Agriculture Reference
In-Depth Information
The proportion of land area sown to grain to total sown area has fluctuated
between 70 per cent and 80 per cent over the past 20 years, and fell to
its lowest level of 69 per cent in 2000 due to low grain prices. In addition,
the government has abolshed the gran producton quotas on the major
gran mportng provnces n the coastal areas to provde more market for
those provinces that have higher comparative advantage. Quotas to the
major gran producng provnces have also been dropped because there
s stll a surplus of gran supples. The formal abolton of the government
quota system or prce protecton wll have a postve effect on the market-
orented structural adjustment.
Export-oriented agriculture has had limited development in China,
mainly in the coastal areas such as Guangdong. In 2000, exports of food
and food animals were US$12.3 billion, accounting for only 4 per cent
of the total value of output of Chna's agrcultural products. There are
possbltes for further development of export-orented crops and anmal
products. Future adjustment should be directed towards increased
exports of labour-intensive products with low land intensity. However,
a major effort is needed, especially for remote inland areas, to develop
business connections with world markets, and also to develop related
human resources, infrastructure and other facilities. These are long-run
tasks, not only as a reaction to the import shock but also a way towards
modernsaton of agrculture.
Removng prce protecton
Past experence ndcates that government protecton of gran prces has
had a negatve mpact on farmers' ncomes because t has dstorted market
prces and led to supply adjustment n the wrong drecton. Government
gran prces set at levels hgher than market prces encourage farmers to
produce grain in excess of market demand, eventually resulting in declines
n market prces and surpluses of gran products. Ths has resulted n large
fluctuations in grain prices and production in the past (see Wang 2001), and
adversely affected farmers' ncomes. Although currently prce protecton
is not in place, under the WTO commitments of the government, price
support s ruled out.
