Agriculture Reference
In-Depth Information
It is clear that without major adjustments in the production structure,
the growing grain imports will significantly affect farmers' incomes and
further widen the rural-urban income gap.
However, the WTO accession provides great possibilities for reforming
China's agricultural sector, leading to positive long-run effects on farmers'
incomes, as it pushes agriculture towards its comparative advantages and
higher efficiencies. In 2002, the area sown to grain in China fell by 2 per
cent, whereas the total grain output increased by 1 per cent from the
previous year. New breeds of soybean with significantly higher quality and
higher oil content were introduced to north-east China, the main region of
soybean production (China Central Television News 2003). These are signs
indicating that further increases in efficiency in agricultural production
are possble n response to the WTO challenge.
However, to increase agricultural efficiency significantly and reduce
rural-urban income disparities, not only structural adjustments of
agrcultural producton but also broad changes n Chna's domestc gran
trade polcy are needed.
The grain pricing system in China and its inconsistencies with
WTO accession
The current domestic grain trade policy—which provides grain support prices
to farmers and almost monopolises the domestic grain trade system—is
not only nconsstent wth the trade lberalsaton but s hardly helpful to
farmers.
Agrcultural producton and domestc trade n agrcultural products
was partially liberalised in the late 1970s and early 1980s. These reforms
changed the long-term stuaton of gran supply shortages nto surpluses.
Grain output increased from 283 million tonnes to 407 million tonnes during
the 1978-84 period. Grain production was first stimulated by the rise in state
purchasing prices, and subsequently fuelled by the abolition of the people's
commune system and introduction of the household responsibility system,
whch converted the collectve-based producton system nto a prvate
system. Grain production was affected by three prices at that time—the
state quota price, the above-quota price, and the market price—but none
of them were lnked to world market prces.
