Big Job: Handing out cash to farmers

When China joined the WTO in 2001, officials were busy trying to come up with ways to protect their farmers from big subsidized farmers in the United States and other countries. One of the "countermeasures" was to give out direct subsidies to farmers. Sounds simple, but the reality is that it takes a small army of accountants and clerks to compile lists of eligible farmers, figure out how much each farmer should get, verify it, and send out the money to 200 million farmers. Then make sure the money doesn't get skimmed off before getting to the farmers.

China began its grain subsidy program in 13 provinces in 2004. At first, many localities deducted the subsidy amount from their taxes instead of giving out cash. The government took pains to publicize the subsidy program so farmers would know how much was due them and prevent officials from stealing the money.

Over the years, the distribution methods have evolved. In recent years, they have been distributing funds by depositing money in farmers' accounts at rural credit cooperatives that they can withdraw with a bank card. A 2007 article about this new system quoted a farmer in Qi County, Henan Province, as saying, "This [program] is great. It makes sure the benefits of the Party's policies go directly to farmers and eliminates our suspicions of officials."

An April 1 article describes new changes in the distribution method for 2009. In previous years, the grain subsidy funds came from the finance bureau to a special account at the township, so the township financial office had to pass the funds through township financial organizations, and they distributed the funds to farmers’ bank accounts. This year, funds will be sent directly from the prefectural finance bureau to farmers’ accounts. First the township finance office will report farmers’ subsidy amounts and accounts to the prefecture finance bureau. After verification by the prefecture finance bureau, the planned amount of subsidy funding will be sent to the prefecture-level financial organization, finally the prefecture level financial organization will send funds directly to farmers’ accounts. The reporter thought it was important to mention that the entire amount of funds left over in township special accounts for the subsidies is to be returned to the prefecture finance bureau (i.e. not used to purchase a Buick for the township accountant).

Another change is that subsidies can now be distributed through two financial insitutions. In previous years, grain subsidy funds were transferred through rural credit cooperative accounts. This year they can also be distributed through postal savings banks as well (a postal savings bank was incorporated in December 2007).

The reporter understands that the provincial finance bureau is now verifying subsidy information and grain subsidy funds will be distributed in early April. A number of other counties report having already distributed subsidies in March.

This seems like an awful lot of work for the amount of funds being distributed. The 2007 article cited above reported that 52 million yuan ($764,000, or one "jumbo mortgage" in the U.S.) was being distributed to 241,300 farmers in Qi county, an average of 215 yuan or $32 per farmer. No reports on how many clerks, accountants, and officials it takes to hand out the cash.