Farmers' output and income both rise: Central Rural Work Conference strengthens supply-side reform
The two-day 2015 Central Rural Work Conference closed on the 25th. The conference reviewed the work on agriculture, rural areas and farmers during the "12th Five-Year Plan" period, analyzed the current situation of agriculture and rural areas, and laid out the work on agriculture and rural areas for 2016 and the "13th Five-Year Plan" period. Before the conference, General Secretary Xi Jinping issued important instructions on doing a good job in the work on agriculture, rural areas and farmers. Premier Li Keqiang issued a written instruction.
Thanks to central government policy, in the new millennium, twelve consecutive No. 1 Central Documents have focused on agriculture, rural areas and farmers, and both central and local governments have given strong financial support to agriculture. By this year, China had achieved twelve consecutive years of growth in total grain output, matching the frequency of the No. 1 Central Documents, spanning three five-year plans.
It is worth noting that the National Agricultural Work Conference was held at the same time as the Central Rural Work Conference. That conference pointed out that during the "13th Five-Year Plan" period, "six phases converge" - the decisive phase for building a moderately prosperous rural society in all respects, the key phase for consolidating the favorable situation in agriculture and rural areas, the transition phase for the agricultural development model, the climbing phase for enhancing agricultural competitiveness, the crucial phase for comprehensively deepening rural reform, and the deepening phase for advancing urban-rural integration.
In the final year of the "12th Five-Year Plan", our country has already stood at a critical period of accelerating the transformation from traditional agriculture to modern agriculture.
The positioning of the "agriculture, rural areas and farmers" issue as the top priority
Successive central governments have always attached great importance to the "agriculture, rural areas and farmers" issue. The previous administration placed it in the position of "the top priority of the whole Party's work", and the current administration has remained consistent with this, once again raising this formulation. On the work related to agriculture, rural areas and farmers, General Secretary Xi Jinping emphasized in his instructions that valuing agriculture and consolidating the foundation is the basis for stabilizing the people. During the "13th Five-Year Plan" period, we must persist in making the proper resolution of the "agriculture, rural areas and farmers" issue the top priority of the whole Party's work.
Summarizing the "12th Five-Year Plan" period, General Secretary Xi Jinping commented: "During the '12th Five-Year Plan' period, our country's agricultural and rural development achieved abundant results, which played an important role in helping us gain the initiative in overall work. At the same time, we must recognize that there are still many difficulties and challenges facing our country's agricultural and rural development, and at no time can we neglect or relax the work related to agriculture, rural areas and farmers."
Since 2016 is the opening year of the "13th Five-Year Plan", next year's rural work will be carried out around the plan. Therefore, the conference emphasized that during the "13th Five-Year Plan" period, we must firmly establish and effectively implement the development concepts of innovation, coordination, green development, openness and sharing, increase efforts to strengthen agriculture, benefit farmers and enrich rural areas, deeply advance all rural reforms, solve the difficult problems of agriculture, rural areas and farmers, strengthen the driving force for innovation, cultivate development advantages, actively advance agricultural modernization, solidly carry out poverty alleviation and development work, raise the level of building a new socialist countryside, and make agriculture and rural areas a vast world of great promise.
Li Qiang, chairman and chief analyst of Shanghai JC Intelligence Co., Ltd., analyzed to a reporter from China Business News that agriculture is a foundational industry. Whether in history or now, the idea of strengthening the foundation and consolidating the base should not change, and the memory of past grain shortages has made the ruling party have to consider attaching importance to grain output and pursuing a bumper harvest. "With grain in hand, there is no panic in the heart," and the consecutive increases that have continued through this year are precisely based on this logic. However, the background of current economic conditions has changed. The new concept of food security needs to shift from simply pursuing quantity to, while ensuring stable quantity, attaching importance to the quality of agricultural products, improving agricultural production efficiency, and improving the agricultural ecological environment.
Li Qiang stated that the new concept of food security has four points: quantity, quality, efficiency and ecology. This is consistent with supply-side structural reform. What structural reform addresses is the problem of improving the quality and efficiency of the agricultural supply system, thereby achieving agricultural modernization. However, this is a medium- and long-term task for the next five years or even longer. The severe challenge faced in the short term is the growing problem of enormous grain inventories, as well as the need behind this to improve the price formation mechanism for grain and other important agricultural products, the purchase and storage policies, and the mechanism for increasing farmers' incomes.
Premier Li Keqiang pointed out in his written instruction that during the "13th Five-Year Plan" period, attention should be paid to analyzing new situations that emerge after a bumper grain harvest, and measures should be taken in a targeted way to continue mobilizing farmers' enthusiasm for developing modern agriculture.
Li Qiang analyzed that the new situations emerging after a bumper grain harvest include farmers not increasing their incomes despite a bumper harvest, and unsustainable agricultural production capacity achieved at the cost of overdrawing the ecological environment.
In late October this year, reporters from this newspaper conducted research in several major grain-producing counties in southern Henan and found that this year farmers faced "difficulty selling grain", not only because wheat quality did not meet standards, but also because of the sharp drop in corn prices, resulting in high agricultural output but no increase in income. The price decline reflects the urgent need to adjust the domestic minimum purchase price policy and the temporary purchase and storage policy, because the implementation costs of these policies are too high, manifesting as excessive fiscal and inventory pressure, as well as fueling the widening price gap between domestic and foreign grain.
Supply-side structural reform of agriculture
After summarizing the achievements in agriculture, rural areas and farmers during the "12th Five-Year Plan" period, the conference pointed out that during the "13th Five-Year Plan" period, work on agriculture and rural areas must firmly establish a strong awareness of shortcomings, adhere to a problem-oriented approach, effectively lengthen agriculture, the "short leg" in the "synchronization of the four modernizations", and fill in the shortfall of rural areas in building a moderately prosperous society in all respects.
By 2020, when the "13th Five-Year Plan" ends, this year is also the time node set by the central government for the first of the "two centenary goals", namely "building a moderately prosperous society in all respects". In this historical period of "six phases converging", agriculture, as the short leg in the "synchronization of the four modernizations", especially needs to accelerate modernization.
Dr. Wang Yuxin of Guilin University of Aerospace Technology told a reporter from China Business News that the major judgment of "top priority" made by the central government after comprehensively considering various factors is most directly due to the fact that if China is to be strong, agriculture must be strong and rural areas must be prosperous. As the ruling party, the Communist Party of China must fulfill its political promise to let the people live a better life. Therefore, during the "13th Five-Year Plan" period, it must lengthen agriculture, this short leg, promote industrial upgrading, fill in the shortfall of rural areas, and expand effective supply. These things must be done sooner or later, and doing them earlier will yield results and benefits earlier.
On November 10 this year, General Secretary Xi Jinping proposed at a meeting of the Central Leading Group for Financial and Economic Affairs that while moderately expanding aggregate demand, efforts should be focused on strengthening supply-side structural reform. On the 17th, when Premier Li Keqiang presided over a meeting on the compilation of the "13th Five-Year Plan" Outline, he once again emphasized that efforts should be made on both the supply side and the demand side to promote industry toward the medium-to-high end.
The economic term "supply-side reform" has attracted academic attention.
The Central Economic Work Conference held recently mentioned that to stabilize economic growth, greater attention should be paid to supply-side structural reform, and proposed five major tasks for next year: cutting overcapacity, reducing inventories, deleveraging, lowering costs and filling in shortcomings. At this Central Rural Work Conference, it was emphasized that efforts should be made to strengthen supply-side structural reform of agriculture. It is worth noting that in the Xinhua News Agency draft, "structural reform" appeared a total of five times.
Wang Yuxin stated that structural overcapacity is not only manifested in the industrial sector, but is equally prominent in the agricultural sector. Moreover, this overcapacity, like that in industry, comes at the cost of overdrawing the ecological environment, and much of it is unsustainable. Therefore, it is necessary to adjust the structure of agricultural production, improve the quality of agricultural products, and raise agricultural production efficiency to truly form an effective supply of agricultural products with a reasonable structure and strong guarantees.
Cheng Guoqiang, a researcher at the Development Research Center of the State Council, believes that China's current grain supply situation can be summarized as insufficient total amount, with structural shortage and surplus coexisting. There is still more of the grain varieties that are abundant, and there is still none of those that are lacking. For example, there is a structural surplus of corn, a structural shortage of soybeans, and for wheat, strong-gluten wheat and weak-gluten wheat cannot be produced domestically, while medium-gluten wheat is already in surplus, and southern indica rice is in surplus, yet production is still increasing.
Among the five major tasks mentioned at the 2015 Central Economic Work Conference, the agricultural sector also faces the tasks of "reducing inventories, lowering costs and filling in shortcomings". Regarding these three tasks, the tone of the conference was to attach great importance to them, and corresponding countermeasures were given for each.
For example, for reducing inventories, it is required to accelerate the digestion of excessive agricultural product inventories and accelerate the processing and conversion of grain; for lowering costs, it is required to reduce production costs and improve agricultural efficiency and competitiveness by developing appropriately scaled operations, reducing unreasonable use of chemical fertilizers and pesticides, and carrying out socialized services; for filling in shortcomings, it is required to strengthen weak links in agricultural supply such as agricultural infrastructure, and increase the production of agricultural products in short supply in the market.
The agricultural problems corresponding to the three tasks of agricultural supply-side structural reform are precisely the "difficulties and challenges" mentioned by General Secretary Xi Jinping in his instructions. Li Qiang said that carrying out structural reform conforms to the essential requirements of modern agriculture, and also conforms to the requirement of "vigorously advancing agricultural modernization" proposed in the draft recommendations for the "13th Five-Year Plan". The core of the reform is to improve the quality and efficiency of the agricultural supply system.
On how to accomplish the above three tasks, the conference required "establishing the concept of big agriculture and big food", and promoting the coordinated management of grain, cash crops and feed, the integration of agriculture, forestry, animal husbandry and fisheries, the integration of planting, breeding and processing, and the integrated development of the primary, secondary and tertiary industries. This is consistent with the requirements of the draft recommendations for the "13th Five-Year Plan".
The conference also mentioned that safeguarding national food security is the basic bottom line of agricultural structural reform. It is necessary to protect staple grains such as rice and wheat, protect arable land, protect production capacity, and protect grain production in main producing areas, especially core producing areas, to ensure that grains are basically self-sufficient and staple grains are absolutely safe. It is necessary to give full play to the leading role of various forms of appropriately scaled agricultural operations in structural reform. Agricultural support policies should be tilted toward scaled operation entities, while attention should also be paid to letting farmers share the results. It is necessary to improve the price formation mechanism for grain and other important agricultural products and the purchase and storage policies, so as to provide impetus for agricultural structural reform.
Three major ways to increase farmers' income
Centering on "valuing agriculture and consolidating the foundation is the basis for stabilizing the people", the conference emphasized that local Party committees and governments at all levels must unremittingly cultivate an atmosphere of valuing agriculture and place work on agriculture and rural areas in the top-priority position.
In terms of financial support for agriculture, the previously held Central Economic Work Conference clearly proposed to "ensure stable growth of farmers' incomes". This rural work conference proposed giving priority to ensuring fiscal investment, ensuring that intensity does not weaken and that the total amount increases. It is necessary to increase the integration of agriculture-related funds, give play to the guiding role of fiscal investment in structural reform, and leverage more social capital into agriculture and rural areas. It is necessary to tap the internal potential of agriculture, promote the integrated development of the primary, secondary and tertiary industries, make good use of rural resources, assets and funds, and increase farmers' incomes through multiple channels.
This is not only because the goal and task of poverty alleviation must be completed - the 70.17 million poor people targeted by precision poverty alleviation and precision poverty elimination are mostly located in rural areas and belong to the farmer population - but also because under the background of the new normal of the economy, pressure on economic growth is very great. The whole Party must form a joint force to develop the economy and ensure the growth of farmers' incomes, so that the economic growth targets for the entire "13th Five-Year Plan" period and the grand goal of building a moderately prosperous society in all respects can be more effectively guaranteed and smoothly realized.
Li Qiang stated that there are three major ways to increase farmers' incomes, corresponding to rural resources, assets and funds.
First, make full use of existing agricultural production factors, agricultural resources and policy support, with coordinated management of grain, cash crops and feed, integration of agriculture, forestry, animal husbandry and fisheries, integration of planting, breeding and processing, and integrated development of the primary, secondary and tertiary industries. This includes the leveraging effect produced by the entry of "Internet Plus" into agriculture, including agricultural product e-commerce. Second, guide fiscal funds and social capital to participate in the entire industrial chain of scaled planting and breeding. Future fiscal support funds should also be tilted toward scaled operations and cooperatives, aiming to increase farmers' incomes and improve production efficiency. Third, reform rural collective assets such as contracted land, homestead land and collective assets, and increase farmers' property income.
It is worth noting that the coordinated management of grain, cash crops and feed brings adjustments in the planting of grain crops, cash crops and feed crops.
On June 28 this year, at a symposium on agricultural structural adjustment in the four northeastern provinces and autonomous regions held in Changchun, Jilin, specific opinions were studied and proposed for next year's planting structure adjustment, especially the optimization of the corn planting structure. Minister of Agriculture Han Changfu emphasized that corn planting structure adjustment is the key and focus of this round of agricultural structural adjustment and must be highlighted.
Han Changfu said that adjustment should be adaptive, with the focus on reducing corn in high-latitude and arid areas and expanding the planting of drought-tolerant miscellaneous grains and beans; adjustment should combine planting and breeding, with the focus on balancing grain and feed, appropriately reducing grain corn and developing silage corn; adjustment should protect the ecology, with the focus on reducing corn planting in rocky desertification areas and developing fruit tea and forage grass; adjustment should combine planting and nurturing the land, with the focus on changing continuous corn cropping to grain-bean rotation; adjustment should ensure both protection and reduction, stabilizing grain production capacity; adjustment should revolve around the market, with the focus on giving play to the leading role of leading enterprises and new types of business entities. The focus of corn planting structure adjustment is the Northeast region, and the four northeastern provinces and autonomous regions must reduce corn planting area next year.
Li Qiang stated that due to overcapacity in grain production and the resulting overdrawing of the ecological environment, the planting structure will face adjustment. With grain-to-feed conversion, corn planting area will decline, and feed crops such as silage corn will increase. This will in turn lead to changes in the structure of the breeding industry, so that meat consumption, which in the past was dominated by pork with less beef and mutton, will in the future see beef and mutton output rise year by year, with prices trending downward accordingly.