Han Jun: Large-scale farms are not suitable for China

On May 17th, Han Jun, deputy director of the Office of the Central Financial and Economic leading Group, delivered a keynote speech on China's agriculture at the fourth China International Agricultural and Business Summit Forum 2015 held by the Beijing campus of the China Europe International Business School.

Han Jun believes that it is necessary to activate the right of management of rural land, but to prevent the forced circulation of farmers and the one-sided pursuit of large-scale operation, large-scale farms are not suitable for China's national conditions.

The following is the full text of Han Jun's speech:

Good morning, everyone. It is a great honor to attend the fourth Agricultural and Business Summit Forum. I also had the honor to attend the invitation of President Liu last year.

Today our theme is very good, ushering in a new era of modern agriculture. The development of our agriculture is faced with many new challenges. In China, we always consider agricultural problems, rural problems and farmers' problems together. Agricultural problems are not like industrial problems and commercial problems. Industrial and commercial problems may be mainly a problem of industrial development. In China, the agricultural problem is not only an industrial problem, but also a farmer's problem, any of our agricultural policies. We should consider its impact on farmers, their employment and their welfare. Our agriculture has indeed entered a new stage and is facing many severe challenges.

General Secretary Xi Jinping of China pointed out that if China wants to strengthen agriculture, it must be strong, if China wants to be beautiful, it must be beautiful, and if China wants to be rich, it must be rich. This is one of the most basic principles for us to formulate policies on agriculture, rural areas and farmers. Now we are talking about the new era of modern agriculture. As far as China is concerned, when formulating policies in the new stage of agricultural development, we are now facing two of the most severe challenges:

Challenge one, our resource and environmental constraints have reached the limit, in such a context, how can we ensure the food security of our country, especially how can we improve the capacity for sustainable development of agriculture? This is a question that we cannot avoid.

The second challenge is that the prices of domestic agricultural products are approaching in an all-round way, even exceeding those of international agricultural products. In such a context, whether China's agriculture is still competitive or not is also a question that we must answer.

Next, I can tell you about the situation first. first of all, the ceiling effect of agricultural products. Now we have to face. This is the data by the end of March. There are some price gaps in corn, soybeans, wheat and rice. After the international grain grain is taxed on shore, the CIF price is much cheaper than ours. A jin of corn is nearly 50 cents cheaper and a jin of wheat is 35 cents cheaper. A jin of rice is more than 50 cents cheaper, soybeans are no longer subject to tariff quotas, and soybeans have come in in large quantities. However, because of the restrictions on tariff quotas for corn, wheat and rice, the tariffs within the quotas are very low, but the tariffs outside the quotas are very high. In the next three to five years, we do not have to worry too much about the impact of cheap foreign grains on the Chinese market, because it is very difficult to enter outside the tariff quotas. Last year, our grain self-sufficiency rate was more than 98%, and the soybean self-sufficiency rate is now only about 18%.

What may be more serious now is that our oil crops and sugar crops are quite cheap to import sugar within the tariff quota in April. We have levied 50% tariff on sugar outside the quota, and the imported sugar is 500 yuan cheaper than our one ton. There is nothing you can do. It is about to enter. This is a complete market behavior. Our dairy industry is now facing a great impact. Officials from the Dutch Ministry of Agriculture attended our forum. I asked Mr. Pan Gang, chairman of Yili, that it is about 2 yuan to buy a jin of fresh milk in the United States and 2.6 yuan in Australia and New Zealand. The cost price of fresh milk per kilogram in China is 3.7 yuan for farmers, and if you are less than 3.7 yuan, farmers may not be profitable. Now it has been lower than this price for 16 consecutive weeks, and the production cost of one ton of raw milk powder is more than 10,000 yuan higher than abroad.

Last year, we only imported more than 8 million tons, that is to say, our grain self-sufficiency rate is still more than 98%. Now there are more and more products replacing corn, because the import of corn is restricted by tariff quotas. In order to circumvent the restrictions of tariff quotas, the import of barley, sorghum, corn lees and DDGS has increased explosively in the past two years. Barley used to make beer, but now half of barley is used for feed, while sorghum is mainly used for feed. In the first quarter, we imported 2.6 or 700 million tons of sorghum and barley. Last year, our imports of these products alone replaced at least 10 million tons of corn, and now the stock of corn has risen sharply in the last two years.

There is a lot of discussion in China (including on the Internet). Why does China import soybeans and can it produce its own? We think that we may not have so many resources for our own production. One of the most realistic problems facing China is that we lack both edible vegetable oil and feed protein. On the one hand, we import soybeans to meet the people's demand for vegetable oil for food. On the other hand, it is also to meet the development of our modern animal husbandry and the demand for high-quality protein feed.

When it comes to our agricultural problems, in a country as large as China, food security is a question that we cannot get around and must be answered. Since China's food security reform and opening up, there are many international evaluation index systems for food security. In recent years, the British Economist Intelligence Unit has released a report on global food security knowledge. China ranks very high every year, relative to our per capita GDP and economic development level. Our food security index is still very high, ranking 42nd out of 107 countries, and India is about 43th in my impression.

The problem we are facing now is that the impact of imports on the domestic market is unavoidable. At present, grain has tariff quota management, and some products managed by tariff quota are better now. Without tariff quota management, the problem is more prominent now. The development of our dairy industry is now at a moment of life and death, especially under the impact of melamine, the shadow has not completely dispersed. The European Union announced this year that it would abolish the management of milk production quotas that had been in place for 31 years, mainly to deal with the market of new countries, especially China. In recent years, due to the signing of the free trade agreement between China and New Zealand, New Zealand's share of the global dairy market has reached 37%, while that of the European Union is only 31%. The EU has also abolished quota management in order to come to the Chinese market and the market of new countries. can increase its market share. The capping effect of price this is a hurdle, and we have to get over it.

The second problem is the cost of our agricultural production, which we call the floor, and the squeezing effect of its lifting is becoming more and more obvious. it is very clear that in the past, farmers' farming did not count the cost of labor, but now the cost of labor is getting higher and higher. now there are more and more inputs into agricultural machinery and chemical fertilizers, and the cost of agricultural production is still in a rapidly rising channel.

The third issue is that we are talking about agricultural subsidies, which we call the yellow line. when we joined the WTO, we had some measures for the management of tariff quotas, and we also promised to impose online restrictions on agricultural subsidies. when we went online to join the WTO, we promised that our yellow box subsidies should not exceed 8.5% of agricultural output value, that is, government subsidies that distort production and trade. Now some of our products have exceeded the limit of the yellow line, but we can have a lot of room for regulation of this yellow line. For example, in recent years, the European Union has adjusted its yellow line agricultural subsidy from 70 billion euros to 7 billion euros. We are also studying the experience of the European Union. For example, in a major policy adjustment this year, we have adjusted agricultural subsidies (grain subsidies and comprehensive subsidies for agricultural materials). After the adjustment, we can use hundreds of billions of comprehensive subsidies for agricultural means of production, which used to be yellow box subsidies. by decoupling this subsidy from the price of agricultural materials, we can turn it into a green box subsidy. This problem is a potential challenge for policy formulation. But we have a lot of space, our yellow box is still far from being used up, and there is still a lot of room for the yellow box to the green box in the future.

The biggest problem is resources, the red light of the environment has begun to light up, some aspects of resources and environmental constraints have reached the limit, people are most concerned about the problems of chemical fertilizers, pesticides and plastic films. Our fertilizer use per hectare is among the highest in the world. For example, the problem of plastic film, the use of thin film in Xinjiang Autonomous region alone reached 4.7 million mu of land, most of these films can not be reduced, now the residue in one mu of land in Xinjiang has reached 16.5kg, the national average level is much lower, now how can we use the film that can be reduced to replace the film that cannot be reduced now? This is a big issue for our agricultural environmental governance.

At present, there is a hurdle that China's agriculture must go through. if we want to open a new era of modern agricultural development, we must change our mode of agricultural development, which we have adopted for a long time. To a certain extent, we rely on resources and the environment, and we mainly pursue the growth of output. Now we must shift to the track of attaching equal importance to quantity, quality and efficiency. This year's Central Committee document No. 1 clearly pointed out that we should pay more attention to improving the international competitiveness of agriculture, pay attention to technological innovation in agriculture, and pay more attention to the sustainable development of agriculture. To change the mode of agricultural development is to put equal emphasis on agricultural development (quantity, quality and benefit).