Agricultural subsidies are launched nationwide.

Caijing reporter Zhou Zhe / Wen

By June 30, 2016, local farmers will receive an "agricultural support and protection subsidy" instead of the previous three subsidies of "direct subsidies for grain farmers", "subsidies for improved varieties of crops" and "comprehensive subsidies for agricultural materials".

This is the result of the introduction of the "three subsidies" reform pilot project to the whole country. In April 2016, the Ministry of Finance and the Ministry of Agriculture issued the Circular on comprehensively promoting the Reform of the three subsidies in Agriculture (hereinafter referred to as "Cannong 31"). It was decided to merge the three subsidies of "direct subsidies for grain farmers", "subsidies for improved varieties of crops" and "comprehensive subsidies for agricultural materials" into agricultural support and protection subsidies, and the policy objectives were adjusted to support the protection of cultivated land and the appropriate scale operation of grain.

This is not only due to the constraints of WTO rules, but also aimed at adjusting the policy intention of agricultural subsidies, that is, from stimulating production to protecting cultivated land, promoting appropriate scale operation, and promoting the development of rural finance. This adjustment indicates that the specific thinking of financial support for agriculture has changed and will gradually have a far-reaching impact on farmers and the structure of agricultural production.

Yellow box to green box

The important reason for the reform of the "three subsidies" is that there is not much room for the yellow box policy, including improved seed subsidies and comprehensive agricultural subsidies, which is close to the "ceiling" stipulated by the WTO, so it is necessary to turn to the unfettered green box policy. from price subsidies to income subsidies.

The three subsidy reforms are comprehensively promoted on the basis of the pilot reform in May 2015. Since 2015, the "three subsidies" reform has adjusted 20% of comprehensive agricultural subsidies nationwide, plus pilot funds for subsidies for large grain growers and incremental funds for agricultural "three subsidies" to support moderate scale operation of grain. In addition, five provinces were selected as pilot projects, the "three subsidies" were merged into "agricultural support and protection funds", and 80% of the stock of comprehensive agricultural subsidies, plus direct subsidies for grain farmers and subsidies for improved varieties of crops, were used for the protection of cultivated land.

In 2016, on the basis of summing up the experience of pilot projects, the reform of agricultural "three subsidies" was comprehensively promoted nationwide, that is, agricultural "three subsidies" were merged into agricultural support and protection subsidies nationwide, and the policy objectives were adjusted to support the protection of cultivated land and the appropriate scale operation of grain.

Cainong document No. 31 requires that all localities should promptly formulate implementation plans and be sure to distribute the subsidy funds that need to be cashed into the hands of farmers by June 30.

Xu Xiaoqing, a researcher at the Development Research Center of the State Council, observed that in the past, various localities have given three subsidies to farmers in practice. "Direct subsidies for grain farmers", "subsidies for improved varieties of crops" and "comprehensive subsidies for agricultural materials" are all issued to farmers, and the payment methods are all in cash, so in actual operation, various localities have long merged them together, often according to the amount of subsidies per mu to farmers. Among the four major subsidies, the subsidy for the purchase of agricultural machinery is that when farmers buy large agricultural machinery, they will get a certain proportion of subsidies based on the basis, which is different from the above three subsidies and will not be issued together.

It is understood that after the abolition of agricultural tax, China has gradually established an agricultural subsidy system based on the above four major subsidies, and the merger of three of them is a major adjustment to the agricultural subsidy system.

Talking about the necessity of the reform of the "three subsidies", many experts have mentioned the restraint of the WTO on the yellow box policy. Li Guoxiang, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, said that China's accession to the WTO initially did not allow China to provide subsidies to agriculture, but after painstaking negotiations, it finally achieved a "minor allowance," that is, the total amount of yellow box support subsidies should not exceed 8.5% of the output value.

According to a research report by the Research Center of the State Council, the yellow box support of grain has gradually approached the "ceiling" of 8.5% of the yellow box, with soybeans accounting for 7.2% of the output value of soybeans in 2012.

The green box policy is unrestricted, and China is committed to transforming the yellow box subsidy policy into a green box policy. The key difference between the yellow box policy and the green box policy is whether it distorts production and prices.

The subsidy for improved varieties of crops is directly linked to some agricultural products, which stimulates the production of this kind of agricultural products and affects its price; the comprehensive subsidy of agricultural materials is a subsidy for chemical fertilizers, pesticides and diesel oil, which reduces production costs and stimulates production. These two items belong to the yellow box policy.

After the merger into agricultural support and protection subsidies, the funds used for cultivated land fertility protection are subsidized to farmers according to area, even if farmers do not farm, they can also get subsidies, and will not distort production, which belongs to the green box policy.

Xu Xiaoqing told reporters that most countries, mainly developed countries, have experienced the process of changing from agricultural price subsidies to farmers' income subsidies. Especially since the end of 1990s, the trend of agricultural subsidy policy turning to farmers' income subsidy is obvious. The transformation from price subsidy to income subsidy is an important trend in the United States, European Union, Japan and other developed countries. In addition to productive subsidies such as price subsidies and income subsidies, countries are also increasing non-productive direct subsidies focusing on the environment, rural development, the quality of agricultural products and animal living conditions.

China's three agricultural subsidy reforms, from yellow box policy to green box policy, from price subsidy to income subsidy, from stimulating production to protecting cultivated land, are the result of learning from the experience of countries all over the world under the constraints of WTO rules.

Protect the fertility of cultivated land

The "three subsidies" have adjusted their policy intentions to stimulate the transformation of food production into the protection of arable land, because the supply of food exceeds demand.

The funds for protecting the productivity of cultivated land may come from 80% of the comprehensive subsidies for agricultural materials, direct subsidies for grain farmers and subsidies for improved varieties of crops. Most of the stock funds of the three subsidies are used to protect the productivity of cultivated land, one is to stabilize the farmers who use the right to contract and reduce the resistance to reform; the other is to compensate the farmers who have the right to contract to protect the cultivated land.

From stimulating production to protecting arable land, Li Guoxiang believes that this is a change brought about by an oversupply of grain, and there is no need for a strong stimulus policy at the present stage, so it is better to cultivate the fertility of cultivated land and develop large-scale operation. There is potential for growth when grain is needed in the future.

It is reported that at present, there is a phenomenon of "three simultaneous increases" in grain production, imports, and stocks in China. The industry believes that grain production is facing another situation of comprehensive supply exceeding demand after reform and opening up, resulting in an increase in grain stocks.

Zheng Fengtian, deputy dean of the School of Agriculture and Rural Development at Renmin University of China, said that in the past, subsidies encouraged farmers to use chemical fertilizers and pesticides, but now they should adjust their concepts and attach importance to the cultivation of land fertility and soil improvement.

After the reform of the "three subsidies", the funds used for the protection of cultivated land will be distributed to farmers with the right to contract according to the area. The subsidy can be based on the second round of contracted cultivated land area, taxable cultivated land area, confirmed cultivated land area or grain planting area, etc., specific to which type of area or which type of area shall be determined by the provincial people's government in combination with local reality. The cultivated land that has been used as animal husbandry farms, woodland, grain fields converted into facility agricultural land, non-agricultural requisitioned (occupied) cultivated land and other arable land that have been changed, as well as cultivated land that has been discarded for years and whose area and quality in the occupation-compensation balance do not meet the conditions for cultivation will no longer be subsidized.

Area has become the basis and key to the distribution of cultivated land fertility protection funds. in order to achieve its original intention of protecting cultivated land fertility, all localities strictly verify the subsidy area, and cultivated land that changes its use and fails to meet the quality requirements will be excluded from the subsidy. For example, Jiangxi Province, in accordance with the procedures of "village group registration, two lists of publicity, initial verification of villages and towns, and confirmation at the county level", verifies, checks and confirms the area of cultivated land subsidized by farmers, so as to ensure that the subsidy achieves the goal of protecting the fertility of cultivated land.

Cannong document No. 31 does not specify how much funds are used for cultivated land fertility protection and how much funds are used for appropriate scale operation, but many experts believe that this funding arrangement may continue the principle of "twenty-eight shares of stock funds and incremental funds for scale operation" in the 2015 pilot project. That is, nationwide, 80% of the stock of comprehensive subsidies for agricultural materials, plus direct subsidies for grain farmers and subsidies for improved varieties of crops, are used for the protection of cultivated land; 20% of subsidies for comprehensive stock of agricultural materials, coupled with pilot funds for subsidies for large grain growers and incremental funds for the "three subsidies" in agriculture, are used as a whole to support appropriate scale operation of grain.

Li Guoxiang said bluntly that the purpose of handing over the bulk of the existing funds to farmers with the right to contract is to ensure a smooth transition of reform and reduce resistance from contracted farmers and small farmers.

Farmers who have the right to contract not only have the right to use land, but also bear the responsibility and obligation to protect cultivated land. Zhu Qizhen, director of the Institute of Peasant Studies at China Agricultural University, said that cultivated land is collectively owned, but the collective cannot effectively supervise the use and maintenance of land to improve the quality of cultivated land, so farmers with the right to contract have the obligation to protect cultivated land. Even if transferred out, the right of supervision should be exercised. Therefore, the subsidy for the protection of cultivated land to the contractor is a basis, which is the compensation for the protection of cultivated land.

Zhu Qizhen also reminded that farmers with land management rights also have the obligation to protect cultivated land, or even a more direct responsibility, so subsidies for the protection of cultivated land should take care of land users and agricultural operators.

Promote scale operation

The third reason for the "three subsidies" reform is to promote land transfer and moderate scale operation. The incremental funds of the "three subsidies" are all used to promote moderate scale operation, which is conducive to improving the enthusiasm of circulating farmers and will effectively promote the development of scale operation in the long run.

The establishment of a national agricultural credit guarantee system is an important measure to support appropriate scale operation. For a long time, farmers with management rights have been faced with the pain of "difficult loans and expensive loans". The system tries to guarantee farmers without collateral so that they can obtain credit loans and discount interest on loans at the same time.

The subsidy funds to promote the moderate scale operation of grain are supported by new business entities such as large grain growers, family farms, farmers' cooperatives and social service organizations. On the other hand, the subsidy method encourages all localities to adopt the methods of discount on loans, major technology promotion and service subsidies, and does not encourage direct cash subsidies to new business entities. The discount interest on the loan may be subsidized at a rate not exceeding 50% of the loan interest. Subsidies for major technology popularization and services may be provided by means of "service first and then subsidy" and providing material and chemical subsidies.

In recent years, subsidy funds for moderate-scale grain operation have been asked to focus on supporting the establishment of a sound agricultural credit guarantee system, and strive to build a policy-oriented, independent, focused agricultural credit guarantee system covering the whole country in three years. In May 2016, the National Agricultural Credit guarantee Union Co., Ltd. was established in Beijing, which represents an important step forward in the national policy agricultural guarantee system.

Loans have always been a constraint to the development of land transfer and scale operation. Xu Xiaoqing analyzed to Caijing that the root of the difficult problem of farmers' loans lies in the lack of effective collateral, so the state is considering establishing a credit loan system to allow provincial and city-level credit guarantee institutions to provide guarantees for new business entities so that they can get credit loans. In view of the high cost of loans, various localities can use agricultural support to protect the subsidy funds used for moderate-scale operations, and provide discount subsidies for loans, and the interest on the subsidies shall not exceed 50% of the loan interest.

If the arrangements for merged agricultural support and protection funds during the pilot period are continued, 20% of the comprehensive agricultural subsidies, pilot subsidies for large grain growers, and agricultural "three subsidies" incremental funds will be used to develop appropriate scale operations.

The reason why there is such an opening in the original subsidy is to subsidize part of the subsidy to new business entities such as large grain growers with management rights. Zheng Fengtian revealed that it is because deputies to the National people's Congress put forward to the agricultural authorities every year that farmers who do not cultivate land but have the right to contract land can get subsidies, but those who get the right to manage their land after the transfer of land do not have any subsidy, so they cannot be encouraged to grow grain. Can not effectively promote large-scale operation.

A case study conducted by Feng Feng, du Jia and Gao Mou in Shiqiao Town, Anhui Province shows that instead of engaging in agricultural production, each person in a family can receive land rent of about 50 kilograms of rice and subsidies of about 100 yuan by renting land. a family can get an income of about 600 yuan a year. In addition to the subsidy of 5 yuan per mu for improved varieties, large grain growers and large-scale operators can not get direct grain subsidies and comprehensive subsidies according to the actual cultivated area, but also pay land rent, and the cost advantage of scale operation is not obvious.

A number of interviewed experts said that the gradual tilt of agricultural subsidies to large-scale operation is the direction of reform, but the original subsidies involve too many small farmers with the right to contract, and it is impossible to abolish them all at once. Therefore, 80% of the stock of comprehensive agricultural subsidies must be given to farmers with the right to contract.

Li Guoxiang also said that all the incremental funds of the "three subsidies" will be used for moderate scale operation, and the "three subsidies" that will be increased according to the needs of the state will all be used for the development of moderate scale operation.

"most of the stock funds are returned to the farmers who have the right to contract for the smooth progress of the reform, and all the incremental funds are returned to the major grain growers with the right of management, which is the direction of the future development of the reform, and the proportion of this part will become larger and larger in the future." Li Guoxiang said.

Xu Xiaoqing reminded Caijing that in the short term, the "three subsidies" policy will have little impact on contracted farmers and transferred farmers, because according to his research, if subsidies are given to transferred farmers, contracted farmers will find compensation for land rent, for example, by raising land rent, so transferred farmers will not benefit significantly in the short term. In the long run, this is the direction and trend, and the intensity of tilting to new business entities such as major grain growers will become more and more obvious in the future.