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Economic Reform
Agriculture Needs More Hats
New policy says rural areas should develop additional functions for development
By Zheng Fengtian | NO. 9 MARCH 2, 2017
 

  Visitors pick strawberries at a farm in Wuqiang County, Hebei Province, on February 7 (XINHUA)

On February 5, the Central Committee of the Communist Party of China and the State Council, China's cabinet, jointly released the No.1 Central Document of 2017, titled Opinions on Deepening Supply-Side Structural Reform in Agriculture and Accelerating the Cultivation of New Growth Engines for Agricultural Reform and Rural Areas.

This is the 14th year straight that the first policy document of the year has focused on agricultural and rural development and farmers.

The year's first policy statement released by the central authorities is seen as a major indicator of policy priorities. In 2017, the main goals of the document are to push forward supply-side reform in agriculture and increase the sector's comprehensive benefits and competitiveness.

 

Harvesting in progress at a wheat field in Yuanyang County, Henan Province, on June 10, 2016 (XINHUA)

From two to four

One of the major elements in this year's document is the focus on promoting new industries and business modes to push forward supply-side structural reform in the agricultural sector. New modes mainly mean promotion of rural multi-functionality. Though the international academic community has identified four rural functions in recent years, China's rural areas have only two.

Traditionally, rural areas were mainly places where agriculture was conducted and farmers' communities lived. China's rural areas have given full play to these two traditional functions. However, such areas can have more diverse functions and become the "back garden" of urban areas. They can be tourism destinations as well as development bases for cities' nursing-home industry. These two new functions are already very mature in developed countries, but in China, in spite of great potential, they still have a long way to go.

With this in mind, the Central Government is emphasizing the promotion of new industries and new business modes in the agricultural sector. These functions are expected to become a new source of rapid growth.

China's rural landscape, local culture and specialty products are very attractive to tourists. Every year, a large number of urban residents visit rural areas. But many beautiful villages are still unknown to the outside world. Despite their great scenic beauty, some villages' tourism potential remains untapped due to insufficient capital investment and inadequate infrastructure and maintenance.

So Chinese villages should pay more attention to multi-functional development, including promotion and infrastructure construction, to transform agricultural production bases into leisure tourism and nursing care destinations.

Beyond basic needs

Another highlight of the document is the implementation of a green mode of production to promote sustainable agricultural development. This mainly involves strengthening environmental protection in this area. Along with implementing environmentally friendly production practices, pollution should be prevented and controlled, and the output of high-quality products, which are in line with market demand, should be increased.

China's agricultural structure is sufficient to meet the nation's food and clothing needs. In its current stage, producing the largest output possible has basically become the goal of all agricultural production. But China now has 300 million people who can be considered to be well-off consumers, and they have higher and more diverse standards for food products. Thus, consumers' demand for high-quality and green agricultural products has significantly increased.

To meet these growing needs, it is essential to conduct supply-side structural reform in the agricultural sector and adjust agricultural production.

Take wheat as an example. In the past five years, China's wheat production grew at a rate of more than 2.5 million tons per year. From the perspective of supply and demand, total wheat production and consumption were essentially balanced; sometimes there was even a slight surplus. For a long time, the goal of the wheat industry was to increase production mainly for making noodles and buns. As a result, the production of gluten-rich wheat, which is used for making bread and cake, was neglected.

However, the younger generation of Chinese, under the influence of the Western way of life, has developed a taste for bread and cake. As a result, people's demand for gluten-rich wheat has grown rapidly, leading to an annual import of over 2 million tons of high-quality wheat. To solve this new imbalance, it is necessary to improve the supply and marketing system.

The current wheat supply and marketing system runs like this: Farmers plant and harvest wheat, then sell it to intermediary agents, who resell the produce to the state-owned grain reserve system or processing enterprises. This system is suitable for general wheat production needs but doesn't work when the market has a high demand for specific products, such as gluten-rich wheat.

As high-quality wheat cannot always generate high revenue and its output can't be guaranteed due to poor technology, farmers are unwilling to take the risk of trying new varieties. They prefer to plant traditional wheat, which they know they can always sell to the state-owned grain reserve system.

Hence, it is urgent to develop a high-quality wheat planting base. A solution to the problem would be to establish a wheat grading, purchasing and storage system on the basis of quality indicators. Unfortunately, China has yet to establish such a system.

Learning from experience

Yanjin, a county in central Henan Province with over 33,300 hectares of high-quality wheat, is a good example.

On May 17, 2016, it established the High-Quality Wheat Industry Technology Innovation Alliance to boost production. It also supported the creation of the Xinxiang Wheat Industry Group, which then established a flour-noodles-pastry-frozen food industrial chain and a liquor-packaging-labeling-logistics industrial chain. It was an innovative way of encouraging the upgrading of wheat production.

Processing enterprises are also seeking to improve their products with high-quality wheat. Jinmailang Foods, a famous Chinese instant noodles manufacturer based in Hebei Province, launched the Jinmailang High-Quality Wheat Project in 2005, creating an agricultural demonstration park of over 66,600 hectares in Longyao County.

"We developed high-quality wheat and raised the income of local farmers. A good crop variety is very beneficial for them," said Fan Xianguo, Chairman of Jinmailang Food.

Despite these achievements, full-scale upgrade of high-quality wheat production still has a long way to go. The biggest difficulties—such as reforming the breeding system—still lie ahead of us.

The author is a professor with the School of Agricultural Economics and Rural Development, Renmin University of China, and a researcher at the National Academy of Development and Strategy

Copyedited by Sudeshna Sarkar

Comments to yaobin@bjreview.com

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