How Can Agricultural Modernization Break Through Under the New Normal

As expected, this year's Central Document No. 1 once again focuses on “agriculture, rural areas and farmers.” This is already the 12th consecutive year that the Central Committee has made Document No. 1 focus on the work related to “agriculture, rural areas and farmers.”

“This is because, against the backdrop of China's economy entering the new normal, China's agricultural development has also entered a new stage, facing new challenges and contradictions.” said Cheng Guoqiang, a researcher at the Development Research Center of the State Council.

Document No. 1, the “Several Opinions on Increasing the Intensity of Reform and Innovation and Accelerating Agricultural Modernization,” is divided into 5 parts in total, and accelerating agricultural modernization attracts particular attention.

New challenges force a top-level design for the “agriculture, rural areas and farmers” issue

From the statistical data, by 2014, China's grain production had increased for 11 consecutive years, and farmers' incomes had also grown rapidly for 11 consecutive years. However, in the view of some experts studying the “agriculture, rural areas and farmers” issue, 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 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, for imported sugar, although China levies a 65% tariff on imported sugar beyond the quota, after calculation, the import price is still 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 the 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 inventory, placing a very heavy burden on public finances.

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 agriculture be kept developing sustainably? 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 and quality safety of agricultural products be guaranteed?

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

In Cheng Guoqiang's view, to respond to the new challenges of agricultural and rural development and resolve new contradictions and new problems, it is necessary to unswervingly strengthen the foundational position of agriculture and persist in making the proper resolution of the “agriculture, rural areas and farmers” issue the 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's issuance of the 12th Document No. 1 themed on the “agriculture, rural areas and farmers” issue 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 “agriculture, rural areas and farmers” issue 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 Documents No. 1, advancing layer by layer and coming from the same lineage.

Cheng Guoqiang believes that agriculture has currently entered a critical period of institutional innovation, structural transformation, and industrial reshaping. A forcing mechanism has formed 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 take the path of modern agricultural development 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 placing equal emphasis on total balance, structural optimization, and quality safety; promote the transformation of agricultural development from mainly relying 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 prioritize and urgently resolve, and they hold a programmatic and guiding position in the work of the entire year.” Du Xiaoshan, a researcher at the Rural Development Institute of the Chinese Academy of Social Sciences, told China Youth Daily that previous Documents No. 1 had 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 foundational industry among the three major industries, but at the same time it is also the weak link among the three major industries. This year's Document No. 1 proposes to promote the synchronized development of new industrialization, informatization, urbanization, and agricultural modernization, strive 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, obtain 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 synchronized advancement of industrialization, informatization, and urbanization.

“The document proposes solving the bottleneck problems in agricultural development from 5 aspects.” Du Xiaoshan said these include, around building modern agriculture, accelerating the transformation of the agricultural development model; around promoting farmers' income growth, increasing the intensity of preferential agricultural policies; around the integration of urban and rural development, deeply advancing the building of a new countryside; around adding vitality to rural development, comprehensively deepening rural reform; and around doing the “agriculture, rural areas and farmers” work well, strengthening the building of the rule of law in rural areas.

All of these embody the Central Committee's reform and innovation in the “agriculture, rural areas and farmers” work. In fact, specific innovations have already begun.

For example, in the agricultural product price system, last year the temporary purchase and storage policies for cotton and soybeans were officially abolished, and pilot projects for target price subsidies for cotton in Xinjiang and for 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 about 6,000 yuan in fiscal subsidy 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 ensure farmers' income growth is also a subject 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 circulation 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 confirmation, registration, and certification work as soon as possible. “These are all basic agricultural issues. Once these issues are resolved, farmers' incomes will also increase.”

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