Policy context
Agriculture/rural development policy: implementation, impact and effectiveness
| Authors: | Hong Hu Liu |
| Coordinating authors: | Constantinos Kosmas, Ruta Landgrebe, Sandra Nauman |
| Editors: | Alexandros Kandelapas, Jane Brandt |
Editor's note 20Mar14: Source D142-7.
The agriculture stimulus policy is wide and diverse, covering issues of agricultural production, food security, product quality supervision, market price supervision and the environment. National agricultural policy has always been subject to the most stringent supervision. Large investments have aimed at high-yielding transformation, such as agricultural infrastructure. The National Government maintains direct management of risk and intervention over grain production.
The policy serves four core objectives:
- increasing agricultural productivity;
- improving living quality of farmers;
- ensuring the supply of fertilizers and other agricultural means of production;
- stabilizing food prices.
Since 1950, agricultural policy has encouraged production. In recent years, national agricultural policy has been directed at using agricultural development to lead the rural economy. Therefore, national rural development strategy planning is always focused on sustainable rural development and improvement of the rural environment.
Overall, the strategic objectives of agricultural policy can be summarized as to:
- improve the value and competitiveness of agro-forestry, animal husbandry, and the fishing industry;
- protect the environment and nature and promote the sustainable use of resources;
- improve the quality of rural life and encourage agricultural diversification;
- develop rural secondary and tertiary industries and diversify the rural labor force.
The main policy actors in Chinese agricultural policy are summarised int he following table:
Agricultural policy actors in China
| National level | Regional and local level |
| Department of Agriculture | The Agricultural Bureau is responsible for overseeing the implementation of policies; collecting the data of agricultural production, harvesting, sales, and storage; and evaluating the implementation of agricultural programs. |
| Ministry of Finance: control project funding and ensure availability of funds. | Land use, lease, and redistribution and control of resources for major infrastructure projects. |
| National Development Bank: responsible for management of specific financial policy. | Local branch of CDB is responsible for unified supervision as to where the money is distributed. |
Source: authors
The main instruments of agricultural policy at the state level are economic and financial, objectives which dominate all other aspects and instruments.
Agricultural policy instruments in China
| Type and Name of Instrument (Legal/institutional) | Content |
| National Rural Economic Development Plan | Subsidies for agricultural product prices |
| Recommendations on the policy of improving grain reform | Direct subsidies for grain production |
| Regulations for tax revenue collection of agricultural specialty crop production | Abolition of agricultural taxes |
| Fund management of interim measures for crop varieties | Subsidies for grain seeds |
Source: authors
Implementation, impact and effectiveness
Agricultural and rural development policies have a variety of policy forms. The primary issues are:
- property rights of land contracting and agricultural income;
- farmers tax reform;
- impact of agricultural price subsidies; and
- impact of agricultural infrastructure.
Formal agricultural policy makers are the State Development and Reform Commission and the Ministry of Agriculture.
In Zigui, the implementation of agricultural policies with Ministry of Agriculture agencies. Ministry agencies develop technical standards for various industries of agriculture, but do not intervene with prices. Even though the Ministry is responsible for agricultural production, building agricultural infrastructure requires cooperation with other departments.
The main target of farmer cooperatives is the purchase of agricultural production, agricultural marketing, processing, transport, storage, and agricultural production and management. This role was confirmed with the 2006 PRC Farmer Cooperatives Act.
The main agricultural policy instrument is agricultural subsidies. Starting in 2000 the subsidy system was progressively reformed with a view "to protect farmers’ enthusiasm for growing grain" and establish a simple and effective means for controlling grain subsidies, though banks and the "One Card" system.
Since 2003, the basic subsidy priciples are:
- subsidies are paid directly to the farmers who are farming;
- abandoned land and non-agricultural land shall not be subsidized;
- subsidies may not be paid for land which is converted to agricultural facilities.
Rural development and planning policies intersect with water policy and environmental protection policies. The interaction with planning policy is problematic as the provision of stable agricultural land tends to be overlooked by planners and the construction industry.
Agriculture is exposed to market risk and natural disasters. Agricultural development depends on the government to provide protection. On the one hand, the government provides low-interest subsidies for investment in infrastructure, helping to withstand natural hazards and improve productivity. On the other hand, interest subsidies and other financial measures through the production and marketing of agricultural trade improve income. The local government is successful in using price instruments to stabilize the price of agricultural means of production to ensure that farmers are able to gain a return. However, local government is powerless in the face of price volatility caused by market speculation.
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