1.　　  General requirements of the CPC Central Party Committee and the State Council for agricultural and rural undertakings

2011 requirements for agriculture and rural undertakings:

Implement the instructions of the 17th CPC Party Congress, the third, fourth and fifth plenary sessions of 17th CPC Central Committee, the CPC economic work conference and the CPC rural work conference;

Pursue the scientific approach to development based on the Deng Xiaoping Theory and the Three-Represents;

Seize strategic development opportunities to advance progress in agricultural modernisation and remodelling of growth, and to achieve the “Two Economic & Two Safety” Goals (more than 500 million tons in grain output and more than 7% in growth of farmers’ income; no major epizootics and no major quality & safety issues for farm produce);　

Improve water conservation infrastructure, boost production, raise efficiency for higher incomes, build capacity, avert risks, and initiate reforms.

The above measures will enable higher crop yield, build on the success of the eleventh Five-year Plan period and secure a good start for the twelfth five-year-period. Furthermore, they will drive agricultural modernisation and rural community development to secure supply and stabilise prices and spur socio-economic development.

Improvement of water conservation infrastructure refers to revamping existing water conservation facilities and constructing new facilities to fill gaps and to fortify the agriculture sector. Boosting agricultural production increases annual grain output to over 500 million tons, stabilises production of VBP products, and balances quantity and mix of major farm produce; it also rationalise supply and stabilise prices. Raising efficiency involves increasing agricultural output and productivity and speeding up rural labour transfer to increase farmers’ income. Capacity-building facilitates change by strengthening the fundamentals and improving overall productivity to bring the percentage contribution of science & technology to agricultural growth to at least 1 percentage point and contribution of farm mechanisation by at least 2 percentage points. Risk aversion includes quality and safety supervision of agricultural products, prevention and control of major epizootics, and hedging of market risks to guarantee quality and safety, animal health and safety, and production safety. Reform encompasses intensifying rural development, establishing modern agriculture model zones and initiating rural reform pilot programmes to develop and improve institutions and mechanisms that motivate local authorities and farmers.

2.Substantial investment increases in agriculture and rural development

The central government will continue to increase spending in agriculture and rural development and better pro-agriculture policies. The three priorities are: increase incremental and total fiscal spending in agriculture and rural development; focus budgeted fixed asset investment on agricultural and rural infrastructures and increase total and incremental investment; channel most land-transfer revenue for development of farmland and farmland water conservation and rural infrastructures, and ensure use of full allocation and adherence to specified use.

Total central government spending in agriculture and rural development was 988.45 billion yuan, 130.84 billion yuan or 15.2% more than last year. The expenditure items are: First, 393.87 billion yuan for agricultural production, including 157.54 billion yuan for agricultural and rural infrastructure (mainly water conservation facilities), 23 billion yuan for general agricultural development, 30.6 billion yuan for agricultural-related poverty alleviation and development, 13.66 billion yuan for subsidizing and rewarding environmentally-friendly grassland management practices, and 9.406 billion yuan for subsidising agricultural insurance premiums; second, 140.6 billion yuan for four major types of agricultural subsidies – 15.1 billion yuan as direct subsidy on grain production, 86 billion yuan as general agricultural subsidies, 22 billion yuan for planting improved varieties, and 17.5 billion yuan for purchase of farm machinery; third, 396.36 billion yuan for social undertakings as rural education and health, including 16 billion yuan for village-level public undertakings, given on a case-by-case basis.

The central government will implement the decision of the State Council’s standing committee and has earmarked funds for two anti-drought schemes (totalling 12.9 billion yuan) to control winter-spring drought. The schemes support pillar projects on upgrading of irrigation system, food production and water conservation facilities in arid areas, and subsidise watering, fertilisation of winter wheat, equipping drought control teams as well as specialized pest control, greenhouse farming in the northeast region, and use of plastic mulching in the southwest and northwest regions.

3.Direct subsidies for grain farming and general subsidies for agricultural production supplies

Grain farming will continue to receive direct subsidies. In principle, recipients are grain farmers, but provincial authorities may exercise discretion based on local conditions. This year, direct subsidies will be gradually increased, and pegged to crop acreage, and production and supply volumes. General subsidy policies for agricultural production supplies will be improved and flexibly and promptly adjusted to account for cost increase caused by price fluctuation of fertilizer, diesel and other agricultural supplies. Subsidies will not be reduced. This year, the central government has 101.1 billion yuan for both subsidies, where 15.1 billion yuan is for direct subsidies and 86 billion yuan for general subsidies. In January, 98.6 billion yuan was disbursed from the central budget to local authorities, so that farmers receive their subsidies through bank cards or passbooks before the spring farming season.

4. Subsidies for growing improved plant varieties

More subsidies are provided for growing improved plant varieties. Subsidies for some varieties have increased. The central government has allocated 22 billion yuan as subsidies for growing improved varieties, 1.6 billion yuan more than last year. Subsidies are provided for rice, wheat, corn, cotton, soybean from northeastern China and Inner Mongolia, and winter rapeseeds in 10 provinces and municipalities along the Yangtze River, Xinyang City of Henan Province, Hanzhong city and Ankang City of Shaanxi Province. Subsidy for wheat, corn, soybean and rapeseeds is 10 yuan per mu, of which, subsidy for growing improved wheat varieties in the Xinjiang Autonomous Region has increased to 15 yuan per mu. Early rice subsidy has increased to 15 yuan per mu, the same amount as that for mid- and late-rice and cotton. Rice, corn, rapeseeds are given directly subsidy in the form of cash; for wheat, soybean and cotton, provincial authorities shall determine the approach as appropriate, including subsidy for seed purchase from the lowest bidder using a centralised tendering system, or by providing direct cash subsidy. Subsidies will continued to be provided for true seed planting potatoes, improved barley varieties in ethnic Tibetan areas, and growing of improved peanut varieties in some peanut growing areas.

5. Subsidies for purchase of agricultural machinery and tools

Subsidies for purchasing agricultural machinery and tools will increase to 17.5 %, 2 billion more than last year, and will benefit all counties and farms practising agriculture and animal husbandry. Subsidies are available for 12 categories of agricultural machinery and tools, 46 sub-categories and 180 items. Local authorities may add another 30 items to the list. Flat subsidies apply for purchases of the same category and same grade made in the same province, and the ceiling is 30% of the average market price of item in the relevant province. Counties within the major impact zone of the Wenchuan earthquake and areas under the Schistosomiasis.Prevention and Control Programme may be granted subsidies of up to 50% of the purchase price. Maximum subsidy per machine is 50,000 yuan. However, for large tractors of over 100 horsepower, high-performance silage harvesters, large zero-tillage sowing machines, milking machines, large computerised paddy-seed germination enhancers, drying machines may be granted subsidy of up to 120,000 yuan. Subsidies for large cotton-picking machines, sugar cane harvesters and tractors of over 200 horsepower may be further increased to 200,000 yuan per unit.

6.Revamping policy for minimum purchase prices for grains

To better support grain production and increase farmers’ income, the central government will raise minimum purchase prices as appropriate for wheat and rice in major production regions when newly harvests are sold in 2011. Minimum purchase prices for white wheat (3rd grade; same hereinafter), red wheat, and mixed wheat will increase respectively by 5 yuan, 7 yuan and 7 yuan, to 95 yuan, 93 yuan and 93 yuan per 50 kg. Minimum purchase prices for early indica rice (3rd grade; same hereinafter), mid and late rice and japonica rice will increase respectively by 9 yuan (9.7%), 10 yuan (10.3%) and 23 yuan (21.9%) to 102 yuan, 107 yuan and 128 yuan per 50 kg. Raising minimum purchase prices compensates farmers for increase in cost of production, enable steady growth of grain farmers’ income, and ensures steady increase in grain production.

7.Incentives for top grain-producing counties

To improve finances of top grain-producing counties and to encourage local governments to prioritise grain production, the central government introduced an incentive policy for top grain-producing counties in 2005. Since then, the central budget for the incentive quantum has been increasing, and the incentive mechanism is continually improved.

In 2010, the top grain-producing counties were paid 21 billion yuan in incentives, from which more than 1,000 counties have benefited. To encourage production and supply of grain, commodity grain volume, production volume and cultivation areas were assigned weights of 50%, 25% and 25% respectively when considering the financial capacities of local governments, and incentives are then calculated and disbursed directly to the counties. The top 100 super grain-producing counties receive special incentives based on production volumes of grain and grain products. Recipients may change, as incentives are awarded based on merit. Since 2008, top oilseed-producing counties were included in the incentive policy. Award criteria are set by provincial governments, giving priority to key varieties and key counties (cities). More than 900 counties have benefited from the incentive.

To leverage the incentive to promote grain production and distribution, the incentive policy consists of a “current” portion and an “additional” portion, and includes incentives and disincentives. As of 2008, all “additional” amounts were used exclusively for promoting grain and oil security; the “current” portion may still be used as transfer payments for general expenditures of county governments. Local governments with initial financial difficulties should also progressively redirect their funds to pay for expenditures relating to food security. Financial incentives may not be used to purchase or upgrade cars, construct office buildings or training centres, or for vanity projects that are burden on finances and the money and the people. The central government has allocated 22.5 billion yuan in its 2011 budget to support the incentive policy, and gives extra incentive payments for increase in grain production increase on top of the regular transfer payment incentives for top grain-producing counties.

In 2011, 4 billion yuan has been set aside from the central budget for the grain security risk fund. The amount has been disbursed to various provincial governments as part of the central government’s progressive rescission of local counterpart funds. An aggregate amount of 5.8 billion yuan has been transferred to major grain-producing regions in 2009 and 2010. The 2011 disbursement completes the three-year process, and local governments are no longer required to fund grain security risk fund. In future, the entire amount of 24.9 billion yuan in grain security risk fund payable to major grain-producing regions will be completely funded from the central budget. This will help offload 9.8 billion yuan in financial burden of the governments of major grain-producing.  

8.Policy incentives for major pig-farming counties

Since 2007, a policy incentive was introduced to encourage development of pig-farming and to streamline farming, distribution and sales to ensure pork supply security. In 2010, the central government allocated 3 billion yuan as incentive for pig-farming and commercial production. The purpose of the incentive is to guide production, reward according to supply volume, fund needy counties directly and ensure funds are used for specific purposes”. The amount granted is based on the quantity supplied, quantity slaughtered and quantity in stock, and the respective weights assigned are 50%, 25%, and 25%. In 2010, 362 counties were granted the incentive. The policy will remain in force in 2011 for major pig-supplying counties. Funding will be given to pig farms (pig-rearing households) for renovation of piggeries, use of improved breeds, epidemic prevention, faeces treatment and loan interest subsidies. The funds may also be used to commercialise pig-farming operations and to support integration of the industrial chain, establish farm-to-market connectivity, and improve quantity and quality.

9.Policy to extensively promote grain, cotton, oil and sugar yields

To increase yield in grain, cotton, oil and sugar, we focus on quality production: fertile fields, improved varieties, and use of good methods, good mechanism and good equipment. This enables us to tap production potentials, use of advanced and applied technologies, and production increase across large planting areas. In 2010, the state budget allocated a special fund of 1 billion yuan to build 5,000 high yield demonstration zones nationwide, totalling 56 million mu (3.73 million hectares). 4,380 of the demonstration zones were allotted for planting grain, 370 for oil-bearing crops and 50 were newly added for sugar crops. Statistics show that the policy has benefited 7,048 towns (times), 37,688 villages (times) and 12,607,700 rural households. According with to the General Office of the State Council’s Opinions on 2011 Actions for Steady Increase in Grain Production, this year, the government will increase its investment,　introduce innovative mechanisms, scale up, and broaden the scope, so as to achieve a level of sophistication.

50 counties (municipalities) and 500 villages (towns) with good fundamentals and potential for production increase will be selected for the pilot grain programme.  The programme will engage the entire village, county or establishment. The 800 major grain production counties (farms) under the Plan of Increase the Country’s Grain Production Capacity by 50 Billion Tons (2009-2020) should also integrate resources and join in the programme. This year, the central government will increase its budget for the programme by 500 million yuan.

10.Policy to develop high quality farmland

The central government decided that large-scale and quality farmland should be developed to meet the highest drought and flood resistance standards. During the “Eleventh Five-Year Plan” period, the central government has spent more than 200 billion yuan to develop quality farmland. Infrastructural development of farmland was supported by on the various authorities, based on their respective funding sources. Development was target at the key grain production areas. In 2010, the government  spent 5.5 billion yuan to develop 13.8 million mu (920 thousand hectares) of high standard grain field. The infrastructural development includes improving field drainage and irrigation conditions and arable land quality, and overall production capacity. This, has ensured that the necessary resources are put in place for the stable increase in grain production and farmers’ income.

In 2011, according to the instructions of the Fifth Plenary Session of the 17th CPC Committee to “develop extensively high quality farmland to ensure output despite climatic conditions”, the State Council is formulating plans, guidelines, targets, tasks, distribution pattern, standards and measures to assist the various authorities and localities. Meanwhile, funds are raised to help key production areas resolve vital problems as irrigation and drainage, soil quality and cultivation techniques.

(To be continued)