Water-saving irrigation companies receive over 1.5 billion yuan in support, ushering in a good opportunity for development
According to the website of the Ministry of Finance, in 2014, the central government allocated 1.55 billion yuan in comprehensive agricultural development funds to support the construction of water-saving supporting renovation projects in key medium-sized irrigation districts, improving the comprehensive agricultural production capacity, especially for grain.
Since July, Henan, Jilin, Liaoning and many other places have successively suffered the most severe drought in 63 years. Analysts pointed out that against the backdrop of severe drought, the central government's allocation of 1.55 billion yuan this time for water-saving supporting renovation will play a positive role in boosting farmland drought resistance, and will be directly beneficial to listed companies in the water-saving irrigation sector.
Realizing "water supply on demand" for irrigation
A China Securities Journal reporter's earlier surveys in multiple drought-stricken areas found that branch canals and field canals in many farmlands were severely silted up, and some had even been planted with corn and soybeans by farmers. Farmland water conservancy and irrigation facilities were weak, and water-saving irrigation facilities were scarce.
It is reported that this batch of funds is mainly used for dredging and lining anti-seepage of canals (ditches), supporting improvement and renovation of main and branch canal (ditch) system structures, and construction of modern irrigation district management systems, so as to strengthen farmland water conservancy infrastructure and provide water source guarantees for comprehensive agricultural development project areas.
In order to realize the organic combination of modern renovation of key medium-sized irrigation districts with high-standard farmland construction under comprehensive agricultural development, and to build China's core grain production areas, in 2014, comprehensive agricultural development selected one irrigation district in each of 4 provinces (regions), namely Jiangsu, Henan, Shaanxi and Ningxia, and launched pilot work for simultaneous planning and design, simultaneous construction and implementation, and simultaneous realization of benefits in water-saving renovation of medium-sized irrigation districts and high-standard farmland construction.
In accordance with the requirements of modern irrigation district and high-standard farmland construction, modern means are used to supply water according to crop water demand, realizing "water supply on demand" for agricultural irrigation, fully embodying the informatization, digitalization and intelligentization of water supply and management in irrigation districts, exploring a feasible path for the modern renovation of medium-sized irrigation districts, and providing solid backbone irrigation and drainage engineering support and water source guarantees for high-standard farmland construction under comprehensive agricultural development.
Related listed companies seize the opportunity
Since the beginning of this year, the central government has issued multiple policies to promote the development of water-saving irrigation. In March this year, the Ministry of Water Resources, together with the National Development and Reform Commission and the Ministry of Finance, completed the compilation of the National Drought Relief Plan Implementation Scheme (2014-2016) and officially launched its implementation, with a total central investment of 29.98 billion yuan, of which 10 billion yuan in 2014, to support 25 provinces and cities included in the plan to implement 2014 drought relief emergency water source projects and improve drought relief emergency support capacity.
In August, the Ministry of Water Resources held a review meeting on the National Modern Irrigation Development Plan, clarifying that by 2020, the national effective irrigation area for farmland will reach 1 billion mu, with an additional 300 million mu of water-saving irrigation engineering area, including more than 150 million mu of new high-efficiency water-saving irrigation engineering area, and the effective utilization coefficient of farmland irrigation water will reach above 0.55. According to relevant market estimates, completing the target tasks proposed in the plan is expected to drive investment of more than 250 billion yuan, which will be beneficial to regional water-saving irrigation pipe and equipment manufacturers and engineering contractors with technical and market advantages.
In the second half of the year, the Water Pollution Prevention and Control Action Plan, with total investment exceeding 2 trillion yuan, is about to be fully implemented. Industry insiders believe that the water-saving irrigation industry will usher in a golden period of development.
With the increase in water conservancy investment, related listed companies are also seizing the opportunity. Taking Dayu Irrigation as an example, the company has created a comprehensive integrated business development model of "design + products + engineering + services," promptly grasping policy opportunities such as land transfer and ecological agriculture, and exploring business models under new agricultural opportunities.
In the future, as the state further increases support for water-saving irrigation, listed companies in water-saving irrigation and water conservancy pipe materials, such as Dayu Irrigation, *ST Xinye, and Yasheng Group, will be the first to benefit.