Discussion on several problems faced by the current Agricultural structure Adjustment

Since last year, the Ministry of Agriculture has successively issued policy documents such as Guiding Opinions on Further Adjustment and Optimization of Agricultural Structure, Opinions on Adjustment of Corn Structure in Sickle Bay Area, National Plan for Sustainable Agricultural Development, Guiding Opinions on Further Adjustment and Optimization of Planting Structure, etc. All localities have implemented the spirit of the Central Committee, intensively issued guiding plans for agricultural restructuring and transformation mode, steadily promoted structural adjustment and optimization, and made remarkable progress. The number of grain-to-feed pilot counties nationwide has been expanded from 30 to 100, and the area of corn reduction is expected to exceed 30 million mu, which is the first time in recent 13 years; the pig stock in the southern water network area has been reduced by 16 million, and the breeding trend is obvious to the areas with large environmental capacity.

While seeing the achievements, we should also be soberly aware that deep-seated contradictions and problems that restrict the optimization of the structure and the transformation of the development mode still exist, mainly as follows:

First, from the perspective of the general environment, China's agriculture is squeezed by the "double board" of cost and price, which is difficult to change in a short time. With the acceleration of urbanization in China, labor costs will continue to rise, opportunity costs between farming and migrant workers and service industries (service industries) tend to expand, and the trend of agricultural labor force continuing to shift to secondary and tertiary industries is more obvious. However, affected by the subsidy policy, farmers expect land appreciation, land circulation price rises year by year, forming huge pressure on large growers, hindering the pace of scale operation and structural adjustment. From the perspective of bulk agricultural product prices, affected by international oil prices and grain trends, the prices of bulk grain products in the United States, Australia, Brazil and other countries will not rise rapidly. If domestic grain and soybean prices continue to maintain stable production and maintain current output, they need to continue to rely on price support, subsidies and other means. At the same time, agricultural resources and environment bear many degrees, and land urgently needs rest and recuperation, which also conflicts with our increasing food demand, especially the demand for vegetable cultivation and livestock breeding with great environmental impact, and will become more prominent with the acceleration of urbanization. Structural optimization and agricultural transformation urgently need revolutionary means to solve the problem.

Second, there is a certain gap between the current adjustment target and the actual demand. At present, the agricultural structure adjustment goal of "two guarantees, three stability and two coordination" proposed by our country (i.e., food rations and grain protection; stabilizing the self-sufficiency level of cotton, edible vegetable oil and sugar; coordinating vegetable production with demand, and coordinating forage production with animal husbandry) is not problematic from the perspective of national security. However, if we look at the balance of supply and demand and the employment and income increase of farmers, I am afraid we have not touched the essence. Our current policy considerations are based on asymmetric information. For example, last year's corn stock pressure was huge and the finance could not bear it. The central government could hear the information feedback from such large enterprises as China Grain Reserve. However, the reality is that in addition to rice, wheat and other varieties stably supported by the government, the production and sales of many crops encounter the problem of "what to plant and what to lose". This year, the research team of the Ministry of Agriculture also reflected that Shanxi adjusted the structure of planting millet, resulting in a drop in millet prices, and parts of northeast China adjusted the structure of planting watermelon, resulting in a drop in watermelon prices; and so on. These phenomena, which seem to be insufficiently connected on the surface, reflect a profound problem. China's agricultural products have entered an era of "total surplus and partial imbalance". As early as 2002, China's per capita vegetable possession has reached four times the world average level. At present, except for a few varieties such as beef, mutton and milk, China's per capita possession and per capita consumption level of major agricultural products rank among the top in the world, and per capita waste is estimated to rank first in the world. In the long run, China's agricultural products (except oilseeds and other crops) will continue to be oversupplied, which will bring very severe adjustment to structural adjustment. A healthy agricultural structure conducive to sustainable development is not only based on food security, but should be conducive to resource conservation and optimal benefits.

Third, from the perspective of the means of guiding structural adjustment, most of them rely on financial subsidies and price subsidies, and the adjustment path is single. From the perspective of the implementation process of the new round of structural adjustment, taking corn as an example, it mainly relies on lowering and canceling the corn temporary storage purchase policy to reduce the expected benefits of farmers planting corn. Although the cancellation of the corn temporary storage purchase policy has played an important role in structural adjustment and destocking, the blow to large growers is also very huge in a short period of time. They have purchased corn planting equipment and mastered a complete set of technologies. The losses caused by sudden transformation can only be borne by themselves. This kind of incoherent and sudden policy change is unfavorable to the cultivation of new farmers and the sustainable development of agriculture. From the perspective of developed areas, the adjustment of planting structure mainly depends on increasing subsidies linked to varieties. For example, Suzhou and Shanghai's support policies for grain and vegetables are based on state subsidies, increasing subsidies of more than 400-500 yuan per mu. Such targeted subsidies are supported by financial strength only in developed areas, and belong to the category of yellow box subsidies, which is easy to cause disputes in WTO agreements and does not have popularization and sustainability. All these policies are "reverse" adjustment with market demand and planting demand of business entities. With the continuous increase of market demand and business entities 'demand for adjusted crops, the financial subsidies required to adjust the structure will increase in parallel. When the finance is unable to support it, the results before adjustment may be restored.

Fourth, from the perspective of financial support structure adjustment, there are also problems of project dispersion, resulting in a lot of investment and low efficiency. Local financial, land, development and reform, water conservancy and other institutions have all played an important role in this round of structural adjustment. However, in the process of implementation, the expected purpose has been achieved through project inclination. The connection is not smooth and unified planning is lacking, resulting in serious waste and low efficiency.

To deal with the above problems, we believe that at least, but not limited to, the following countermeasures need to be taken:

First, fully grasp the advantages and disadvantages of international competition, recognize the complexity and long-term nature of structural adjustment problems, study and formulate long-term mechanisms and medium-and long-term plans for structural adjustment, and avoid treating headaches and feet. The situation that the prices of wheat, soybean and other crops in the international market are lower than those in the domestic market will not change in the short term, and the gap will widen. If the gap is further widened, although financial subsidies can be increased to increase production capacity, subsidies are limited by the WTO legal framework and cannot be increased indefinitely. Therefore, it is necessary to consider reducing costs and improving competitive advantages through scale and mechanization.

Second, consider agricultural restructuring from both supply side and demand side. China's agriculture is not only unbalanced on the supply side, but also more obvious on the demand side. For the general urban residents, China's per capita food possession is higher than the world average, the waste level ranks among the highest in the world, and the cost of obtaining food is lower than that of developed countries in the world; however, for the population in poor areas, food prices pose challenges to their livelihood. This needs to be addressed through "structured" supply and demand solutions, which are also common in developed countries. For example, in the United States, despite low prices for wheat and corn, there are still poor people who cannot pay for food. In the 2014 U.S. Farm Bill budget, 75% of the budget is still allocated to "supplementary nutrition support", mainly for food subsidies for disadvantaged residents and students, and increased spending on environmental governance. Therefore, structural adjustment should not be a simple supply-side adjustment, but a two-way adjustment of supply and demand. Only when our agricultural products return to rational prices can most farmers benefit from their operations, stabilize the agricultural employment population and promote sustainable agricultural development.

third, reform the structural adjustment system and mechanism. At present, the main reason why structural adjustment is difficult to push forward is the problem of government support means in addition to market problems. At present, farmers and growers across the country believe that the state will continue to increase agricultural subsidies and have high expectations for policy support. The structural adjustment implemented is also the use of subsidies-some increase subsidies to growers, some price subsidies. However, it must be noted that the relevant subsidies implemented in China, especially those linked to varieties, distort market prices and without exception increase the cost of land and the rise of comprehensive costs. The more subsidies, the faster the rent rises. After the temporary corn storage policy in Northeast China was cancelled this year, the land rent also declined. Therefore, what the contractor leaves to the growers is a fixed profit. The more subsidies, the higher the rent. All the risks are borne by the growers, which is very unfavorable to the cultivation of new farmers. From the experience of developed countries, more and more agricultural subsidies and policies are aimed at people rather than industries, which has proved to be an important means of enhancing agricultural competitiveness. By increasing subsidies to the rural low-income population and increasing their employment, land contractors will gradually get rid of their dependence on land rent, and farmers will truly become the masters of the market, which will greatly reduce costs, improve efficiency and competitiveness, and solve the problem of structural adjustment.