from both sides, how can agriculture increase efficiency and how can farmers increase income?

Third, agricultural resources are scarce, overdevelopment and worsening pollution are occurring, and ecological and environmental constraints are tightening. How can the effective supply of agricultural products and quality safety be guaranteed?

Fourth, urban and rural factors are flowing more rapidly, and the problems of agriculture becoming a side occupation, farmer households taking multiple jobs, labor quality weakening, and rural hollowing out are becoming increasingly prominent. How can the building of a new countryside be accelerated against the background of deepening urbanization?

In Cheng Guoqiang's view, to respond to the new challenges of agricultural and rural development and solve new contradictions and new problems, it is necessary to unswervingly strengthen the fundamental position of agriculture and persist in making the proper resolution of the “three rural” issues a top priority in the work of the whole Party.

“Especially in the new stage of agricultural development, to solve increasingly complex contradictions and major issues, a top-level design and overall planning are necessary.” Cheng Guoqiang said that the Central Committee issuing the 12th No. 1 document themed on the “three rural” issues precisely reflects this logic, and is the clearest and most direct manifestation of the Central Committee's insistence on making the proper resolution of the “three rural” issues the top priority in the work of the whole Party.

From this perspective, this year's Central Document No. 1, in terms of policy arrangements and layout, is closely linked with the previous 11 Central Document No. 1 documents, advancing layer by layer and coming from the same lineage.

Cheng Guoqiang believes that agriculture has currently entered a critical period of mechanism innovation, structural transformation, and industrial reshaping. This creates a forcing mechanism for agricultural policy choices, requiring reform and innovation to promote quality improvement and efficiency gains and to save costs and reduce consumption; and requiring an accelerated transformation of the agricultural development model to promote intensive management and sustainable development.

In Cheng Guoqiang's view, the biggest highlight of this year's Document No. 1 is the proposal to promote modern agriculture construction by accelerating the transformation of the agricultural development model. What is noteworthy is that the document sets clear requirements and goals for developing modern agriculture. In the future, China's agriculture should follow a modern agricultural development path featuring high output efficiency, safe products, resource conservation, and environmental friendliness, which means continuously raising land output rate, resource utilization rate, and labor productivity.

“At the same time, promote the transformation of agricultural production from focusing on quantity growth to balancing total volume, optimizing structure, and attaching equal importance to quality safety; promote the transformation of agricultural development from relying mainly on resource consumption to being resource-conserving and environmentally friendly; promote the transformation of agricultural production conditions from mainly depending on the weather to raising the level of material and technical equipment; and promote the transformation of agricultural producers from traditional farmers to high-quality professional farmers.” Cheng Guoqiang said this requires focusing on improving competitiveness, focusing on agricultural technological innovation, and focusing on sustainable intensive development.

Reform and innovation proposed for the first time

⟧ “The themes focused on in Central Document No. 1 are often issues the country currently needs to focus on and urgently solve, and it holds a programmatic and guiding position in the work of the whole year.” Du Xiaoshan, a researcher at the Rural Development Institute of the Chinese Academy of Social Sciences, told China Youth Daily that previous No. 1 documents also mentioned agricultural modernization many times, but this year reform and innovation were mentioned for the first time.

As is well known, agriculture is the foundation of the national economy and the most fundamental industry among the three major industries, but at the same time it is also a weak link among the three major industries. This year's Document No. 1 proposes promoting the synchronous development of new industrialization, informatization, urbanization, and agricultural modernization, striving to tap new potential in raising grain production capacity, open new paths in optimizing the agricultural structure, seek new breakthroughs in transforming the agricultural development model, achieve new results in promoting farmers' income growth, and take new steps in building a new countryside, so as to provide strong support for the sustained and healthy development of the economy and society.

This means that the chain of traditional agriculture is being extended, and the weak link in agricultural development must be made up through the synchronous advancement of industrialization, informatization, and urbanization.

“The document proposes solving the bottleneck problems in agricultural development from 5 aspects.” Du Xiaoshan explained that these include centering on building modern agriculture and accelerating the transformation of the agricultural development model; centering on promoting farmers' income growth and increasing the intensity of benefit-farmers policies; centering on integrated urban-rural development and deeply advancing new countryside construction; centering on adding vitality to rural development and comprehensively deepening rural reform; and centering on doing the “three rural” work well and strengthening the building of the rule of law in rural areas.

All of these embody the Central Committee's reform and innovation in the “three rural” work. In fact, concrete innovation has already begun.

For example, in the agricultural product price system, last year the temporary purchase and storage policies for cotton and soybeans were formally abolished, and pilot projects for target price subsidies for cotton in Xinjiang, China and soybeans in the three northeastern provinces and Inner Mongolia were launched.

The target price is not the price understood by ordinary people, but the basis for fiscal subsidies for agricultural products. Specific subsidy standards are set according to farmers' production costs plus reasonable protective returns.

Taking cotton as an example, the market price is 13,000 to 14,000 yuan per ton, while the target price is 19,800 yuan per ton, equivalent to a fiscal subsidy of about 6,000 yuan per ton of cotton.

Although this pilot project lasted only 1 year, in Han Jun's view, agricultural product prices have already begun to return to market equilibrium prices, and the market has begun to play a decisive role.

How to guarantee farmers' income growth is also a topic requiring reform and innovation.

Du Xiaoshan told reporters that in the long run, it is necessary to promote land system reform, improve and encourage the transfer of land management rights, encourage appropriately scaled operations, and raise land output rate. In addition, it is necessary to accelerate the exploration and development of rural property rights trading markets and realize land ownership confirmation, registration, and certification as soon as possible. “These are all basic agricultural issues. Once these issues are solved, farmers' incomes will also increase.”

In addition, urbanization construction is also a way to raise farmers' living standards. “Encourage farmers in central and western rural areas to settle in small and medium-sized towns. If these farmers settle and find employment in towns, they can increase their incomes through employment. At the same time, if the land is transferred to farmers remaining in rural areas to cultivate, the per capita cultivated land area will increase, and through scaled operations, labor productivity will be raised. By means of family farms, agricultural cooperatives, and enterprises plus farmer households, farmers remaining in rural areas can increase their incomes.” Du Xiaoshan said.