Why Is Grain Not Grown After Land Transfer? An Analysis of the Reasons

Curb the “non-grain” trend in land transfer: farmers must find grain growing profitable, and limits must also be placed on large-scale farming by industrial and commercial capital in rural areas.

Behind today's land transfer boom, the “non-grain” phenomenon is worth watching.

Recently, a survey released by a major grain-producing province showed that the “non-grain” share of land transferred by large households reached 60%, up 16.3% from 2010. According to a survey by the Ministry of Agriculture, in some areas only 6% of industrial and commercial enterprises renting land grow grain. The faster land transfers proceed, the larger the “non-grain” area becomes. Who will grow grain in the future?

Why is grain not grown on transferred land? The main reason is the low comparative benefit of growing grain. “1 mu of vegetables can match several mu of grain.” Whether they are large transfer households or industrial and commercial capital, those going to the countryside to farm all aim for more lucrative cash crops. A large transfer household admitted frankly that land rent, agricultural input prices and labor costs keep rising. In Northeast China, rent is 800 yuan per mu; in the central region, 1,000 yuan; and in coastal areas, 1,500 yuan. No matter how capable you are, it is hard to make money renting land to grow grain.

The state wants grain, while those who have taken transferred land want to make money. Is this really a contradiction? In fact, judging from China's agricultural product structure, it is broadly 70% grain and 30% cash crops. There is a market balance here: growing grain requires less input, carries lower risk and offers stable returns, while cash crops offer higher returns but also come with certain risks. Compared with industrial and commercial enterprises, farmers growing grain do not count labor costs and are more flexible in production, giving them more advantages. The advantage of companies going to the countryside lies in modern breeding and farming, not in competing with farmers to farm land. Therefore, in the future, grain growing should still rely on the broad mass of farmers. To protect farmers' enthusiasm for growing grain, support should focus on new types of business entities closely tied to farmers, while certain thresholds should be set for large-scale farming by industrial and commercial capital in rural areas.

However, some places do the opposite with transfer, giving the green light to industrial and commercial capital going to the countryside, adjusting the structure unrealistically, and, for the sake of scale and model projects, not hesitating to use administrative orders to assign targets and rush the pace. One patch of grain fields after another is converted into seedling bases and flower bases, but market demand is only so large. The more bases there are, the greater the risk. Once the industry collapses and the companies leave, it is ultimately farmers' interests that suffer.

Planting whatever is profitable is a market behavior, but excessive administrative intervention often makes it lose its true flavor. Agriculture in particular is not a simple industry: it concerns the livelihoods of hundreds of millions of farmers and the country's food security, so it cannot focus only on efficiency while ignoring everything else. To curb the “non-grain” trend in land transfer, countermeasures should be studied from the strategic height of national food security. The key point is to make grain growing profitable for farmers.

Protect enthusiasm for growing grain. Agriculture is a weak industry, so grain subsidy policies for new types of business entities should be improved, subsidy methods innovated, and precision and targeting enhanced. Explore a grain target price system and establish a dynamic grain price formation mechanism mainly regulated by the market.

Ensure that those who promote grain production do not lose out. Major grain-producing counties are mostly “high-yield poor counties.” A benefit compensation mechanism should be established more quickly, fiscal transfer payments further increased, and local enthusiasm for valuing agriculture and promoting grain production mobilized. On this basis, the state should issue guiding policies, designate permanent basic grain fields, and ensure that grain land is used for grain and may not be occupied for other purposes.

Regulate land transfer well. To manage the visible hand of government well, the policy bottom line must be upheld. The government cannot replace the market, nor can it make decisions for farmers. In particular, it should not divorce itself from the actual conditions of the local agricultural development stage and the human-land relationship, or one-sidedly pursue scale and speed in transfer.