Reform and Innovation Ideas to Drive Agricultural Modernization
The 2014 China Grain and Food Security Strategy Summit opened in Beijing. Li Wei, Director of the Development Research Center of the State Council, said at the meeting that in responding to the new challenges facing food security, the fundamental way forward is still to drive China's agricultural modernization through reform and innovation. The Third Plenary Session of the 18th CPC Central Committee made the decision on comprehensive reform, and the Fourth Plenary Session made the decision on governing the country according to law. We must continue to enhance our grain security capacity and intensify law-based food safety protection. Let me briefly emphasize this.
Innovate the agricultural production system and actively develop various forms of scale operation. This must be compatible with the urbanization process and the scale of rural labor transfer, with the progress of agricultural science and technology and the improvement of production methods, and with the improvement of the level of agricultural socialized services. We should take family farms and cooperatives as the leading force and actively develop various forms of moderate-scale agricultural operation.
⟦NL> We must deepen the reform of the rural land system, accelerate the pace of confirming, registering and certifying contracted land rights, implement the system of separating three rights, and guide the transfer of land management rights for those who settle in cities and towns. This passage is somewhat understandable for China, but for foreign friends it is a bit of a tongue twister. There are too many concepts in it, concepts that have not developed in your countries, but for us two or three words carry very deep connotations. In addition, in rural reform, the land issue is the hardest fortress to capture.
We must improve the diversified agricultural service system and provide scale operators with comprehensive services in information, technology, purchasing and marketing, finance, agricultural machinery and other areas.
The following is the full text of the speech:
Li Wei: Respected Mr. Luo Bin, ladies and gentlemen, good morning to you all!
I am very pleased that here at Diaoyutai we are once again gathered with many old friends, and I have also met many new friends. A year ago, with the theme of establishing an efficient, open and sustainable food security guarantee, we conducted in-depth discussions on major issues in the field of food security. The results of the conference received great attention from all sectors of society, including of course the international community.
They played a positive and important role in the formulation and formation of China's agricultural policy and grain policy. Today, we will continue in-depth discussions around the theme of using reform and innovation to continuously enhance the capacity for grain and food security.
We look forward to this conference likewise achieving fruitful results. On behalf of the Development Research Center of the State Council, I would like to extend a warm welcome and heartfelt thanks to all the guests for coming!
At the Central Economic Work Conference held at the end of last year, General Secretary Xi Jinping placed effectively ensuring national food security first among all economic work and clearly put forward the national food security strategy of taking self-reliance as the main approach, basing ourselves on domestic production, ensuring production capacity, moderately importing, and relying on scientific and technological support. Not long ago, Premier Li Keqiang pointed out in a speech at the United Nations Food and Agriculture Organization that food is the first necessity of the people, a concept long upheld by the Chinese people. We will always adhere to basing ourselves on domestic production to achieve basic self-sufficiency in grain, which fully demonstrates that Chinese leaders attach great importance to ensuring food security and supply in governing the country. As a large developing country with a huge population, we have made strenuous efforts to ensure that all citizens can eat enough and eat with confidence, and we have achieved notable results, though of course there are quite a few problems.
From 1978 to 2013, China's grain output increased by 98%, almost doubling; oil crops increased nearly 6 times; fruit output increased 37 times; and aquatic product output increased more than 12 times. From 1996 to 2013, China's meat output increased by 86%, poultry egg output increased by 46%, and dairy output increased 4 times. At present, markets in both urban and rural China are full of a dazzling array of products, and consumers have greatly expanded choices.
China's decades of reform and opening up have not only in the field of grain supply, but also in other fields of commodity supply, thoroughly changed the shortage economy that characterized the socialist economies before the Cold War era. Now, in many commodities, including the supply of grain and agricultural products, we are to a considerable extent characterized by weakness, and in many areas production capacity exceeds demand.
Consumers' choices have been greatly expanded. While ensuring sufficient quantity and abundant variety, we are striving to improve the level of food safety protection. In recent years, the overall qualification rate of China's agricultural products has remained above 95%, approaching 97% in 2013, and was 97.3% in the first three quarters of this year. The overall qualification rate of food safety supervision spot checks has also remained above 90%.
Not only those present here, after this figure was released to society, some people raised certain doubts: do you believe it? In any case, I believe it. Because product quality involves the issue of standards, and the determination of high or low standards may not be entirely consistent domestically and internationally. Of course, regarding this determination of standards, some people may also raise opinions about the samples covered by spot checks or inspections and the aspects they represent. But the data I mentioned at the beginning is based on evidence.
These achievements have not come easily, but we must clearly see that in the level and capacity of grain and food security protection, we still face a huge gap. How to meet the new requirements of urban and rural residents for the quantity and quality of food consumption will be a long-term and highly challenging and arduous task.
This challenge can be understood from the following aspects:
In terms of quantity demand, the peak of society-wide grain demand has not yet arrived. Total population, urbanization and residents' income are the three major factors affecting total grain demand. In the coming period, China's total population, urbanization level and urban and rural residents' income levels will all continue to grow. Together they will undoubtedly drive the total consumption of grain and other major agricultural products to increase continuously.
Academic predictions for China's population peak do indeed still differ, but taking a middle figure, it is roughly between 1.4 billion and 1.5 billion, with 1.5 billion being China's highest population peak. At the end of 2013, the population was 1.36 billion. Based on this, China's total population will increase by at least 40 million to 140 million in the next 20 years. If it is 1.4 billion, then from 1.36 billion it increases by 40 million; if it is 1.5 billion, it increases by 140 million. One more person means one more mouth and one more stomach, so grain demand will undoubtedly increase.
Based on the current overall per capita annual consumption of 400 kg of grain, population growth alone will cause total grain demand to increase by 16 billion to 56 billion kg. The range is a bit wide, but the upper limit of 56 billion kg is not a small figure.
In terms of urbanization, China's registered household population is 36%, and there is still great room to reach the level of most countries at 70% to 80%. Research shows that although urban residents consume less staple grain than rural residents, their consumption of livestock products is far higher than that of farmers. Urban residents' direct and indirect grain consumption is much higher than that of farmers. When population moves from rural areas to cities and towns, it will increase total urban consumption. In terms of residents' income, as China's economy continues to develop, urban and rural residents' income will also continue to rise. After the problem of food and clothing is basically solved and before the adjustment of the food consumption structure is fully in place, higher income levels will lead to a reduction in direct staple grain consumption. Correspondingly, they will also lead to increased consumption of animal-based foods, and total grain consumption will undoubtedly show an increasing trend.
Countries such as South Korea and Japan are broadly similar to China in grain consumption, though of course there are now relatively large differences. According to the growth patterns of their food consumption, only when per capita GDP reaches about 20,000 US dollars does the transformation and upgrading of the food consumption structure basically reach completion. Of course, this is not merely the concept of a per capita GDP of 20,000 US dollars. With the growth of per capita GDP and the large-scale expansion of international exchanges and human activities, in fact food consumption structures are becoming increasingly similar, with more things in common, and this will probably be the case in the future as well.
From this perspective, we still have a long way to go in terms of income level. In short, in the coming period China's total population will continue to increase, and it will be in a stage of rapid development as the urbanization rate rises from about 50% to 70%. It will be in the development stage from an upper-middle-income country to a high-income country. This period will be one in which China's food consumption structure continues to change. There is still great room for growth in the consumption of animal-based foods such as meat, poultry, eggs and fish. Total grain demand will inevitably continue to increase. From the perspective of quality demand, urban and rural residents have ever higher requirements for the quality and safety of grain and food. As urban and rural residents' income and living standards improve, health awareness also continues to rise. Their requirements for food consumption accordingly rise to a higher level. People are no longer satisfied with eating enough, and further demand higher quality, especially concern about quality and safety.
However, our country's production methods are relatively backward, and in addition there is a lack of integrity among some market participants, and our market legal supervision mechanism is imperfect, with government supervision lacking to a certain extent. If I use a neutral formulation, I would say that the foundation of food safety in our country is not yet solid, and the key point is that quite a few environmental problems are rather prominent.
China has a large population and little land, so it needs to develop intensive agriculture and use chemical fertilizer inputs to increase production. But improper use can also produce more chemical residues. China has more than 200 million farming households, more than 400,000 food production enterprises, more than 3 million food business entities, and countless small workshops and street vendors. Food technology is highly specialized, safety-related and concealed, and it is very difficult for regulatory departments, production and business operators and consumers to achieve complete information symmetry.
From the field to the dining table, from the soil to the tongue, there are so many links, and our coverage of so many people is so vast, that a problem in any one link may produce a not insignificant safety incident.
We now already live in an era of big data and informatization. A local problem or an individual case may spread rapidly and produce a relatively large negative social impact. In recent years, the food safety issue has been one of the hot issues of widespread social concern, and also a prominent headache. How to effectively ensure food safety by strengthening supervision of the whole process is a long-term and arduous task. In addition, from the perspective of production costs, the comparative advantage of grain production in our country may now be continuously weakening. With the in-depth development of industrialization and urbanization, in recent years the cost of China's grain production has risen rapidly. From 2004 to 2012, the land cost of the three main grains of rice, wheat and corn increased at an average annual rate of 15.7%, more than double our current GDP growth. Labor costs increased at an average annual rate of 10.4%, and material and service costs increased at an average annual rate of 8.7%, both higher than the 7.3% growth rate of the production prices of the three main grains in the same period. Price growth was 7.3%, even a double-digit figure or above.