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Yin Chengjie: Making Structural Reform to Agriculture

Source: www.farmer.com.cn Date: 2016-10-13
At the fifth plenum of the 18th CPC Central Committee and the Central Economic Work Conference last year, the major decision was made to make supply-side structural reform. General Secretary Xi Jinping stressed that “China’s economy has entered the new normal. We must press ahead with supply-side structural reform with firm confidence and focus.” In his government work report delivered to the NPC and CCPCC sessions, Premier Li Keqiang underscored the need to “focus on prominent issues in key areas, remove institutional and systemic impediments and improve the quality and efficiency of the supply system through supply-side structural reform.” Such reform is vital for securing medium high growth rate, moving the economy up the value chain and achieving the goal of building a moderately prosperous society. Agricultural modernization is the foundation for a moderately prosperous society and modernization of the country. It is an essential part of supply-side structural reform. The supply-side structural reform in agriculture is important for improving economic structure, unlocking development potential, increasing farmers’ income and raising agricultural competitiveness.

Agricultural restructuring is an important way to supply-side structural reform in agriculture.

Supply-side structural reform in agriculture is a major way to modernize agriculture and raise agricultural competitiveness. Since reform and opening-up, especially in recent years, China has made notable progress on the supply-side in agriculture, making important contribution to agricultural modernization and economic development. As we have found in our field trips, there are issues to be resolved on the supply side in some places due to the shortage of agricultural resources, unbalanced supply and demand, and market changes at home and abroad. Though issues vary, there are some shared challenges such as price ceiling, cost floor, insufficient middle and high-end consumption power, falling efficiency, low industrialization level, low competitiveness as well as resource and environmental constraints.

Agricultural restructuring is an important task in the supply-side structural

reform of agriculture. For structural problems, there must be integrated solutions to improve productivity, efficiency and quality, and optimize product, regional and operational structure. According to those in the agricultural sector, the recent structural changes have caused adverse impact on agricultural machinery, technologies, equipment and income. It is therefore suggested that policies and measures are adopted to promote and support structural reform in agriculture and move towards breakthroughs in agricultural structure.

Transforming and Upgrading Agriculture

Based on the experience in our places, the ongoing structural adjustment is different from that in mid 1980s and late 1990s. The latter was conducted to address shortage and low farmers’ income. Resource and environmental constraints were not prominent at the time. This time, it is important to transform and upgrade agricultural structure across the entire industrial chain.

Agricultural structure concerns the entire system of China’s arable land. The on-going agricultural restructuring must identify its priorities. Policies must be made to improve the structure, save resources, reduce the use of pesticides and restore the ecology. Through restructuring, the networks of supply, employment, urban-rural integration and ecological building will be established. The new structural adjustment should improve the ability for production and increase income. It should at the same time restore the ecology and extend the industrial and value chain. This way, the agricultural sector will be improved in a way that strengthen its functions and increase income.

Making Full Use of Local Conditions

In pressing ahead with supply-side structural reform in agriculture, we must take into consideration local agricultural resources, climate, function and operations. While ensuring food security and increasing farmers’ income, we must restructure the agricultural sector, particularly the cultivation structure, to improve efficiency and income, restore ecology, protect resources, improve supply and meet consumption needs.

First, the cultivation area for corn should be reduced appropriately. Corn cultivation should be reduced appropriately in areas that are suitable for corn production in Northeast China. With strong-gluten wheat breeds, Heilongjiang is in a good position to grow such high-quality wheat. In the long run, China still has a big demand for corn and efforts must be made to maintain the scale of corn cultivation and improve the quality of the wheat, while at the same time addressing price and quality issues.

Second, the rotating cultivation system should be established. The lack of rotating cultivation system is one of the prominent structural issues at the moment. Rotating cultivation should be applied to make structural adjustment, reduce inventory, improve efficiency, protect farm land, prevent diseases and restore ecology. Rotation should be restored for dry land cultivation. It is also suggested that corn, soy beans, strong gluten wheat and potato should be rotated as it was in 1990s. And in some places, there should be rotation between corn, soy beans and wheat or corn and soy beans. Supporting policies and measures should be developed in support of rotating cultivation.

Third, efforts must be made to ensure “two conversions” of grain and other agricultural products. That includes industrial conversion through processing and conversion through animal husbandry. Now the problem is that there is no way for conversion in places of food production. To make structural adjustment, reduce inventory, improve efficiency and increase income, efforts must be made to foster and build the system of two conversions to ensure agricultural products are utilized in a very efficient way. Agri-processing industry must be accelerated. Not only production but also processing should be modernized. Without modernized processing capacity, there will be inevitably inventory, rising cost, falling efficiency and shrinking consumption power. Agriculture should be developed in a way that raw materials are better processed. Agriculture, industry and commerce should be integrated. Animal husbandry should also be developed to turn grains and other agricultural products to meat, milk and food.

Fourth, circular agriculture should be developed. Resources and inputs should be utilized in a circular way. In the south, an integrated approach has been adopted in rice cultivation and aquaculture to ensure green and circular agriculture.

Fifth, science and technology must be used to improve agricultural production. R&D must be stepped up to improve the breeds. Technological innovation must be encouraged to develop quality products. The Internet, big data and modern information technologies must be integrated in the supply side of agriculture and establish a system of effective scientific and technological support.

Sixth, the system of quality standards for agricultural products has been established. Standards should be strengthened for agricultural structure and production. They should also be updated to improve agricultural standards and planning.

  (The author is a research fellow of COSC.)