Fourth South-South Cooperation Workshop on Rural Development and Poverty Reduction - Xu Xiaoqing

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Fourth South-South Cooperation Workshop on Rural Development and Poverty Reduction - Xu Xiaoqing

  1. 1. Agriculture in China and the Policy Trend Prof. Xu XiaoqingDirector General,Rural Economic Research Department, Development Research Center of the State Council July 9, 2012
  2. 2. ContentsI. Rural policy overviewII. Focus on crop productionIII. Strengthen agricultural technologiesIV. Improve the circulation of agro-productsV. Properly address the issue of transfer employment of farmersVI. Deepen the reform of rural land management system
  3. 3. I. Rural Policy Overview GDP (in 100 Gross Proportion of Proportion of Proportion of million yuan) Agricultural Agriculture rural agricultural Product (in 100 (GDP%) population labor force million yuan) (%) (%)1978 3,645 1,028 28.19 82.1 70.51985 9,016 2,564 28.44 76.3 62.41995 60,749 12,136 19.86 71.0 52.22005 183,217 22,420 12.24 57.0 44.82008 314,045 33,702 10.73 54.3 39.62009 335,353 35,477 10.58 53.4 38.12010 397,983 40,497 10.18 ------ ------
  4. 4. Structure of China’s Gross Agricultural Product Crop Forestry Animal Fishery Farming Husbandry1978 80.0 3.4 15.0 1.61985 69.2 5.2 22.1 3.51995 58.4 3.5 29.7 8.42005 49.7 3.6 33.7 10.22008 48.4 3.7 35.5 9.02009 50.7 3.9 32.3 9.32010 53.3 3.7 30.04 9.3
  5. 5. I. Rural Policy Overview Achievements: Adhere to the principle of balanced urban and rural development, andalways regard the increase of farmers’ income as the central task of the government’srural work. A policy system that supports and benefits the farmers has beenpreliminarily formed, and an institutional framework that meets the need of balancedurban and rural development has been basically established. In 2011, the favorabletrend of agricultural and rural development provided strong support for steady andrapid economic development and effectively safeguarded the overall situation ofreform, development and stability. 1. The output of grain achieved growth for eight consecutive years, reaching 570million tons (1.1424 trillion jin) in 2011. 2. The per capita net income of farmers has experienced rapid growth for many years,reaching 6,977 yuan this year, up by 11.4%. 3. In 2011, the four major subsidies granted by the central government to crop-growing farmers totaled 140.6 billion yuan. The subsidy policy has expanded into animalhusbandry, forestry, grassland, water-saving irrigation, agricultural insurance and manyother areas. 4. The rural infrastructure construction and development of various social programshas been continuously advanced.
  6. 6. Growth in the Output of Major Agro-products in China: 2003-2010 (in 10,000 tons) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 grain 43,070 46,947 48,402 49,804 50,160 52,871 53,082 54,648 57,121 Oilbearing 2,811 3,066 3,077 2,640 2,569 2,953 3,154 3,230 sCotton 486 632 571 753 762 749 638 596Vegetab 54,032 55,065 56,452 53,953 56,452 59,240 61,824 65,099 le Fruit 14,517 15,341 16,120 17,102 18,136 19,220 20,396 21,401Meat 6,444 6,609 6,939 7,089 6,866 7,279 7,650 7,926AquaticProduct 4,077 4,247 4,420 4,584 4,748 4,896 5,116 5,373 s Milk 1,746 2,261 2,753 3,193 3,525 3,556 3,519 3,576
  7. 7. Farmers’ IncomeIn 2011, the annual per capital income of farmers reached 6,977 yuan, or a realincrease of 11.4%, and 3 percentage points higher that that of urban residents.The rapid increase of farmers’ income may be attributed to the price hike of agro-products and the income increase of migrant workers. From 2005 to 2011, theaverage monthly salary of migrant workers increased from 875 yuan to 2,049 yuanat an annual average growth rate of 14.1%.The increase rate of farmers’ income exceeded that of urban residents for twoyears in a row, showing a smaller income gap between the urban and rural areas.
  8. 8. Rural Infrastructure ConstructionOver the nine years since the beginning of rural infrastructure construction, 2.72million km of roads have been built and reconstructed in rural areas, theproblem of drinking water safety for 326 million rural residents has been solved,and the dilapidated houses of more than 4.6 million rural households have beenrebuilt.The fund guarantee mechanism for rural compulsory education has beenreformed so as to achieve free compulsory education in a real sense.The framework of rural social security system has been established: the newrural cooperative medical system has covered 97% of farmers; the ruralsubsistence allowance system provides security to more than 53 million ruralresidents; the new rural social pension pilot program has covered 60% of thecounties, with over 78 million farmers receiving their old-age pension. The threesystems will cover the whole of rural China this year.
  9. 9. Major Problems:1. Complicated international economic situation2. Bigger impact of global climate change3. More pressure caused by a growing population onfarmland and freshwater resources4. More risks and uncertainties faced by agriculturaldevelopment
  10. 10. Three Average Crop Production Costs Since 2003 (yuan/mu, %)Item 2003 2004 2005 2006 2007 2008 2009 2010 395.4Total Cost 377.03 425.02 444.90 481.06 562.42 600.41 672.67 5Material and 186.64 200.12 211.63 224.75 239.87 287.78 297.40 312.49 Service CostPercentage (%) 49.50 50.61 49.79 50.52 49.86 51.17 49.53 46.46Labor Cost 137.66 141.26 151.37 151.90 159.55 175.02 188.39 226.90Percentage (%) 36.51 35.72 35.61 34.14 33.17 31.12 31.38 33.73Land Cost 52.73 54.07 62.02 68.25 81.64 99.62 114.62 133.28Percentage (%) 13.99 13.67 14.59 15.34 16.97 17.71 19.09 19.81
  11. 11. Overall Targets of Rural Policies1. Advance industrialization, urbanization and agricultural modernization synchronously.2. Focus on strengthening science and technology to ensure development, increasing production to ensure the supply of food, and improving people’s livelihood to ensure stability.3. Further increase the efforts of policies that supports and benefits the farmers. Strive to achieve high agricultural yields, work together to promote the rapid increase of farmers’ income, and safeguard the harmony and stability of rural areas.
  12. 12. II. Focus on Crop ProductionChina’s crop production in 20111. The output of grain in 2011 totaled 1.1424 trillion jin(0.5 kilogram), anincrease of 49.4 billion jin(0.5 kilogram), keeping growing for eightconsecutive years.2. The production of rice, wheat and corn all increased, with the totaloutput of the three crops surpassed 1 trillion jin(0.5 kilogram) for the firsttime in history.3. The yield per unit area was increased by relying upon technologies. Theyield per mu reached 688.8 jin(0.5 kilogram) in 2011, an increase of 25.6jin(0.5 kilogram), with the contribution rate of such increase reaching86%.
  13. 13. Fully Understand the Weak links in China’s Agricultural Production 1. Agricultural natural disasters frequently occurs and reoccurs, and the capacity of resisting and reducing the disasters is inadequate. The dependence of agriculture on natural conditions has not been fundamentally changed. 2. The land and water resources are growing strained, making it increasingly difficult to ensure the balance of supply and demand of major agro-products, such as grain, cotton and oil. 3. The material cost and labor cost of agriculture has been on the rise, with the acute problem of low comparative profits.
  14. 14. Heavy Dependence on Foreign Resources and Markets1. The self-sufficiency rate of edible oil has dropped to less than 50%, while that of cotton stays at 60%.2. Under current conditions of farmland and water resource supply, it is impossible to be self-sufficient in the supply of all agricultural products.3. There are 1.826 billion mu of farmland in China, with a sown area of 2.35 billion mu for cash crops and 1.6 billion mu for grain.4. In 2010, the import of soybeans reached 54.8 million tons, vegetable oil 8.02 million tons, and cotton 3.12 million tons. It is estimated that the import of agro-products is equivalent to the utilization of 900 million mu of sown area in foreign countries.
  15. 15. Major Policies to Stabilize Grain Production1. Keep the price of grain at a reasonable level. The reasonable rise of grain price is one measure to ensure the food supply and balance the interest relationship between agriculture and industry, and it is also an important part of how industry back-feed agriculture.2. Improve the long-effective mechanism of financial subsidies to crop-growing farmers. In recent years, the cost of agricultural production means, agricultural service and labor has been increasing all the time, which caused the constant increase in the cost of crop growing. The effect of subsidies is offset by the price hike. Therefore, the government needs to increase its subsidy efforts and raise the subsidy standard to a level which can not only cover the cost of crop growing, but also guarantee reasonable profits.3. Enhance the enthusiasm of major grain production counties in developing crop production, and improve the benefit compensation mechanism for major grain production areas. The central government has implemented incentive policies in these counties, which has, to a certain extent, alleviated their financial difficulties. However, the reward fund is still limited, and the financial difficulty of these counties remains acute. Thus, the central government must allocate the reward fund in accordance with the per capita financial strengthen at the county level so as to secure the basic expenditure of the counties as well as to ensure the development of various social programs.4. Continue to tap into and improve the potential of increasing the grain yield per unit area by a variety of means, including the promotion of advanced practical techniques, matching the find variety with find cultivation method, and combining agricultural machinery with agricultural skills.
  16. 16. III. Strengthen Agricultural Technologies1. Identify the direction of agricultural technology innovation, give prominence to the priority tasks, and improve the innovation mechanism and the conditions for innovation.2. Focus on the innovation of seed technology.3. Improve the non-profit agricultural technology extension service at the grassroots level. Guide the scientific research institutions to actively provide agricultural technology services. Foster and support new socialized agricultural service organizations.4. Rejuvenate and develop agricultural education. Cultivate agricultural technological talents at a faster pace, and vigorously train large numbers of skilled talents for the rural areas.
  17. 17. Major Problems in Agricultural Sci-tech Reform and Development1. The capacity for independent innovation in agricultural technologies is weak. The reserve of original innovation and key technological achievements is obviously inadequate.2. The allocation of agricultural technological resources is unbalanced.3. The disconnection between agricultural science and technology and agricultural production is severe, and the cooperation among agriculture, science and education, as well as among agriculture, universities and research institutions, is anything but close.4. The system of agricultural technology extension and service at the grassroots level is weak.5. The agricultural scientific research system has its flaws.6. The role played by businesses in agricultural sci-tech innovation is limited.
  18. 18. The Impact of Changes in Labor Supply and Demand on Agricultural Input1. As the rural surplus labor force is decreasing, the supply of labor force is entering thezone of “Lewisian Turning Point”.2. The comparative cost of agricultural labor investment is rising, so the input of labor inagricultural by farmers has been significantly reduced.3. The machine-for-labor replacement ratio has been rising, and the use of agriculturalmachinery has seen a sharp increase.4. Although the investment made by farmers in agricultural materials, such as chemicalfertilizers, pesticides and agricultural film, to improve the yield has increased, the growthrate is declining.Conclusion: The significant change in agricultural input symbolizesthat China’s agriculture is transforming from the traditionalagricultural growth model featuring the improvement of landproductivity to the modern agricultural growth modelcharacterized by the improvement of labor productivity.
  19. 19. Labor Used per Mu of Land for Major Agro- products in China: 1990-2010 (day/mu) Average Labor Used for Two OilYear Rice Wheat Corn Soybean Cotton Vegetable fruit Three Crops Major Crops1990 17.3 20.6 14 17.3 12 21.2 44.31995 15.9 19 12.7 16 10.7 18.6 41.7 65.22000 12.2 14.6 7.9 12.4 7.4 14.2 29.1 47.06 43.92005 9.59 11.39 7.91 9.49 5.11 10.91 24.86 46.14 39.822010 6.93 7.82 5.64 7.33 3.43 9.15 21.82 38.42 43.69
  20. 20. Major Policies to Support the Agricultural Sci-tech Reform and Development1. Improve the agricultural sci-tech innovation system. The government renders key support to basic, leading-edge and industrial generic agricultural scientific research, while focusing on the improvement of ability for independent innovation in agricultural science and technology. Guide the enterprises to participate in agricultural sci-tech innovation, and make breakthroughs in key agricultural technologies and generic technologies.2. Improve the agricultural sci-tech commercialization and extension service system. Cultivate a stable talent team for the commercialization of agricultural sci-tech achievements, and build a relatively sound national agricultural sci-tech achievement commercialization system. Clarify the non-profit nature of grassroots agricultural technology extension, and constantly increase the financial investment to set up township or regional public service agencies for technology extension. Mobilize agricultural universities and colleges, farmers’ specialized cooperatives, supply and demand cooperatives, leading enterprises and master hands in crop farming and animal breeding to participate in the agricultural technology extension service. Improve the diversified and socialized agricultural technology extension service system.
  21. 21. Major Policies to Support the Agricultural Sci-tech Reform and Development3. Improve the rural sci-tech service system that benefits the livelihood of farmers. Pay attention to applying the technological achievements to rural livelihood. Actively develop rural livelihood technologies, and introduce more modern technological facilities and management skills in the fields of rural education, public health, clean energy and informationization. Bridge the gap between the urban and rural areas in terms of livelihood by technological means.4. Improve the agricultural sci-tech investment mechanism. Considerably increase the input (within the scope of financial budget) in agricultural scientific research. Encourage the input of social capital in agricultural scientific research. Build a diversified agricultural scientific research investment system with government as the leader and businesses as the major player, and with wide participation of various social forces, so as to for a stable and sustainable investment increase mechanism. Secure the personnel expenditure and working expenses of non- profit agricultural technology extension service agencies. Grant subsidies to farmers and grassroots sci-tech extension agencies for major agricultural technology extension and demonstration activities.
  22. 22. IV. Improve the Circulation of Agro-products1. The agro-product market is underdeveloped, with low circulation efficiency.2. The large-sized agro-product wholesale markets in the original places need considerable improvement. Many products have to be transported from the original places to regional wholesales markets with a large sales volume before they reach the local market. The transportation cost is increased in this process.3. The are an excessive number of links of circulation, with the price being increased link by link and too much unreasonable charges.4. In the area of fresh agricultural products, the market structure with unstable small dealers as its major player has not improved for long.5. Farmers are less organized in the circulation area.6. The construction of agro-production storage facilities is insufficient, adding to the risk of market volatility.7. In terms of market information service, there needs to be a platform for the release of timely, accurate and authoritative information, a professional information service body, and an effective monitoring and early warning system. The problem of information asymmetry is prominent.
  23. 23. Construction of the Agro-product Circulation System Policy requirements: improve the circulation efficiency, and practically secure the stable and balanced supply of agro-products, including strengthening the construction of circulation facilities, innovating the circulation mode and improving the market regulation and control.1. Accelerate the cultivation of large-sized modern agro-product trading and circulation enterprises.2. Enhance the degree of organization of small farmers, and explore the effective mode of connecting farmers with businesses.3. Support the construction of agro-product terminal markets in major production areas and agro-product logistics center in medium- and large-sized cities.4. Field pre-cooling, refrigeration and cold-chain transportation represents the direction in which the fresh agro-product logistics industry should develop. Increase the support for agro-product circulation enterprises, transportation companies and farmers’ specialized cooperatives to develop the cold-chain system.5. To help the farmers increase their ability to grasp the market changes, the collection, analysis and release of agro-product market information should be turned into a basic public service. Build a sound system and platform under sophisticated planning.
  24. 24. V. Properly Address the Issue of Transfer Employment of Farmers1. We cannot rely on a few urban circles and economically developedareas to complete the task of urbanization.2. Rationally guide the flow of population, and the farmers may getemployed in local areas without having to go far.3. Put the focus of national infrastructure construction on the rural areasin the long term. The rural characteristics shall be preserved for thebenefit of farmers’ production activities and daily life. The rurallandscape and favorable eco-environment shall also be protected.
  25. 25. Continue to Improve the Transfer Employment Policy1. Realize equalization in basic public services between urban and rural areas, as well as between the urban residents and migrant workers. Solve the problem of “unstable employment, family incompleteness, unstable residence and unequal service” for migrant workers in the urban areas.2. Strengthen the skill training, significantly raise the proportion of highly skilled industrial workers in the labor force, and improve the capacity of migrant workers for starting their own businesses.3. Improve the normal salary increase mechanism for migrant workers. Increase the income growth rate of migrant workers, and make it properly higher than that of economic growth.4. With the reform of the administration and management system of counties and key townships as the starting points, strengthen the industrial function of small- and medium-sized cities, and improve the capacity of small towns for public service and inhabitancy.
  26. 26. Consider the Question of “Who will till the land”1. Based on the household contract management system, we shall foster and create new agricultural management bodies. While developing farmers’ specialized cooperatives, we should also accelerate the development of new management bodies, such as big specialized farmers and family farms.2. Train career farmers and professional farmers. Let the new generation of farmers who have the knowledge and skills and are adept at management to stay in or return to the rural areas to engage in modernized management of agricultural production.3. Reinforce the socialized agricultural service system. Develop multiple forms of agricultural service organizations, such as professional, comprehensive, cooperative, corporate, governmental or non-governmental service organizations.4. In the process of urbanization, the farmers who come to the cities must be entitled to equal treatment enjoyed by the urban residents. At the same time, we should rationally guide the flow of population. Build a better rural life while advancing the process of urbanization, so that those who stay in the rural areas can also enjoy sound production and living conditions.
  27. 27. VI. Deepen the Reform of Rural Land Management System (1)There are major system defects in protecting the land rights and interests of farmers:1. The powers and functions of land contract is yet to be improved;2. The homestead rights and interests of farmers lacks basic institutional regulation;3. The scope of land expropriation is over wide, and the compensation for farmers too low;4. The distribution of land benefits obviously favors the cities and non-agricultural sectors. The long-term livelihood of farmers who have lost their land is not secured.
  28. 28. VI. Deepen the Reform of Rural Land Management System (2)1. To clearly define the land rights is the basic task in improving the land system. The “permanent” powers and functions in the farmers’ land contract management right must be further clarified. The land contract management certificates and homestead use right certificates with clearer legal effect should be granted to the farmers. In addition, we should also accelerate the establishment of a centralized authoritative rural land rights registration system (Clear definition of land rights).2. Well grasp the direction of land circulation. In recent years, the circulation of rural contract land has picked up speed. By late June 2011, a total of 210 million mu of rural contract land had been circulated, accounting for 16.2% of the total area of land under household contract; in the major players of circulation, farmers accounted for 66.3%, cooperatives 13.7% and enterprises 9.2%. The agricultural management system of many countries in the world is a family agricultural one based on natural person, and corporate farms based on legal person only account for a small proportion. “The farmers must till their own land” so that their status as the major player of household contract management can be secured. On the other hand, turning the corporate legal person into the major player of agricultural management and farmers into agricultural workers does not represent the direction of the reform of agricultural management system in China. In the field crop production, we do not encourage companies to rent and manage the contract land of farmers for a long time and on a large scale (Rural land shall be possessed by the farmers and used for agriculture).
  29. 29. VI. Deepen the Reform of Rural Land Management System (3)1. The land contract management right, homestead use right, and collective profit distribution right are the legal property rights granted by the law to the farmers. Whether they need such rights to serve as the basic guarantee, or whether they choose to stay in the rural areas or go to the cities, no one may deprive them of such rights.2. China has registered enormous economic development, and therefore, should no longer reduce the cost of industrialization and urbanization by sacrificing the land property rights of farmers. Instead, it must and has the condition to significantly raise the proportion of profit enjoyed by farmers in the distribution of land value-added income.3. Carefully craft a plan for the reform of the land expropriation system. Speed up the relevant work, and make sure to promulgate the law next year.
  30. 30. Thank You!

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