Agricultural Resolution in 2011

In September 2010, the Research Center for Rural Economy of the Ministry of Agriculture conducted a survey of 9,950 villages in 12 provinces. The results showed that the growth in input for agriculture, forestry and water resources was slow, the proportion of budgetary investment in agricultural fixed assets was declining, general transfer payment to some major grain-producing counties was growing slowly, and some supporting funds and subsidies were appropriated behind schedule.

China should improve its mechanism to support agricultural development, strengthen financial input toward agriculture and the countryside, balance the development between urban and rural areas, continue to readjust the national income distribution structure and ensure fast growth of fiscal input in agriculture, Song said.

Breaking the bottleneck

Water shortage remains an obstacle for China's grain production. More than half of the country's cultivated land has inadequate basic irrigation and drainage systems. To ease the stress of the water bottleneck, the conference decided to intensity the construction of water conservation facilities with priority on improving irrigation infrastructure.

This year the Ministry of Water Resources will intensify farmland irrigation project construction, harness medium and small rivers, reinforce small-scale endangered reservoirs, prevent floods, construct floodwater storage areas, improve infrastructure construction against droughts and address other weak links concerning water conservation.

Winter and spring are the busiest seasons for water conservancy facilities in China. According to the plan of the Ministry of Water Resources, from winter 2010 to spring 2011, the total investment in water resource projects will increase by more than 10 percent year on year to surpass 170 billion yuan ($25.64 billion). It is estimated that in 2011 the country will increase the acreage of stable yields for crops irrespective of droughts or floods by 1.06 million hectares, improve irrigation facilities on 5.3 million hectares, eliminate waterlogging on 1.09 million hectares and develop water-saving irrigation on 2.08 million hectares.

The impact of water resource shortages on China's agriculture has been seen in recent years. According to the Ministry of Water Resources, in 2005, a total of 3,882 hectares of cropland suffered from droughts. That figure increased to 4,899 hectares in 2007. In 2010, direct losses caused by floods totaled 374.5 billion yuan ($56.49 billion) and those by droughts 76.9 billion yuan ($11.6 billion). Droughts caused grain losses of 16.8 billion kg, more than 3 percent of the country's total annual grain output.

Most of China's existing water conservation facilities were constructed between the 1950s and the 1970s, falling into disrepair over the years. Now, less than half of the projects are in proper working condition. The Central Rural Work Conference discussed and arranged the future development and reform of the water conservation system, meaning the Chinese Government will begin to address this weak link.

Reinvigorating the rural

Special attention was also given at the Central Rural Work Conference to the livelihood of rural residents. In 2011, the government will take more measures to enhance farmers' vocational skills and increase their incomes, accelerate the construction of rural drinking water facilities, roads and marsh gas projects, renovate dilapidated housing and improve rural education and medical mechanisms and public cultural services.

In recent years, conditions in rural areas and the rural economy have been greatly refined. According to statistics from the Ministry of Human Resources and Social Security, by the end of September 2010, some 67.19 million rural residents had participated in the new-type rural endowment insurance experimental program. Of total participants, 18.28 million received pensions, with 11.8 billion yuan ($1.78 billion) in basic pensions provided.

The number of participants in the new rural cooperative medicare system has been increasing. According to statistics from the Ministry of Health, by the end of June 2010, the number of participants had reached 833 million. Some regions are also exploring measures to improve the rural medical service environment, such as establishing the basic medicine supply system, improving facilities in grass-roots medical institutions and enhancing the professional level of medical personnel.

More importantly, farmers' incomes have increased markedly. Statistics from the Ministry of Agriculture show that in 2010 the per-capita net income of Chinese farmers surpassed 5,800 yuan ($874.81), an increase of 10 percent year on year.

Despite the continuous growth in farmers' incomes, the increasing gap between China's urban and rural residents has remained unchanged. From 2004 to 2009, the per-capita disposable income of urban residents increased at an average annual rate of 9.7 percent, 2 percentage points higher than the increase of farmers' income. During this period, the income gap between urban and rural residents increased from 3.21:1 to 3.33:1. Even in rural areas, the income gap between different households and different regions is unusually large. In 2009, the per-capita net income of farmers in Shanghai was 4.2 times that of farmers in northwest China's Gansu Province.

"The government must adopt more effective measures to increase farmers' incomes and curb the expanding income gap between urban and rural residents," said Song.

Pressing issues

Grain security has long sat atop China's list of priorities. Although China has achieved seven consecutive bumper harvests, it has become increasingly difficult for the country to maintain the structural balance between supply and demand when it comes to agricultural produce.

China's output of wheat and rice is barely at a self-sufficient level, while the country's output of soybean and corn cannot satisfy domestic demand. In the first 11 months of 2010, China imported 1.56 million tons of corn and 49.4 million tons of soybeans.

The Information Office of the Ministry of Agriculture said the core grain problem for the foreseeable future will be ensuring supplies, and the government needs to adopt various policies to achieve a comprehensive balance by addressing the current problem.

Also, in recent years, grain production costs have been increasing. From 2007 to 2009, the prices of rice, wheat and corn increased at an average annual rate of 7.1 percent, while the production costs increased at an average annual rate of 11.7 percent. In 2009, only 29.1 percent of Chinese farmers' incomes came from farming, due to the fact that many farmers had left their land to seek jobs in cities.

Competition among agricultural producers on the international market also puts pressure on China's agricultural development. Although China has accelerated its steps of opening up, its agricultural sector remains less competitive in the global market.

Currently, China is the world's third largest farm produce trading nation. Its trade volume of farm produce increased from $56.38 billion in 2005 to $92.33 billion in 2009, increasing by 63.8 percent with an average annual growth rate of 13.2 percent. As for the trade structure, in 2004, China had $4.6 billion worth of trade deficits in farm produce, and in 2008, the deficits in farm produce increased to $18.16 billion.

Another serious concern is the access of farm produce from abroad, especially those selling at lower prices. This may impact China's farm produce market by reducing Chinese farmers' enthusiasm to grow farm crops. From 2005 to 2007, China was confronted with this situation. Because of the low price of imported soybean, prices in northeast China, the country's major soybean-producing area, were lower than production costs, which seriously dampened local farmers' willingness to plant soybeans. Later, because of the reduction of domestic soybean output, China had to import soybeans from abroad and this vicious circle has yet to be corrected.