China's Modern Agriculture Development Picture Under the New Normal

Modern agriculture not only provides a guarantee of employment for the production of hundreds of millions of farming households, but also provides an opportunity for development for new types of business entities engaged in agriculture, and has itself, from the perspective of gathering resource factors, ushered in new opportunities amid the transformation and upgrading of traditional non-agricultural industries

At present, China has entered the new normal of economic development. As a country with a large population, China is still in a stage of rapid industrialization and urbanization, and the rigid growth in demand for agricultural products will not undergo a fundamental change in the short term. According to estimates, simply because of the increase in meat, eggs and milk in the dietary structure, each transfer of one rural person adds 75 kg of feed grain. At present, the country as a whole increases grain demand by roughly 4 million tons, meat by 800,000 tons and vegetable oil by 500,000 tons each year. Vigorous demand for agricultural products provides new prospects for the development of the production and trade of agricultural products.

The New Situation of Modern Agriculture Development

There are two key indicators for judging the development situation of modern agriculture: one is agricultural production, and the other is farmers' income. Looking at the situation in 2014, China's agricultural situation presented new highlights:

Grain output climbed onto the 1,200 billion jin step for two consecutive years, achieving eleven consecutive increases. In 2014, national grain output was 1,214.2 billion jin, exceeding 440 kg per capita, about 100 kg higher than the world average; in the first three quarters of 2014, the total output value of agriculture, forestry, animal husbandry and fishery was 6,493.4 billion yuan, up 6.4% year on year.

The growth rate of farmers' income is expected to be higher than the growth rate of urban residents' income for five consecutive years, and the urban-rural income gap is expected to return to below 3:1. In the first three quarters of 2014, farmers' per capita cash income was 8,527 yuan, a real increase of 9.7% year on year after deducting price factors, 2.8 percentage points higher than the growth rate of urban residents' per capita disposable income. In 2013, the urban-rural income ratio was 3.03:1, and in 2014 the urban-rural income gap is expected to return to below 3:1 for the first time since 2002.

New Challenges for Modern Agriculture Development

Against the current background of the new normal, China's agricultural development faces two new challenges: the slowdown in domestic economic growth and increasingly fierce competition in the international agricultural product market.

The national economy has entered the new normal of development, shifting from high-speed growth to medium-to-high-speed growth, and the macro environment for modern agriculture development is facing a tightening trend. How to rapidly raise the labor output rate and resource allocation efficiency of agriculture amid the double slowdown in economic growth and fiscal revenue growth is a major challenge facing modern agriculture development.

Against the background of global agricultural integration, international agricultural product prices continue to fall and cost advantages are obvious; the problem of inverted domestic and international agricultural product prices is becoming increasingly prominent, and the international competition facing modern agriculture development is becoming fiercer.

According to data from the General Administration of Customs, from January to November 2014, the country imported a cumulative total of 62.87 million tons of soybeans, up 12.3% from the same period last year; imports of cereals and cereal flour were 17.14 million tons, already up 17.5% from the 14.58 million tons imported in all of 2013, and already accounting for 3.07% of domestic grain output in 2014. More noteworthy is that the cost advantage of international agricultural products is obvious; the post-tax landed prices of resource-based agricultural products are already comprehensively lower than domestic wholesale prices or port prices of agricultural products, and prices continue to fall, forming a huge impact on China's agricultural products.

According to data from the Market Department of the Ministry of Agriculture, in July 2014, the domestic port price or wholesale price per kg of rice, wheat and corn was already 0.14 yuan, 0.4 yuan and 0.68 yuan higher respectively than the post-tax landed import price, the average port price of soybeans was 12% higher than the average post-tax landed import price, and the average market prices of pork, beef and mutton were 49%-53% higher than the average post-tax landed import price. From November 17 to 23, 2014, international prices of wheat, corn, soybeans, cotton, sugar and rice fell by 16%, 12%, 21%, 18%, 8% and 5% respectively year on year, showing obvious competitiveness compared with domestic agricultural products.

New Opportunities for Modern Agriculture Development

From the perspective of the policy environment, the central government has always attached importance to developing modern agriculture and has made a series of new deployments and new arrangements; modern agriculture development faces favorable policy opportunities.

In early November, when General Secretary Xi Jinping inspected Fujian, he stressed that in building a moderately prosperous society in all respects, the rural side must not be left behind, and on how to handle the “rural side” well, he put forward the “five new” requirements: efforts should be made to tap new potential in raising grain production capacity, open up new paths in optimizing the agricultural structure, seek new breakthroughs in transforming the agricultural development mode, obtain new results in promoting farmers' income growth, and take new steps in building a new countryside. The “five new” requirements are major goals for the work related to agriculture, rural areas and farmers in the new period.

The 2014 Central Economic Work Conference made accelerating the transformation of the agricultural development mode one of the main tasks of economic work in 2015, stressing that solving the “three rural issues” well is always the top priority in the work of the whole Party. It will more effectively mobilize the enthusiasm of hundreds of millions of farmers to produce agricultural products, especially grain, and will also stimulate the enthusiasm of various new types of business entities to engage in agriculture, injecting new and powerful momentum into modern agriculture development.