Agricultural subsidies 'should be reconsidered'

Updated: 2015-05-13 07:43

By Xu Wei(China Daily)

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China should reconsider policies that give heavy subsidies for grain products and agricultural applications such as pesticides and fertilizers, as the country is facing mounting pressure to deal with agricultural pollution, the director of an international food policy think tank says.

Fan Shenggen, director-general of the International Food Policy Research Institute, said the current subsidized agricultural structure will result in greater agricultural pollution and an imbalance in the country's agricultural production.

"The subsidies are spurring farmers to spend more on fertilizers and pesticides, which is piling heavy pressure on the rural environment," Fan said in an interview with China Daily.

In April, the Ministry of Agriculture started a five-year plan to curb pollution in rural areas. The ministry also said it aimed for the use of formulated fertilizers, which should reduce the volume of fertilizer needed, on more than 90 percent of farmland.

The ministry set a target of a zero increase in the use of fertilizers and pesticides by 2020.

A total fund of 122.2 billion yuan ($19.7 billion) was set aside last year for subsidies to farmers for grain production and purchase of agricultural production resources, according to the Ministry of Finance. The country produced a total of 607 million metric tons of grain last year, an increase in production for the 11th consecutive year.

Fan said canceling the subsidies can force farmers to switch production to more diversified food products, including fruits, vegetables and dairy products.

The 2014-2015 Global Food Policy Report, released by the research institute on Wednesday in China, said middle-income countries, including China, remained home to a majority of the world's hungry and malnourished populations.

China has 150.8 million people who struggle with undernourishment and another 341.8 million suffering from weight issues and obesity, according to the Food and Agriculture Organization of the United Nations.

"China needs a major adjustment to its agricultural production structure to solve the problem," Fan said.

The over-reliance on grain production has hampered the production of more nutritious food products, he said.

Chinese Finance Minister Lou Jiwei said during a speech at Tsinghua University in April that the country should scrap subsidies to the farmers for growing grain products such as corn and wheat.

The price of domestically produced corn, for instance, is still higher than prices at international markets after the subsidies, he said.

Lou also said that the country should encourage agricultural imports to enable more labor to flow from rural areas to industrial and service sectors.

The phasing out of subsidies could substantially reduce the country's grain production due to the loss of price edges to imported products, which can enable the market to allocate resources, Lou said.

Agricultural subsidies 'should be reconsidered'

Any worries about a lack of sources for grain imports are groundless, he said.

Fan said the country still has immense potential to improve its agricultural productivity.

"The investment saved from the subsidies can go to agricultural science research institutes. It can also go to supporting production of food products with higher nutritional value," he said.

"The ultimate purpose is to ensure food security. But that does not mean that the country must be totally independent in food supply," he said.

Fan urged China to continue to invest in research of genetically modified food science, because the research can help the country cope with potential future climate change.

"Some GM grain strains can resist droughts or high temperatures. These features can also be very helpful in the near future," he said.

Another way to ensure food security is to diversify the import channels of agricultural products.

"For Chinese companies, it would be naive to think that they can purchase the land in another country and then ship the produce back to China," he said.

(China Daily 05/13/2015 page5)