Monday, June 4, 2012

Onfarm Storage Subsidy

Large amounts of China's farm products spoil or are otherwise wasted due to poor onfarm storage. On May 23, the Ministries of Agriculture and Finance issued a new subsidy program for onfarm storage facilities. The program pays 30 percent of the cost of building storage, preservation and drying facilities built by farmers or farmer cooperatives. A special subsidy fund of 500 million yuan is being established. The subsidy is paid after the facility is built. The program was set to be launched May 31 in eleven provinces, mostly in northeast and western regions: Inner Mongolia, Liaoning, Jilin,  Hebei,  Henan, Sichuan, Yunnan, Shaanxi, Gansu, Ningxia and Xinjiang. 

According to the announcement, China loses 7-to-11 percent of grain, 15-to-20 percent of potatoes and apples, and 20-to-25 percent of vegetables to waste each year. This program, which was called for in the "Number 1 Document", is expected to address this problem. The government has for several years been calling for local governments to give financial support to farmer cooperatives for building such facilities  but local governments have generally been slow to cough up the funds. 

Jilin Province's announcement says the province has 40 million yuan to give out in 15 counties. A farmer can apply for up to 2 projects and a cooperative can apply for subsidies for up to 5 facilities. They can include facilities for cleaning, grading, storage, preservation, drying, packaging, cooling and treatment. 

The Ministry of Finance's Q&A reveals that the project will be integrated with regional development and demonstration projects for developing contiguous areas specializing in particular crops. There are maximum awards set for each size of storage unit. The largest is 105,000 yuan for a 100-metric-ton cold storage unit. The smallest is 2000 yuan for a 2-mt storage shed. A 2-mt capacity hot-air drying shed can get a maximum subsidy of 20,000 yuan. The subsidy cannot exceed 30 percent of the cost. 

Farmers or cooperatives first apply to their township for approval. If granted, then the county agriculture and finance departments must approve. Then the facility can be built. After construction it has to be approved again (to verify that it was actually built and meets standards). A public notice is issued and 7 days later the the subsidy funds can be paid out. 

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