1. Agricultural Development and Policy in China Dr. Laping Wu Professor, College of Economics and Management China Agricultural University March 13, 2008

2. 2 Outline Basic data and facts on agricultural sector in China Agricultural production and trade of China Current agricultural policy New orientation of agricultural policy in China

3. Basic data and facts on agricultural sector in China

4. 4 Basic data Agricultural population: 750-900 million, depending on definition (about 150 million migrants) Agricultural households: 200 million Average farm size: 0.6 ha Most of the agricultural activities take place in eastern half of the country

5. 5 Population distribution in China

6. 6 Grain Production in China

7. 7 Meat production in China

8. 8 Cotton Production in China

9. 9 Sugar crop production in China

10. 10 Structure of agriculture in China in % of production value

11. 11 Cropping structure in China

12. 12 Meat production structure in China

13. 13 Agriculture in national economy 19802006 GDP%3012 Population%8157/73 Employment%6943 Export%203 Import%154 Food expenditure, urban%5736 Food expenditure, rural%6243

14. 14 Agricultural production and trade of China

15. 15 Grain balance Continued demand for grain due to growth of population, income and other sectors: about 485 million tons per year Stagnated production due to resource constraints Reduction of arable land due to urbanization Degradation of land quality Shortage of irrigation water

16. 16 China’s Cultivated Land

17. 17 Declining grain cropping area

18. 18 Grain areas by crop in China

19. 19 Stagnated yields of China, kg/mu

20. 20 Grain yields, by product

21. 21 Grain production in China ， 100 million tons

22. 22 Grain production in China, by commodity

23. 23 Regional Structure of Wheat Production of China (2006) RegionOutput% Total104.46 Henan 28.23 27.0% Shandong 18.90 18.1% Hebei 11.50 11.0% Anhui 9.66 9.3% Jiangsu 8.18 7.8% Sichuan 5.14 4.9% Shaanxi 4.16 4.0% Unit: million ton

24. 24 Due to the constraints of resources, especially land resource, China must import certain grain or other crop products Net importer: additional 13% cropping areas would be needed if import of soybean, cereals and cotton should be produced domestically in 2005 (Ke, 2006).

25. 25 Agricultural and food trade in China, 100 million US$

26. 26 Agricultural and food import by commodities in China, %, 2005

27. 27 Agricultural and food export by commodities in China, %,2005

28. 28 Wheat trade in China million tons

29. 29 Major source of wheat import of China in 2007, Unit: ton, 10000 USD No.SourceQuantityValue% in total Total100517.432871.07 1Canada45025.581097.0238.21 2Australia26846.56690.0324.03 3USA17400.84531.1218.50 4Japan5869.5295.8510.30 5Korea2527.98144.685.04 6Thailand877.4146.921.63 7Holland52521.080.73 8China470.7314.310.50 9Vietnam40012.740.44 10Russia306.326.390.22

30. 30 Major destination of wheat export of China, Unit: ton, 10000 USD No.DestinationQuantityValue% in total Total307268369140.48 1Corea101467019992.428.92 2Indonesia61931714476.220.94 3Philippines53916711415.3416.51 4Vietnam2811866628.659.59 5Hongkong1180024147.116.00 6DPR Korea1436813527.015.10 7Thailand1093192941.194.25 8Malaysia806381894.342.74 9Burma25537660.80.96 10 United Arab Emirates 26834647.720.94

31. 31 Rice trade in China, million tons

32. 32 Corn trade in China, million tons

33. 33 Soybean trade in China million tons

34. 34 Soybean production and import 10 000 tons

35. 35 Cotton trade in China 1000 tons

36. 36 Cotton production and import 10 000 tons

37. 37 Edible oil import in China

38. Current agricultural policies in China Grain market policy Subsidies and Support Price Rural infrastructure Rural public services

39. Grain market policy 2001: beginning to liberalize grain market reform 2004: Fully liberalizing grain market + launching grain direct subsidy 2006: abolishing agri-taxation system 2004-2008: 5 No.1 Document to improve agricultural and rural development

40. 40 Govn’t expenditure in rural area and its share in total

41. 41 Four subsidies Grain Direct Subsidy Seed Subsidy (RMB 4.55 billion in 2006) Machinery Subsidy Agri-input Subsidy (RMB 12 billion in 2006) Total subsidies of above: 2006: RMB 30.95 billion 2007: RMB 51.40 billion, increase by 66% Support price

42. 42 Rural Infrastructure Rural water supply –Irrigation: total 9.27 billion during 1990- 1995 –Drinking: more than 10 billion during 1990- 1995; 6 billion each year in next 5 year Rural electricity – total 160 billion during 1990-1995 – covering 80% of rural population

43. 43 Rural transportation –2006: RMB 43 billion by central and local gov –2006-2010: total RMB 100 billion by central gov Rural methane project –2.5 billion every year –Covering 25 million households

44. 44 Rural public services Education –2006: 12 western and 10 central provinces –Free textbook, free tuition and living subsidy – Elementary school student: saving 140 per year per student –High school student: saving 180 yuan per year per student

45. 45 Hospital –Rural cooperative medical care system –41 thousand farmers in 1400 countries join the program

46. New orientation of agricultural policy in China

47. 47 High priority to agricultural & rural development  2004 No. 1 document:Boost growth in farmers ’ incomes  2005 No. 1 document:Improve overall production capacity of agriculture  2006 No. 1 document:Building a new socialist countryside  2007 No. 1 document:Developing modern agriculture  2008 No. 1 document:Strengthening the foundation of agriculture-infrastructure

48. 48 Building “a new socialist countryside” Goals: –Increase production capacity (national food security, raw material needs) –Improve farmers living standards –Strengthen rural infrastructure (road, drinking water, electricity, biogas, cable TV, living environment…) –Enhance rural education, healthcare and cultural life –Advance democratic governance in rural areas

49. 49 New measures Deepening comprehensive reforms Shift the focus of governmental expenditure to rural areas: a higher share, especially in the budget of central government

50. 50 To improve agricultural productivity Stricter control on taking farmland for non-farm purposes Increased public funding on improving irrigation systems and other infrastructure Increased public funding on agricultural technical extension Increased funding for agricultural research: –Agricultural research to be granted high priority in the public investment; –The share of agricultural research on the total national research budget to be increased; the total research budge itself will increase significantly.

51. 51 To increase farmers’ income Increasing agricultural income: –Reducing cost –Increase production –Stabilizing prices –Restructuring promoting off-farm employment in and out of rural areas –Better policy framework for rural workers in cities Direct subsidy

52. 52 To improve rural infrastructure Public investment in rural road, drinking water etc. Village renovation: –To and in village road –Draining system –New toilets –Garbage collection and disposal –New housing (design and blueprints)

53. 53 To enhance rural education, health care and social security More support to implementing 9 year basic education: –Tuition free –Free textbook and subsidy to boarding fees –Improving teaching facilities and teachers salary More support to rural health care: –New medical insurance system for serious illness –More investment in rural hospitals Social security: –More money for poverty reduction –Pilot projects for rural pension

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