2017 Interpretation of the Three Rural Subsidy Policies, Overview of Farmers' Application Conditions
On May 22, the Ministry of Finance and the Ministry of Agriculture issued the "Guiding Opinions on Adjusting and Improving the Three Agricultural Subsidy Policies" (hereinafter referred to as the "Guiding Opinions"), which will launch the work of adjusting and improving the three agricultural subsidy policies: the subsidy for improved crop varieties, the direct subsidy to grain farmers, and the comprehensive subsidy for agricultural inputs. Today let us take a look at the related information together!
2017 Three Rural Subsidy Policies
To the People's Governments of All Provinces, Autonomous Regions, Municipalities Directly Under the Central Government, and Cities with Independent Planning Status:
In recent years, the Party Central Committee and the State Council have attached great importance to the effective implementation of agricultural subsidy policies, and have clearly required that while steadily increasing the intensity of agricultural subsidies, agricultural subsidy policies should be gradually improved, agricultural subsidy methods should be improved, and the effectiveness of agricultural subsidy policies should be enhanced. In accordance with the requirements of the Third Plenary Session of the 18th CPC Central Committee and the Central Document No. 1 of recent years on improving agricultural subsidy policies and reforming the agricultural subsidy system, as well as the unified decision-making and deployment of the Party Central Committee and the State Council, the Ministry of Finance and the Ministry of Agriculture, in response to prominent problems arising in the implementation of agricultural subsidy policies, carried out in-depth investigation and research, and on the basis of fully soliciting and extensively listening to opinions from all sides, put forward suggestions for adjusting and improving agricultural subsidy policies. With the consent of the State Council, it was decided to adjust and improve the three subsidy policies starting from 2015: the subsidy for improved crop varieties, the direct subsidy to grain farmers, and the comprehensive subsidy for agricultural inputs (hereinafter referred to as the agricultural "three subsidies"). In order to actively and steadily advance the work of adjusting and improving the agricultural "three subsidies" policy, the following guiding opinions are hereby put forward:
1. Adjust 20% of the comprehensive subsidy funds for agricultural inputs nationwide to support moderate-scale grain operation
(1) Necessity. Since 2004, the state has successively implemented the agricultural "three subsidies," which played a positive role in promoting grain production and increasing farmers' income and in advancing agricultural and rural development. However, as profound changes have taken place in the situation of agricultural and rural development, the policy effects of the agricultural "three subsidies" have diminished, and policy effectiveness has gradually decreased, making adjustment and improvement urgently necessary.
First, transforming the agricultural development model urgently requires adjusting and improving the agricultural "three subsidies" policy. China's agricultural production costs are relatively high, and the comparative returns from grain cultivation are low. The main reason is that the agricultural development model is extensive and the scale of operation is small. Constrained by small-scale operation, great difficulties are encountered in the promotion and application of advanced scientific and technological achievements, the provision of financial services, effective connection with the market, the advancement of standardized agricultural production, the improvement of agricultural product quality, the increase of production efficiency, and the enhancement of market competitiveness. Therefore, accelerating the transformation of the agricultural development model, strengthening the capacity for grain security, and building a national system for grain security and agricultural ecological security urgently require adjusting and improving the agricultural "three subsidies" policy, increasing support for moderate-scale grain operation, and promoting sustainable agricultural development.
Second, improving policy effectiveness urgently requires adjusting and improving the agricultural "three subsidies" policy. In most places, the agricultural "three subsidies" have evolved into income subsidies for farmers. Some farmers can receive subsidies even if they do not grow grain or do not farm at all. Yet large grain growers, family farms, farmer cooperatives, and other new types of operating entities truly engaged in grain production find it very difficult to obtain subsidy support beyond the cultivated land they have contracted themselves. The role of the agricultural "three subsidies" policy in mobilizing enthusiasm for grain cultivation and promoting grain production has been greatly reduced. Therefore, enhancing the targeting, precision, and effectiveness of the agricultural "three subsidies," increasing support for moderate-scale grain operation, and improving the policy effectiveness of the agricultural "three subsidies" urgently require adjusting and improving the agricultural "three subsidies" policy.
(2) Basic content. In light of the current decline in prices of agricultural production materials such as chemical fertilizers and diesel, all provinces, autonomous regions, municipalities directly under the central government, and cities with independent planning status shall adjust 20% of the comprehensive subsidy for agricultural inputs issued in advance by the central finance, plus the pilot funds for subsidies to large grain growers and the incremental funds of the agricultural "three subsidies," to be coordinated for use in supporting moderate-scale grain operation. The support targets are moderate-scale producers and operators of major grain crops, with emphasis on new types of operating entities such as large grain growers, family farms, farmer cooperatives, and agricultural social service organizations, reflecting the principle that "whoever grows more grain shall be supported first."
Support the development of various forms of moderate-scale grain operation. This can include supporting moderate-scale land operation formed through orderly land transfer, as well as supporting other forms of moderate-scale grain operation such as land share cooperation and joint operation or land trusteeship, leading enterprises signing orders with farmers or cooperatives to achieve scale operation, and agricultural social service organizations providing professional production services to achieve regional scale operation.
All localities shall adhere to the principles of adapting measures to local conditions, being simple and easy to implement, and balancing efficiency and fairness, and shall adopt proactive and effective support methods to promote moderate-scale grain operation. Priority shall be given to supporting the establishment and improvement of the agricultural credit guarantee system. Through agricultural credit guarantees, credit guarantees and risk compensation shall be provided for loans to moderate-scale grain operation entities, focusing on solving the problems of "difficult financing" and "expensive financing" faced by new types of operating entities in moderate-scale grain operation. The subsidy funds supporting moderate-scale grain operation shall mainly be used to support all localities, especially major grain-producing provinces, in establishing an agricultural credit guarantee system, promoting the formation of a nationwide agricultural credit guarantee system, gradually building an agricultural credit guarantee network covering major grain-producing areas and major agricultural counties, strengthening the bank-guarantee cooperation mechanism, and supporting moderate-scale grain operation. Loan interest discounts, direct cash subsidies, and subsidies for major technology promotion and services may also be adopted to support moderate-scale grain operation. Appropriate subsidies shall be given for loan interest of moderate-scale grain operation entities (not exceeding 50% of loan interest). Direct cash subsidies shall be linked to the planting area of major grain crops or the area of technology promotion services, and a reasonable upper limit on subsidy scale shall be set for individual households to prevent "favoring large households." For subsidies for major technology promotion and services, methods such as "subsidy after service" and the provision of materialized subsidies may be adopted.
2. Select some regions to carry out pilot reform of the agricultural "three subsidies"
(1) Necessity. As a member of the World Trade Organization, China's agricultural subsidies are subject to the constraints of World Trade Organization rules. Continuing to increase the total amount of existing subsidy categories will further narrow China's support space within the overall scope of World Trade Organization rules, and will not be conducive to China's full use of the rules to mobilize grain farmers' enthusiasm and further raise grain farmers' income levels. Therefore, it is necessary to reform the existing agricultural "three subsidies" system and convert part of agricultural subsidies into subsidies that are unrestricted under World Trade Organization rules, such as protection of cultivated land resources. At the same time, support for moderate-scale grain operation shall be increased. In order to actively and steadily advance reform, it is necessary to select some regions to carry out pilots.
(2) Pilot content. In 2015, the Ministry of Finance and the Ministry of Agriculture selected 5 provinces, namely Anhui, Shandong, Hunan, Sichuan, and Zhejiang, and the provinces selected some counties and cities to carry out pilot reform of the agricultural "three subsidies." The main content of the pilot was to merge the agricultural "three subsidies" into the "agricultural support and protection subsidy," with the policy objective adjusted to supporting the protection of cultivated land fertility and moderate-scale grain operation. First, 80% of the existing funds of the comprehensive subsidy for agricultural inputs, plus the funds of the direct subsidy to grain farmers and the subsidy for improved crop varieties, shall be used for the protection of cultivated land fertility. The subsidy targets are all farming farmers who have contracted management rights to cultivated land. Farmers receiving subsidies must ensure that cultivated land is not left barren and that soil fertility is not reduced. Subsidy funds shall be linked to cultivated land area or sown area, and the boundaries of subsidy policy shall be strictly observed. No subsidies shall be given to cultivated land that has already been used as livestock and poultry breeding farms, forest land, contiguous grain fields converted to facility agriculture land, cultivated land requisitioned (occupied) for non-agricultural purposes, and other cultivated land whose use has changed, as well as long-term abandoned land, and land in the "compensation" part of the balance of occupation and compensation whose area and quality do not meet cultivation conditions. At the same time, farmers shall be mobilized to strengthen awareness of protecting agricultural ecological resources, proactively protect soil fertility, and be encouraged to return straw to the field and not burn it in the open. Subsidy funds used for the protection of cultivated land fertility shall be paid directly in cash to households. Second, 20% of the existing funds of the comprehensive subsidy for agricultural inputs, plus the pilot funds for subsidies to large grain growers and the incremental funds of the agricultural "three subsidies," shall support moderate-scale grain operation in accordance with the requirements for nationwide unified adjustment and improvement of the policy.