Who exactly do agricultural subsidies go to? An analysis of subsidy recipients in 2016

First, one fact must be made clear: grain prices have fallen sharply. In 2015 the temporary storage price for corn was cut by more than 1 mao per jin, and in 2016 prices will continue to fall further.

What does the government say?

Chen Xiwen, director of the Office of the Central Rural Work Leading Group, proposed that grain prices will continue to return to a level close to international market grain prices, which will help curb grain imports, reduce domestic grain stocks, and restore circulation in the domestic grain market.

Analysis:

Since prices are returning to international grain prices, everyone knows what international grain prices are. Soybeans are 2900 yuan/ton, corn is 1600 yuan/ton. If grain prices really drop to this level in 2016, what happens to us farmers' income? If balancing grain prices comes at the expense of farmers' interests, would you do it?

Definitely not. When that happens you will just throw in the towel - this old man is not farming anymore!

If nobody farms, who will supply the grain? So in 2016 agricultural policy will first protect farmers' interests!

Now that agricultural policy has been mentioned, let's talk about it first:

In late 2015, why was there an urgent merger of the “three agricultural subsidies”?

In the past the state guaranteed farmers' income through market-support procurement plus the three agricultural subsidies: the comprehensive agricultural input subsidy, the direct subsidy, and the improved seed subsidy. The result was that domestic grain prices rose higher and higher, lost competitiveness, and the grain system stood on the edge of a cliff.

At the same time, since joining the WTO, that club of big spenders, high-price market-support procurement also violates the rules. It belongs to the “amber box subsidies” that cause distorted prices, and is explicitly prohibited.

Therefore, the old three agricultural subsidies were not actually delivered where they were needed. As land transfer accelerated, land gradually transferred into the hands of people who can farm and know how to farm. Yet most of these subsidies were paid to the original land contractors, and large operators who took over transferred land basically could not get them. So large grain-growing households not only fail to get the policy benefits, but with falling grain prices they are bound to suffer unbearably, and there is bound to be instability!

So the state urgently merged the three agricultural subsidies to protect the income of grain growers.

Policy reform: subsidies go to those who actually grow grain

Starting in 2015, the state began piloting “green box subsidies”, such as pest and disease control, technology extension, agricultural infrastructure construction, and storage subsidies. In other words, subsidies go to the production stage, so that those who actually grow grain can receive them.

At present the central finance department has already issued ahead of time 2016 funds of 201.1 billion yuan for agricultural support and protection subsidies, agricultural machinery purchase subsidies, agricultural technology extension and service subsidies and other related funds, with average subsidy funds of about 120 yuan/mu, to support actual growers in carrying out agricultural production.

In 2015, who received the 20 billion yuan in subsidies that disappeared?

If you calculate carefully, subsidies were lower in 2015. In 2014 the national comprehensive agricultural input subsidy funds were 107.1 billion yuan; calculated at this standard, 20% is 21.42 billion yuan. Where did this money go? In fact, what was reduced was traditional subsidies, while production-stage subsidies increased.

These more than 20 billion yuan were used to support large growers, family farms, farmers' cooperatives and other appropriately scaled new-type operating entities, and support for these entities will increase year by year. In 2015 the funds used to support these entities exceeded 23 billion yuan, and in 2016 they will increase further!

In 2016, direct subsidies to appropriately scaled new-type operating entities will exceed 35 billion yuan!

In 2016 the state will enable those who truly grow grain to receive more subsidies, so that subsidies are actually delivered, thereby making up for the losses caused by falling grain prices. Newly added agricultural fiscal funds are already tilting toward large grain growers. Preliminary estimates show that in 2016, direct subsidies to appropriately scaled new-type operating entities will exceed 35 billion yuan!