Economic Observation of China (2005 Issue No. 2)

Author: Wang Dongjing
Publisher:
Publish Date: 2005-06-01
Features: Safety: Focusing on Large-Scale Operations
China has a population of 1.3 billion, and "food" is of paramount importance. Therefore, the Party and government have always attached great importance to food security. Academic discussions on this issue are also diverse, with varying opinions. It is unnecessary to elaborate on academic viewpoints; anyone with some understanding of economics knows that ensuring food security relies on two main principles: protecting arable land and encouraging farmers to grow more grain. Arable land is a scarce, non-renewable resource. If it is not protected and is recklessly seized, food supply will certainly be compromised. However, if arable land is protected but grain cultivation is not profitable, farmers will not be willing to grow it, making food security a mirage, a pie in the sky. Two figures can be cited as evidence: In the past decade, when farmers' enthusiasm for growing grain was high, the annual grain output reached 522.52 million tons, while when it was low, it dropped to only 430.65 million tons, a difference of 81.78 million tons. It is clear that the state of food supply is closely linked to farmers' enthusiasm for growing grain. No one starts something without profit. To boost farmers' enthusiasm for growing grain, they must be made profitable. In recent years, the government has introduced many measures to help farmers increase their income. However, looking back, these measures can only address symptoms, not the root cause. For example, agricultural industrialization, encouraging farmers to engage in deep processing of agricultural products. Undoubtedly, farmers who run processing factories can indeed increase their income. The problem is that not every farmer can set up a factory, and most farmers can only grow grain and cannot afford to do so, meaning they cannot benefit from industrialization. Another example is the adjustment of the agricultural industrial structure, allowing farmers to grow whatever is profitable. In theory, it is acceptable for farmers to adjust the structure themselves, but if the government interferes, it often backfires. Economics has a supply and demand principle: when supply is insufficient, prices rise; when supply exceeds demand, prices fall. Structural adjustment is no exception. For example, in the early days, some farmers in Northeast China grew traditional Chinese medicine and made a profit, so the county government encouraged everyone to grow it. As a result, supply exceeded demand, prices plummeted, and farmers lost everything. It is clear that structural adjustment is not the government's responsibility. In recent years, the government has introduced some policies to protect farmers' interests and reduce their burden. First came the reform of fees to taxes, then direct subsidies for grain production, and later, the reduction or abolition of agricultural taxes. These policies have been a rare blessing for farmers. Unfortunately, while the government is reducing farmers' burdens, the prices of agricultural inputs have also risen, offsetting the benefits the policies bring to farmers. Farmers' income increases in name only, and in some regions, it has even decreased. According to an investigation by the author in Fugou County, Henan Province, in 2004, farmers' income from grain production increased by 37 yuan per mu due to policy support, but due to rising input costs, their expenses increased by 40 yuan per mu compared to the previous year, resulting in a net loss of 3 yuan per mu. What is even more troubling is that the government's policy support for farmers has nearly reached its limit, leaving little room for further income growth through policy measures. As early as two decades ago, Comrade Deng Xiaoping said that rural reforms should undergo two leaps: The first leap was the implementation of the household responsibility system; the second leap was the implementation of large-scale land operations. Why large-scale operations? Without them, farmers' income can only stagnate year after year. Now, farmers have an average of 1.5 mu of land per person. On this 1 mu and 5 fen of land, no matter what the farmers grow,