The document discusses China's rural policies and agricultural development trends. It notes that China's policies aim to increase farmers' incomes while ensuring food supply and stability. Key points include focusing on crop production and strengthening agricultural technologies. Challenges include natural disasters, limited resources, and rising production costs. The government provides subsidies and supports technology innovation to address these challenges and transition Chinese agriculture to a more modern, productive model.

1. Agriculture in China and the
Policy Trend
Prof. Xu Xiaoqing
Director General,Rural Economic Research Department,
Development Research Center of the State Council
July 9, 2012

2. Contents
I. Rural policy overview
II. Focus on crop production
III. Strengthen agricultural technologies
IV. Improve the circulation of agro-products
V. Properly address the issue of transfer employment of
farmers
VI. Deepen the reform of rural land management system

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 70.5
1985 9,016 2,564 28.44 76.3 62.4
1995 60,749 12,136 19.86 71.0 52.2
2005 183,217 22,420 12.24 57.0 44.8
2008 314,045 33,702 10.73 54.3 39.6
2009 335,353 35,477 10.58 53.4 38.1
2010 397,983 40,497 10.18 ------ ------

4. Structure of China’s Gross Agricultural Product
Crop Forestry Animal Fishery
Farming Husbandry
1978 80.0 3.4 15.0 1.6
1985 69.2 5.2 22.1 3.5
1995 58.4 3.5 29.7 8.4
2005 49.7 3.6 33.7 10.2
2008 48.4 3.7 35.5 9.0
2009 50.7 3.9 32.3 9.3
2010 53.3 3.7 30.04 9.3

5. I. Rural Policy Overview
Achievements: Adhere to the principle of balanced urban and rural development, and
always regard the increase of farmers’ income as the central task of the government’s
rural work. A policy system that supports and benefits the farmers has been
preliminarily formed, and an institutional framework that meets the need of balanced
urban and rural development has been basically established. In 2011, the favorable
trend of agricultural and rural development provided strong support for steady and
rapid economic development and effectively safeguarded the overall situation of
reform, development and stability.
1. The output of grain achieved growth for eight consecutive years, reaching 570
million 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 animal
husbandry, forestry, grassland, water-saving irrigation, agricultural insurance and many
other areas.
4. The rural infrastructure construction and development of various social programs
has been continuously advanced.

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
Oil
bearing 2,811 3,066 3,077 2,640 2,569 2,953 3,154 3,230
s
Cotton 486 632 571 753 762 749 638 596
Vegetab
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 21,401
Meat 6,444 6,609 6,939 7,089 6,866 7,279 7,650 7,926
Aquatic
Product 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. Farmers’ Income
In 2011, the annual per capital income of farmers reached 6,977 yuan, or a real
increase 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, the
average monthly salary of migrant workers increased from 875 yuan to 2,049 yuan
at an annual average growth rate of 14.1%.
The increase rate of farmers’ income exceeded that of urban residents for two
years in a row, showing a smaller income gap between the urban and rural areas.

8. Rural Infrastructure Construction
Over the nine years since the beginning of rural infrastructure construction, 2.72
million km of roads have been built and reconstructed in rural areas, the
problem 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 been
rebuilt.
The fund guarantee mechanism for rural compulsory education has been
reformed so as to achieve free compulsory education in a real sense.
The framework of rural social security system has been established: the new
rural cooperative medical system has covered 97% of farmers; the rural
subsistence allowance system provides security to more than 53 million rural
residents; the new rural social pension pilot program has covered 60% of the
counties, with over 78 million farmers receiving their old-age pension. The three
systems will cover the whole of rural China this year.

9. Major Problems:
1. Complicated international economic situation
2. Bigger impact of global climate change
3. More pressure caused by a growing population on
farmland and freshwater resources
4. More risks and uncertainties faced by agricultural
development

10. Three Average Crop Production Costs Since 2003 (yuan/mu, %)
Item 2003 2004 2005 2006 2007 2008 2009 2010
395.4
Total Cost 377.03 425.02 444.90 481.06 562.42 600.41 672.67
5
Material and
186.64 200.12 211.63 224.75 239.87 287.78 297.40 312.49
Service Cost
Percentage (%) 49.50 50.61 49.79 50.52 49.86 51.17 49.53 46.46
Labor Cost 137.66 141.26 151.37 151.90 159.55 175.02 188.39 226.90
Percentage (%) 36.51 35.72 35.61 34.14 33.17 31.12 31.38 33.73
Land Cost 52.73 54.07 62.02 68.25 81.64 99.62 114.62 133.28
Percentage (%) 13.99 13.67 14.59 15.34 16.97 17.71 19.09 19.81

11. Overall Targets of Rural Policies
1. 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. II. Focus on Crop Production
China’s crop production in 2011
1. The output of grain in 2011 totaled 1.1424 trillion jin(0.5 kilogram), an
increase of 49.4 billion jin(0.5 kilogram), keeping growing for eight
consecutive years.
2. The production of rice, wheat and corn all increased, with the total
output of the three crops surpassed 1 trillion jin(0.5 kilogram) for the first
time in history.
3. The yield per unit area was increased by relying upon technologies. The
yield per mu reached 688.8 jin(0.5 kilogram) in 2011, an increase of 25.6
jin(0.5 kilogram), with the contribution rate of such increase reaching
86%.

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. Heavy Dependence on Foreign Resources and Markets
1. 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. Major Policies to Stabilize Grain Production
1. 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. III. Strengthen Agricultural Technologies
1. 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. Major Problems in Agricultural Sci-tech Reform and
Development
1. 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. The Impact of Changes in Labor Supply and Demand
on Agricultural Input
1. As the rural surplus labor force is decreasing, the supply of labor force is entering the
zone of “Lewisian Turning Point”.
2. The comparative cost of agricultural labor investment is rising, so the input of labor in
agricultural by farmers has been significantly reduced.
3. The machine-for-labor replacement ratio has been rising, and the use of agricultural
machinery has seen a sharp increase.
4. Although the investment made by farmers in agricultural materials, such as chemical
fertilizers, pesticides and agricultural film, to improve the yield has increased, the growth
rate is declining.
Conclusion: The significant change in agricultural input symbolizes
that China’s agriculture is transforming from the traditional
agricultural growth model featuring the improvement of land
productivity to the modern agricultural growth model
characterized by the improvement of labor productivity.

19. Labor Used per Mu of Land for Major Agro-
products in China: 1990-2010 (day/mu)
Average
Labor
Used for Two Oil
Year Rice Wheat Corn Soybean Cotton Vegetable fruit
Three Crops
Major
Crops
1990 17.3 20.6 14 17.3 12 21.2 44.3
1995 15.9 19 12.7 16 10.7 18.6 41.7 65.2
2000 12.2 14.6 7.9 12.4 7.4 14.2 29.1 47.06 43.9
2005 9.59 11.39 7.91 9.49 5.11 10.91 24.86 46.14 39.82
2010 6.93 7.82 5.64 7.33 3.43 9.15 21.82 38.42 43.69

20. Major Policies to Support the Agricultural Sci-tech Reform
and Development
1. 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. Major Policies to Support the Agricultural Sci-tech Reform
and Development
3. 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. IV. Improve the Circulation of Agro-products
1. 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. 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. V. Properly Address the Issue of Transfer
Employment of Farmers
1. We cannot rely on a few urban circles and economically developed
areas to complete the task of urbanization.
2. Rationally guide the flow of population, and the farmers may get
employed in local areas without having to go far.
3. Put the focus of national infrastructure construction on the rural areas
in the long term. The rural characteristics shall be preserved for the
benefit of farmers’ production activities and daily life. The rural
landscape and favorable eco-environment shall also be protected.

25. Continue to Improve the Transfer Employment Policy
1. 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. 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. 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. 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. 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. Thank You!