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Economic Reform
Sowing Agricultural Reforms
Agricultural transformation and upgrading is necessary to stabilize the market
By Xiang Junyong | NO. 11 MARCH 16, 2017
Farmers at work in an agricultural science and technology demonstration base in Qingdao, Shandong Province, on March 1 (XINHUA)

On March 5, Premier Li Keqiang delivered the Government Work Report at the opening ceremony of the Fifth Session of the 12th National People's Congress. The report suggests that this year's agricultural work will focus on pushing forward supply-side structural reform and fostering new growth engines for rural development.

As an old Chinese saying goes, agriculture is the foundation of human society. For a country populated by nearly 1.4 billion people, agriculture is essential to social stability. Properly handling issues concerning agriculture, rural areas and farmers is of strategic significance to China's economic development and overall stabilization.

In 2017, China's supply-side structural reform will be reinforced, and work on the agricultural front will be facilitated. At present, although agricultural and rural development in China has entered a new stage, the agriculture industry is plagued by inadequate supply of quality products despite periodic oversupply in other commodities. Given that, China should take agricultural supply-side structural reform as the focus of work in rural areas for the foreseeable future.

As a major part of reforms on the supply side, revisions to the agricultural industry should begin with production methods, push forward the building of agricultural brands, develop green agriculture, and give full play to science and technology. The scheme should also improve rural land management, renovate rural financial services and enhance the overall quality and efficiency of the agricultural supply system.

Brand building

The key to agricultural development lies in brand building. Reviewing international agricultural trends, one finds that brand strategy is a necessity for a country to gain an advantage in international competition.

By strengthening brand building, displaying competitive advantages and intensifying intellectual property protection, France has become the largest agricultural producer in Europe and the second largest exporter of farm products in the world. These brands have earned the country a good reputation among global consumers and helped it have the upper hand in global competition. China should also carry out its own agricultural brand strategy and obtain a competitive edge by fostering a bundle of internationally famous brands. By doing so, China will be able to propel its domestic agricultural transformation and upgrading as well as the development of modern agriculture.

Judging from the different regions across the vast country, implementation of brand strategy is the key to a more competitive agricultural industry. Regions with more advanced agricultural industries are often those with more branded farm produce. Brand building involves a lot of factors such as production and marketing, and it drives the optimization of related industries.

President Xi Jinping put it during his visit to Jilin Province in July 2015 that China should incubate its own agricultural brands, and its grain should be qualified to be carried by brands. By implementing this strategy, we can coordinate a variety of factors including various regions' ecological environments, planting methods, culture and history. This will sustain local social and economic development and generate impetus for continued agricultural development.

Green agriculture

As progress is made in China's social and economic development, the external environment for agricultural restructuring has changed a lot. These days, people are not satisfied with just having enough food, but tend to prefer safe, nutritious and eco-friendly food that is non-toxic, organic and pollution-free. To cope with changing market demand, the agricultural supply system needs to be transformed from being production-oriented to consumer-oriented and increase the production of green, eco-friendly and organic farm products. China should improve its standardized production system, its quality and safety examination system and speed up the quality certification of branded agricultural products to ensure food safety.

To develop green agriculture, the country needs to vigorously promote the green production model. To produce eco-friendly farm products, efforts should be made to insist on clean production, gradually improve fertilization patterns, and push forward the replacement of chemical fertilizer with organic fertilizer. Furthermore, farmers should implement strict high-standard management of chemical fertilizers and pesticides, and advance the control of plant diseases and insect pests.

At the same time, China should focus on treating prominent problems concerning the agricultural environment, and put into effect the action plan on preventing and controlling soil contamination. It should also advance the restoration and comprehensive treatment of arable land, grassland and river and lake systems so that green agricultural development can be put into reality, and sustainability of agricultural growth can be improved.

Sci-tech strength

The future direction of agriculture is modernization, and scientific and technological innovation is essential to that end. For a long time, scientific research in this field has been detached from production in China. To solve this long-standing problem, China should let agricultural scientific research take the lead in agricultural supply-side structural reform.

To achieve that, the government should accelerate major breakthroughs in agricultural scientific research and technological model innovation, adjust the emphasis and direction of scientific research to comply with new development trends in the sector, and push forward the Internet Plus action plan by facilitating e-commerce and big data development in rural areas.

In addition, agricultural scientific research should be more closely linked to everyday production. The government should help agricultural science and technology benefit more farming households. At the same time, efforts should be made to nurture professional farmers. 

Rural land reform

In recent years, with the acceleration of industrialization, informatization, urbanization and agricultural modernization, new rural land reforms seem inevitable.

In 2016, central authorities released a document on completing the separation of rural land ownership, contracting and

operating rights. Before that, the household contract responsibility system confirmed the separation of collective land ownership and contracted farmers' land management right. That's to say, on one hand, farmland is still collectively owned by the public; on the other hand, production and management are entrusted to individual farming households through long-term contracts. Now the land contracted management rights have been further divided into contracting and operating rights, another major breakthrough in China's rural land reform.

In the context of a large agricultural workforce moving to the manufacturing and service industries—and considering China's aging society—the separation of the rights to land ownership, contracting and operation is designed to boost the efficiency of the use of land and foster medium-scale farm management models.

This can help solve existing problems in small-scale management and failures to introduce modern farming methods. On the basis of protecting farmers' contracting rights, this new reform measure will lead to better allocation of land resources and support the development of medium-scale farms, a management model that can reduce barriers in introducing agricultural science and technology and modern machines in farms. Consequently, an array of problems such as an imbalance in production and demand, resource misallocation, environmental deterioration and declining competitiveness can be solved.

Financial innovation

Agriculture is the foundation of the national economy, and finance is the core of the modern economy. Expediting rural financial innovation is a prerequisite to facilitate agricultural supply-side structural reform. As urbanization and urban-rural integration keep progressing, rural financial demand is increasingly flourishing and diversified. Farmers' financial demand is strong especially in underdeveloped regions. However, constrained by information asymmetry and incomplete rural financial system, people in rural areas are deeply troubled by financing difficulties and high costs.

The government should propel the innovation of financing channels and lower financing cost for farmers. It should carry out pilots allowing farmers to get loans by pledging their land management rights, house property rights and large-scale agricultural machinery, speed up the identification of the ownership of rural resources, push forward the development of agricultural insurance and use fiscal expenditure to attract more social capital into rural areas.

In pushing agricultural supply-side structural reform, the government should make sure that grain production capacity doesn't decline, farmers' incomes don't decline, and that rural stability can last. On that basis, with perseverance, success will be achieved.

The author is deputy director of the Department of Industrial Research at the Chongyang Institute for Financial Studies of Renmin University of China

Copyedited by Bryan Michael Galvan

Comments to zhouxiaoyan@bjreview.com

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