The article points out that relatively stable grain prices in
The farm subsidy program was started in 2004 with tiny payments of 10 yuan per mu (about $1.20 at the time) that was given to farmers in 13 important grain-producing provinces. There was also a murky “quality seed” subsidy and a subsidy for buying large machinery. Year by year the subsidies have been raised. Local governments can kick in money too. They also started paying support prices for wheat and rice. The support prices were increased in May. On top of this, they started paying a subsidy to offset rising prices of fertilizer and fuel this year that is even bigger than the grain subsidy. (There are also subsidies for the dairy industry, hog breeding, and large poultry farms.)
The article cited above tells us that the subsidy in
It’s not clear whether these subsidies are (will be) considered “green box” (not linked to production) or “amber box” (potentially distorting subsidies linked to production) when reported to the WTO. But this news report clearly credits the subsidies with raising grain production because income from grain is more attractive compared with growing other crops or leaving to work in the city.
Chinese officials have it good. They can brag about how farmers are thrilled to earn a gross income of $362. Officials in
Oh, and how do the Grain Bureau officials finance their banquets? Well, they’re sitting on grain reserves of about 150-200 million metric tons. That’s worth somewhere around $50 billion at current prices locked up in warehouses (some of it rotting or serving as rat food). They could sell 10-20 million metric tons on world markets and never miss it, plus make millions of dollars in profits. But they don’t because the government keeps writing checks, paying them to store it in the name of maintaining “grain security.”
When Chinese officials trumpet the effectiveness of their policies, perhaps they should calculate the cost of their “grain security.”