From The Cotton "Target Price" Subsidy Policy To See The Hidden Trouble Of The New Reform Of Agricultural Subsidy

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The pilot subsidy program is to integrate the "three subsidy" (seed subsidy, grain subsidy and agricultural subsidy) into "agricultural support and protection subsidy", and then adjust the fishery oil price subsidies.

China's agricultural subsidy policy at the central level is undergoing a series of major reforms.

According to an expert close to the Ministry of agriculture, there are more than 50 agricultural subsidy projects at the central level of China. In the next agricultural subsidy policy reform, most of the agricultural subsidy policies will be made great efforts to reform and adjust.

The "target price" subsidy, like the industry's concern, will be made from soybeans.

It will be extended to three main staples, and the "three subsidy" integration pilot will be implemented nationwide in 2016.

At present, China's agricultural subsidies are basically implemented.

"The general direction of the next reform will be tilted to major grain producers, grain experts and other new agricultural operators.

In simple terms, who will cultivate grain and who will subsidize it.

It is not like now that as long as farmland is contracted in the countryside, we can enjoy various kinds of land and grain subsidies.

However, there are still some problems and contradictions in the new agricultural subsidy reform since last year's pilot projects of "target price" subsidies for cotton and soybean and the integration of "three subsidies" implemented this year.

The contradiction of the "target price" subsidy is that, in theory, the direction of reform is very correct, but the actual operation is very difficult, and even raised the subsidy cost. After the integration of the "three subsidy", the problem is that many farmers with contracted land have begun to plan to raise the rent of agricultural land.

The analysis of experts close to the Ministry of Agriculture said that although there were some contradictions and problems in the pilot reform of the two categories of "target price" subsidies and the integration of "three subsidies", the whole agricultural subsidy reform was tilted to the large grain producers, tilted to the main body of the new agricultural business, and tilted to the scale of operation.

Disadvantages of GSP

At present, various subsidy policies implemented by the central government on agriculture are mainly implemented in the form of "GSP". For example, since 2002, the successive subsidy schemes implemented by the state, such as improved seed subsidy, direct grain subsidy, comprehensive agricultural subsidy and agricultural machinery purchase subsidy (referred to as "four subsidies"), have been launched since 2004.

These policies play a greater role in promoting farmers' income.

In 2014, Han Changfu, Minister of agriculture, said that in 2013, only four subsidies were granted, and the direct subsidy of the central government to the farmers was as high as about 160000000000 yuan.

In the implementation of the "market support policy", the total amount of subsidized income paid by the central government for grain farmers and farmers in rural areas is even greater.

If we add a variety of other agricultural subsidies, the central government's annual subsidy to agriculture has exceeded 1 trillion yuan.

"Four subsidy" and "trust market policy" have been implemented for more than 10 years, and many contradictions and problems have been exposed.

The main problem of the "four subsidy" policy is that as long as there are farmers who have a policy contracted land, no matter whether they are planted or not, they do not grow grain. Every mu of land can basically get a national subsidy of about 90 yuan per year.

The result is that some farmers turn to work in the city after they get subsidies, while those who live on rented land do not enjoy subsidies for grain production.

The contradiction of the "market support policy" is that the state raises the minimum purchase price of major agricultural products every year. Now, the prices of the main agricultural products, including two countries, are higher than the international price, and the grain reserves of the state are sold for various reasons, leading to the distortion of the whole grain market in China.

In addition to the "four subsidy" and "trust market policy", there are also various contradictions and problems in recent years, such as agricultural insurance subsidies, agricultural processing subsidies, fishery diesel subsidies and animal husbandry subsidies.

The more consistent view of the industry is that the subsidy system for GSP should be vigorously reformed as soon as possible.

At this year's two national meetings, Zong Qinghou, the president of the National People's Congress and the chairman of the Hangzhou Wahaha Group, put forward a proposal that the state should change the mode of agricultural subsidies to the "generalized system" as soon as possible, reduce the heavy burden of the state's finance, and also benefit the main body of the real grain planting.

The aforementioned experts close to the Ministry of Agriculture said that in recent years, many of the motions and proposals of the NPC and CPPCC representatives suggested that the "GSP" agricultural subsidy policy be reformed as soon as possible.

The national development and Reform Commission, the Ministry of Finance and the Ministry of agriculture have conducted a lot of research.

The "target price" policy has been tested and integrated with the policy of "three subsidy" and the adjustment of fishery oil price subsidies.

A wider range of agricultural subsidy policy reform is expected to commenced in 2016.

New reform worries

In April and May last year, the national development and Reform Commission and the Ministry of Finance announced the "target price" subsidy policy for cotton and soybeans.

More than a year after the "target price" policy pilot, the relevant departments found that in the specific implementation process, the "target price" subsidy is not perfect, and there are still more complex problems and contradictions, such as difficult operation and high implementation costs.

Xinjiang was the pilot area for implementing the "target price" of cotton last year. The policy requirement is that cotton farmers must have the right to enjoy the benefits of "target price" subsidies if they sell cotton to specific institutions designated by the government.

Ma Wenfeng, an analyst with the eastern Agribusiness Consulting firm, believes that the disadvantage of this is that the government has brought monopoly opportunities to the designated cotton purchasing and storage institutions. Some of the purchasing and storage agencies may also exploit cotton farmers' interests through the cotton price reduction and other rent-seeking, and even make the state pay substantial additional subsidies.

Ma Wenfeng agreed with the general direction of "target price" subsidies, but thought that the cotton and soybean subsidy policies issued by relevant departments were contrary to the original intention of market reform. He suggested that the government should subsidize cotton farmers only according to their planting area, so that they could save costs and achieve full marketization.

The experts close to the Ministry of Agriculture said that from last year's implementation, in addition to the difficulties in operation and the high cost, there were also problems such as falling cotton prices, farmers and purchasing agencies in series to defraud subsidies.

According to Ma Wenfeng's proposal for planting area subsidy, the expert's view is that there will be loopholes in subsidized farmers only by area, by production and by sales volume. At present, the relevant parties are actively planning to make further improvements to the "target price" subsidy measures.

It is reported that, according to the national development and Reform Commission and other aspects of the plan, in the cotton and soybean "target price" pilot successful experience, the next step will be

Soybean, cotton, rapeseed, sugar and other varieties are also implementing the "target price" reform. In the future, the policy will also be implemented for wheat and rice.

Zheng Fengtian, vice president of the school of agriculture and rural development of Renmin University of China, believes that the "target price" policy is more suitable for non staple grain varieties such as cotton, soybean and sugar. For the three main staples, especially wheat and rice two rations, officials should be cautious, so as not to affect farmers' enthusiasm for growing grain.

Unlike the implementation of the target price, this year, the Ministry of agriculture and the Ministry of Finance jointly launched a pilot project to integrate the "three subsidy" policy in May and the fishery oil price subsidy policy launched in July.

However, from Shanxi, Henan and other places, many farmers who have contracted land have begun to plan to raise the rent of cultivated land, so as to make up for the "loss" caused by the integration of "three subsidies".

As for the direction and goal of the next step of agricultural subsidy reform, the experts close to the Ministry of Agriculture added that as a whole, the reform of agricultural subsidies will be tilted to the main body of large grain producers, family farms and farmer cooperatives. The main goal is to protect the national food security. For the contradictions and problems that may arise in the new reform, we will continue to explore new agricultural subsidy measures, strengthen the pertinence and effectiveness of policies, and focus on solving the major contradictions and key problems that harm the interests of the state and farmers.