Seed subsidy evolves

Heilongjiang Province held a teleconference on March 6 to announce the details for distributing "quality seed" subsidies. This is one of three kinds of direct subsidies to grain producers introduced in 2004. It has never been clear how the subsidies are distributed--the methods may differ from province to province--but an article describing the conference gives some clues. The details revealed by the Heilongjiang Province finance department show that the subsidies have become more closely linked to actual production than in the past.

The subsidies were originally based on a standard of 10 yuan per mu, apparently based on historically grain plantings. This year, Heilongjiang has announced that the subsidy will be 15 yuan per mu for rice, 10 yuan for corn, soybeans and wheat. It is emphasized that the subsidies are to be allocated according to actual planted area. You get a subsidy if you plant; none if you don't. The link to actual plantings moves this subsidy into "amber box" of market-distorting subsidies in terms of reporting to WTO and counts against its 8.5% cap on subsidies.

The funds will be distributed to counties based on 2007 census records of plantings of each crop, then parceled out to villages and then to farmers. The actual subsidies paid depend on actual planted area. They are to be distributed to farmers by the end of March, i.e. before planting. This is also a change. Initially, subsidies appear to have been distributed after crops were already planted, but this year officials have been careful to give out subsidies and announce support prices before planting decisions were made.

Subsidies are paid by depositing them in an account they can access with an ATM card. Some of the prohibited practices reveal past abuses. You have to base the subsidy on actual area, not a diluted area that raises the average subsidy. No skimming funds, deductions, withholding, misappropriation allowed. The quality seed subsidy fund province-wide will exceed 1.35 billion yuan (about $200 million), an average of 80 yuan (less than $12) per farmer. Each farmer is to fill in a "quality seed subsidy area card" and subsidy distribution is to be publicly announced so farmers know how much is due them.