Agricultural Development and Policy in China Dr. Laping Wu Professor, College of Economics and Management China Agricultural University March 13, 2008
Agricultural Development and Policy in China
Dr. Laping WuProfessor, College of Economics and Management
China Agricultural UniversityMarch 13, 2008
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
Basic data and facts on agricultural sector in China
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
Population distribution in China
6
Grain Production in China
7
Meat production in China
8
Cotton Production in China
9
Sugar crop production in China
10
Structure of agriculture in Chinain % of production value
Croppi ng54%Li vestock
35%
Fi shery11%
11
Cropping structure in China
Ri ce18%
Wheat14%
Corn16%
Rapeseeds5%
Others27%
Peanut3%
Cotton3%
Roots6%
Beans8%
12
Meat production structure in China
Pork65%
Beef9%
Mutton5%
Poul try21%
13
Agriculture in national economy 1980 2006
GDP % 30 12
Population % 81 57/73
Employment % 69 43
Export % 20 3
Import % 15 4
Food expenditure, urban % 57 36
Food expenditure, rural % 62 43
14
Agricultural production and trade of China
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
China’s Cultivated Land
130.
0
129.
9
129.
6
129.
2
128.
2
127.
6
125.
9
123.
4
122.
4
122.
1
121.
8
120
122
124
126
128
130
13219
96
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Mill
ion
Ha
17
Declining grain cropping area
14. 014. 515. 015. 516. 016. 517. 017. 518. 018. 5
1978
1981
1984
1987
1990
1993
1996
1999
2002
100m
illi
on M
u
18
Grain areas by crop in China
150
200
250
300
350
40019
78
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
mill
ion
hect
ares
Rice Wheat Corn
19
Stagnated yields of China, kg/mu
20
Grain yields, by product
0.10
0.20
0.30
0.40
0.50
0.60
0.7019
78
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
ton
per
ha
Rice Wheat Corn
21
Grain production in China,100 million tons
305 32
137
944
643
544
3 456
445 46
750
549
4 512
508
462
453
457
431
469 48
4 497
300
350
400
450
500
55019
7819
8019
8519
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
06
Mill
ion
ton
22
Grain production in China, by commodity
50
70
90
110
130
150
170
190
210
1978
1980
1985
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Mil
lion
ton
Corn Rice Wheat
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Regional Structure of Wheat Production of China (2006)
Region Output %
Total 104.46
Henan 28.2327.0
%
Shandong 18.9018.1
%
Hebei 11.5011.0
%
Anhui 9.66 9.3%
Jiangsu 8.18 7.8%
Sichuan 5.14 4.9%
Shaanxi 4.16 4.0%
Unit: million ton
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• 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
Agricultural and food trade in China, 100 million US$
26
Agricultural and food import by commodities in China, %, 2005
27
Agricultural and food export by commodities in China, %,2005
28
Wheat trade in China million tons
0
2
4
6
8
10
12
14
1619
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
07
Mil
lion
ton
Import Export
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Major source of wheat import of China in 2007, Unit: ton, 10000 USDNo. Source Quantity Value % in total
Total 100517.43 2871.07 1 Canada 45025.58 1097.02 38.21
2 Australia 26846.56 690.03 24.03
3 USA 17400.84 531.12 18.504 Japan 5869.5 295.85 10.305 Korea 2527.98 144.68 5.046 Thailand 877.41 46.92 1.637 Holland 525 21.08 0.738 China 470.73 14.31 0.509 Vietnam 400 12.74 0.4410 Russia 306.32 6.39 0.22
30
Major destination of wheat export of China, Unit: ton, 10000 USD
No. Destination Quantity Value % in total
Total 3072683 69140.48 1 Corea 1014670 19992.4 28.922 Indonesia 619317 14476.2 20.943 Philippines 539167 11415.34 16.514 Vietnam 281186 6628.65 9.595 Hongkong 118002 4147.11 6.006 DPR Korea 143681 3527.01 5.107 Thailand 109319 2941.19 4.258 Malaysia 80638 1894.34 2.749 Burma 25537 660.8 0.96
10 United Arab Emirates 26834 647.72 0.94
31
Rice trade in China, million tons
0. 0
0. 5
1. 0
1. 5
2. 0
2. 5
3. 0
3. 5
4. 019
8019
8119
8219
8319
8419
8519
8619
8719
8819
8919
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
07
I mport
Export
32
0
2
4
6
8
10
12
14
16
1819
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Mill
ion
ton
Import
Export
Corn trade in China, million tons
33
Soybean trade in Chinamillion tons
0
5
10
15
20
2519
80
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Product i on
I mport
Export
34
Soybean production and import10 000 tons
35
Cotton trade in China 1000 tons
0
400
800
1200
1600
2000
2400I mport
Export
36
Cotton production and import10 000 tons
37
Edible oil import in China
0
100
200
300
400
500
600
700
2001 2002 2003 2004 2005
Total pal m oi lsoy oi l rapeseed oi l
Current agricultural policies in China
• Grain market policy• Subsidies and Support Price• Rural infrastructure• Rural public services
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
Govn’t expenditure in rural area and its share in total
262.
6
297.
5
339.
7
431.
8 562.
5
0
100
200
300
400
500
600
2004 2005 2006 2007 2008
Bill
ion
RM
B
7.8%
8.0%
8.2%
8.4%
8.6%
8.8%
9.0%
9.2%
9.4%
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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
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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
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• 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
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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
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• Hospital– Rural cooperative medical care system – 41 thousand farmers in 1400 countries join
the program
New orientation of agricultural policy in China
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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
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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
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New measures
• Deepening comprehensive reforms• Shift the focus of governmental
expenditure to rural areas: a higher share, especially in the budget of central government
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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.
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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
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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)
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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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