New Challenges in the Development of Agriculture and Rural Areas

From: English Edition of Qiushi Journal Updated: 2013-08-20 15:33
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In order to guarantee the sound progression of our initiatives pertaining to agriculture, rural areas, and rural residents in the period ahead, we need to deepen our understanding of new situations and challenges, accurately identify new requirements and tasks, and rationally set out new ideas and measures for the development of agriculture and rural areas in China. 

First, the increase in inelastic demand for agricultural products has presented us with new challenges in improving the overall productivity of agriculture, ensuring food security, and guaranteeing the sufficient supply of major agricultural products. With the growth of the overall population, the rising proportion of the urban population, increases in the level of household consumption, and the expanding application of agricultural products in industry, increases in the inelastic demand for agricultural products have been seen in China. Though grain output has increased for consecutive years, we are still facing a situation in which the overall supply and demand of major agricultural products remains balanced but structural shortages in the supply of certain varieties are persisting. Due to strong demand, China continues to be a net importer of corn, and our dependence on imports for the supply of soybeans remains high. In addition, consumers are increasingly paying attention to food quality and safety, which is bringing about even higher demands for the quality of produce. Thus, we are facing an arduous task in ensuring overall balance, structural balance, and quality in the supply of agricultural products. To address these challenges, we need to increase the comprehensive productivity of agriculture, strategically balance the production of major agricultural products in light of our own conditions, and identify priorities in the development of agricultural production. At the same time, we need to intensify the regulation of the agricultural products market and improve the quality and safety of agricultural products.

A greenhouse area belonging to the Zhejiang Yiyuan Ecological Agriculture Company houses organic vegetables at the foot of Mount Mogan. In 2012, modern agriculture was responsible for an output of 150 million yuan in Mount Mogan Town. The town was also visited by more than 2.7 million domestic and foreign tourists, allowing it to generate a total of 540 million yuan in revenue from tourism. / Photo by Xinhua reporter Tan Jin

Second, having set ourselves the goal of doubling rural incomes, we are facing new challenges in expanding sources for the growth of incomes and maintaining the rapid increase of incomes for rural residents. At its Eighteenth National Congress, the CPC set forth the goal of doubling the income of rural and urban residents by the year 2020 (compared to 2010 levels). For this goal to be achieved, the net income of rural residents will need to continue growing at an annual rate of more than 7% over the coming years. At present, we lack a stable foundation to underpin the growth of rural incomes, and this will present us with a degree of difficulty in achieving our goal. With regard to the breakdown of rural incomes, the share of income from household production has decreased to 44.6%, although this still constitutes the largest single source of income; while the share of wage income has risen to 43.5%, becoming the major force driving the increase of rural incomes. In addition, though property income and transfer income have also increased, their combined share only accounts for 11.9% of rural incomes in total. In order to double rural incomes, we need to do everything in our power to expand the sources of income for rural residents whilst adapting to changes in the breakdown of rural earnings. Specifically, we need to stabilize and then increase production income and wage income among rural residents, and create conditions for the further growth of property and transfer incomes, especially by increasing the proportion of land value gains that go to farmers. By doing so, we will be able to achieve the growth of rural incomes on several fronts at once.

Third, increases in the cost and levels of investment required for agricultural production and operation have presented us with new challenges in increasing comparative returns in agriculture and keeping farmers motivated. In recent years, the cost of agricultural production in China has soared due to constant rises in the price of means of agricultural production, increases in the cost of renting land and securing finance, and the growing cost of labor, a factor which was previously almost negligible, due to the outflow of the young and middle-aged workforce. Meanwhile, comparative returns in agriculture have been decreasing on a constant basis. Statistics show that in the year 2011, net profits for wheat, rice, and corn per 666 square meters of farmland were just 118 yuan, 371 yuan and 263 yuan respectively. Therefore, the question of how we can motivate farmers to produce grain has become a new topic of concern. Under these circumstances, it is imperative that we further develop a system to subsidize agricultural production and guarantee the prices of agricultural products. At the same time, we must work faster to cultivate new forms of operation in agriculture, such as large farming households, family-run farms, and specialized farmer cooperatives, and devote major efforts to the development of moderately large-scale agricultural operation and the intensive processing of agricultural products, so as to improve the comparative returns of agricultural production and boost the competitiveness of agricultural products. These measures will help to ensure that farmers are able to receive sound returns and real benefits from the production of grain without suffering losses.

Fourth, profound changes to the structure of the agricultural sector and to the forms of production and operation employed in agriculture have presented us with new challenges in the construction of a new operational framework for agriculture. As forms of development have become more diverse and market forces have come to play an increasingly important role in agriculture, we have seen the emergence of large-scale grain and livestock producing households, family-run farms, specialized farmer cooperatives, leading agricultural companies, and commercial agricultural service organizations in significant numbers. Gradually becoming a leading force behind the development of modern agriculture in China, these new forms of operation have led to a notable increase in the proportion of large-scale operations in China’s agricultural sector. As the agricultural sector expands towards pre-production and post-production operations, the division of labor over different areas of the sector has become an inevitable future trend. This constant emergence of new industrial forms has turned modern agriculture into an industrial system in which the primary, secondary, and tertiary sectors are deeply integrated. Under such circumstances, the land operation mode, production management mode, and production and financial services of the past are no longer fully geared to demands for the expansion of productivity. There is, therefore, a pressing need to change our approach to agricultural production and operation. On the basis of preserving the system of household contracting, we must work faster to develop a new operational framework for agriculture, so as to keep on injecting vitality into agriculture and rural economies in China. 

Fifth, the problem of high input levels and low efficiency in the use of agricultural resources has become increasingly acute, presenting us with new challenges in transforming the mode of agricultural development and promoting the sustainable development of agriculture. At present, China’s factors of agricultural production and environment are already under huge pressure. Rapid industrialization and urbanization have put us under greater pressure to ensure that the total area of arable land stays above the “red line” of 120 million hectares, and soil pollution is becoming increasingly serious. China has entered a period of severe water shortages, with the shortfall in water supply for irrigation standing in excess of 30 billion cubic meters nationwide. Moreover, the frequent occurrence of natural disasters has caused grain losses of more than 30 billion kilograms over the last decade. Waste from agricultural production is having an increasingly severe impact on the environment. The overuse and inefficient use of fertilizer, pesticide, and plastic sheeting have caused non-point source pollution and soil degradation, while the problem of household waste and waste from the breeding of domestic animals has become increasingly prominent. The excessive exploitation of offshore fishery resources has led to the ecological deterioration of fishing waters. Meanwhile, a fundamental turnaround in the ecological deterioration of grasslands has yet to be achieved. Therefore, in consideration of the above, we may say that our present, resource-intensive mode of agricultural development is unsustainable. In line with requirements for making ecological progress, we must work quickly to establish a resource-conserving and environmentally friendly mode of agricultural development, so as to promote the sustainable development of China’s agriculture in the future.

Sixth, prominent structural shortages in the agricultural labor force have presented us with new challenges in training a new breed of professional farmers and ensuring a sufficient labor force to underpin the sustainable development of agriculture. In recent years, the scale and skill-set of China’s agricultural labor force have declined constantly along with the relocation of rural laborers to non-agricultural areas of employment in large numbers. This has led to a shortage of labor in farming seasons, a shortage of qualified labor to underpin the development of modern agriculture, and a shortage of human resources for the development of a new countryside. Other problems brought about by the decline of the agricultural labor force, such as the sidelining of agriculture, the emptying-out of villages, and the aging of the rural population, are also becoming increasingly visible. In many regions, the bulk of the farming population comprises of women and middle-aged people whose family members have left the countryside in search of work elsewhere. Moreover, more than 50% have never received any education above the primary school level. Only 1.6% of the rural labor force has practical skills, and less than 4% have attended secondary rural vocational education. This has led to a serious shortage of skilled personnel in agricultural production and management. A new generation of rural migrant workers, which accounts for over 60% of the total migrant workforce, is unwilling to return to the countryside and work in agriculture. Thus, the question of who will farm has become a major and pressing issue. We need to approach the training of a new breed of professional farmers as an issue of underlying importance. Through the provision of policy incentives and technical training, we need to foster a contingent of highly capable personnel in agricultural production and operation, thereby ensuring that we have the people we need for the sustainable development of agriculture.

Seventh, continued imbalanced development across industry and agriculture and across rural and urban areas has presented us with new challenges in realizing the equal exchange of factors of production between rural and urban areas and in promoting the integrated development of rural and urban areas. Since the launch of reform and opening up, profound and positive changes have occurred in the relationship between industry and agriculture and in the relationship between rural and urban areas. Despite this, however, prominent imbalances are still seen in development between industry and agriculture and between rural and urban areas, and the deep-rooted factors that have impeded the integrated development of rural and urban areas still exist. With the widening gap between the prices of industrial and agricultural products having now been resolved, the main problems we are facing at present are the inequitable exchange of factors of production between rural and urban areas, imbalanced resource distribution between rural and urban areas, and the serious outflow of rural resources. These are problems that cannot be fundamentally resolved within a short period of time. In addition, public services in rural areas are still lagging behind, and public expenditure is still low in both absolute and proportional terms. Migrant workers still face a number of difficulties, such as settlement in urban areas, equal employment opportunities, access to social safety nets, the purchase and rental of property, and schooling for their children. In order to resolve these problems, we need to take effective measures to promote overall coordination in the development of rural and urban areas. These measures include promoting the equal exchange of factors of production between rural and urban areas, promoting equal access to public services in both rural and urban areas, and providing permanent residence for rural migrant workers in cities on a step-by-step basis. Doing so will allow us to genuinely develop a new form of relationship between industry and agriculture and between rural and urban areas, one in which industry promotes agriculture, urban development drives rural development, and industry and agriculture can benefit each other. 

The new changes and situations that we are seeing at present prove that China has genuinely begun to make the transition from traditional agriculture to modern agriculture. They demonstrate that China is gaining new momentum in its transition from conventional, small-scale agricultural production to large-scale, society-wide production, and that profound adjustments and interactions are genuinely beginning to take place in the relationships between industry and agriculture and between rural and urban areas. At the current stage, we need to remain aware of both potential risks as well as potential opportunities in our initiatives regarding agriculture, rural areas, and rural residents. We need to examine new situations in depth, mount rational responses to challenges, and work to secure accelerated progress in the following two aspects. First, we need to speed up the transformation of our mode of agricultural development. Specifically, we need to base our development on increases in the quality and returns of agricultural development, rely more on scientific and technological advancement, the upgrading of facilities and equipment, and the improvement of skills to drive agricultural development, and make major efforts to improve the overall productivity, competitiveness, and sustainability of agriculture. Second, we need to speed up our efforts to introduce new modes of organization and new systems in agriculture. Specifically, on the basis of upholding and making improvements to our basic rural operation system, we must focus on establishing a new framework for the operation of agriculture that is characterized by intensive, specialized, and organized agricultural production and widespread social participation. 

(Originally appeared in Qiushi Journal, Chinese edition, No.7, 2013)

Author: Minister of Agriculture of the People’s Republic of China

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