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Flexible grain policy needed
2002-06-04
China Daily
China's strategies and policies governing grain production and circulation should be adapted to the profound changes that have taken place in the domestic and global economy, so that the grain safety of China can be ensured under the new situation.
During the period prior to China's opening-up policies, grain was continuously in short supply in the country due to poor production efficiency, inferior technology and low investment. At that time, the international agricultural market was out of reach.
Therefore, it was only natural for the government to motivate all available resources to improve the production of grain to ensure the nation had enough food.
The reform, carried out from the late 1970s, brought about remarkable improvements in the production capability of grain. At the same time, the opening-up drive also made China an active participant in economic globalization.
Against the remarkably transformed backdrop, it is necessary to give a new definition of grain safety, analyze its current challenges and adjust relative policies accordingly.
Considering the contemporary conditions, many challenges for grain production are obvious.
First, the area of farmland in this country has been decreasing in the past two decades. The per capita area of farmland was 0.15 hectares in 1978 and the figure declined by 25 per cent to 0.1 hectares in 1999. With the deteriorating ecological environment, both flood and drought conditions are worsening year by year.
Some experts predict the total area of farmland in the country will decrease by 4 million hectares by 2010.
Therefore, it is difficult to raise the grain production by increasing farmland.
Scarce water resources are another problem. China ranks No 121 in the world for per capita water volume, and is one of 13 countries which suffer the most from the water shortages.
In Northwest China, grain production is only 30 per cent of its theoretical production because of the shortage of water.
Research on grain production shows irrigation is the factor that has the biggest influence on grain production. Judging from the long-term development, water shortages may pose a bigger threat to grain production than the decreasing area of farmland.
The third challenge facing grain production comes from the insufficient research and technological support for agriculture.
Governmental investment in agricultural science and technology has failed to meet the demand. There lacks an effective mechanism to popularize the achievements of researchers, and, consequently, some achievements are laid untouched instead of being put into practice.
Despite the challenges, there is still hope grain production will grow further, as long as the government takes efficient measures to tackle the difficulties.
An important policy shift would be to enhance the support to major grain production areas. Major grain production areas turn out more than two-thirds of the country's grain production.
The government should offer more favourable treatment to the agricultural sector because it is in an inferior position in the economy and highly vulnerable to natural conditions. The market itself is unable to finish the task of ensuring a balanced development between agricultural and non-agricultural sectors.
It is the government's responsibility to offer special treatment to help improve the production efficiency of agriculture and the agricultural structure, especially in the major grain production areas.
However, the growth of grain production should also be realized through technological progress.
Since most agricultural technology achievements benefit the public, it is unrealistic to take back all government investment and push such research institutes on to the market.
The research institutes in agricultural science and technology should be sponsored mainly by the government so that their investment needs can be guaranteed. Moreover, it is necessary to increase investment in research and development of agricultural technology. The ratio of research investment to the gross agricultural product should be raised to 0.26 per cent, the average level in developing countries, from the current 0.1 per cent in China.
A network should be established to popularize the achievements and apply them into the daily practice of farmers.
Besides the domestic policy adjustment, a more instant solution is to make good use of the international grain market.
It has been a long-term guideline of the central government that China should rely on itself for grain supply. It is now time to adjust the guideline considering the overwhelming trend of economic globalization, especially following China's entry to the World Trade Organization.
Under the new background, it is proper to relate grain safety with the demand and supply of grain on the international market rather than constraining the solution just within the country.
China's economic progress has made the country more flexible in investing in agricultural production and importing grain when necessary. Therefore, even if the grain production of China cannot satisfy domestic demand, the government would still be able to find a solution on the international market.
Entering the international market can also highlight China's competitive advantages.
If an interdependent approach is established between the import of land-intensive grain and the export of labour-intensive agricultural produce, it would improve the efficiency of reallocation of domestic resources. In this sense, it ensures grain safety in a more efficient way.
To import grain when necessary will also help China cut down the cost of maintaining a huge grain reserve.
To purchase grain on the international market will diversify the risks when the demand or supply of grain witnesses an abrupt rise or slump; for example, during the time of a natural disaster.
In order to make the best use of the international market, the government should reform the current trade policy, including importing from different countries, signing long-term trade contracts and improving transportation conditions.
Li Chenggui is a researcher with the Institute of Rural Development under the Chinese Academy of Social Sciences, and Wang Hongchun is a lecturer at the Financial School of Shijiazhuang, Hebei Province.
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