Tuesday, July 23, 2013

China's livestock support policies 2013

China's support for its livestock industry is ambitious and nuanced. The government's 2013 guidance for livestock work included an exhausting list of objectives:

  1. Ensure an adequate supply of livestock products
  2. Strictly monitor product safety
  3. Protect the environment using comprehensive measures
  4. Focus on pushing the industry's scale, standards, industrialization and information dissemination
  5. Strengthen dairy and feed quality and safety oversight
  6. Make a big push to protect the ecology of grasslands

A March 2013 Farmers Daily article summarized the different policy support measures available to livestock farms. China has quite a few programs to support the livestock industry, but subsidies are relatively small--especially in comparison with grain subsidies--and most are designed to transform livestock production from a backyard extensive activity to an intensive industrialized mode of farming.

1. Subsidies for improved breeding stock (1.2 billion yuan, or $194 million) which covers swine, dairy and beef cattle, sheep, and yaks. This subsidy was introduced in 2005, but authorities had been importing and propagating breeding animals by different means since the 1970s. Owners of sows can get a subsidy of 10 yuan for each artificial insemination attempt using semen from improved breeds of boars (2 attempts for 2 breedings per year). Dairy cattle AI subsidies are 30 yuan for holsteins and jerseys and 20 yuan for other breeds, and 10 yuan for beef cattle. Subsidies for buying male breeding stock are 800 yuan for sheep and 2000 yuan for yaks.

The livestock work guidance also reflects discomfort with the vast import of animal genetics that has been accelerated by the improved breed subsidy. The guidance emphasizes work on the genetic improvement plan which focuses on protecting native species of livestock and poultry (many in are in danger of extinction) and ensuring the quality and pedigree of breeding animals.

2. "Award" payments for major hog-producing counties (3.5 billion yuan, or $564 million). This is a sort of block grant given to about 400 counties to improve their hog industry. The funds can be used for subsidies to build new commercial-scale hog farms, buy breeding stock, or to subsidize loans for feed or purchase of animals, loans for processors or marketing, or to subsidize insurance for pigs. The counties are chosen by a competitive process using a weighted score based on hog production, inventories, and sales outside the county.

3. Support for "scale" livestock and poultry farms. Begun in 2007 to "transform" the industry, this program gives cash grants to build farms of certain sizes. Funds can be used for water, electricity, road improvement, manure management, disease prevention, milking facilities, quality testing and other related infrastructure. In 2007, it began with an annual allocation of 2.5 billion yuan ($400 million) for hog farms. In 2008, 200 million yuan ($32 million) was added for dairy farms and that was increased to 500 million yuan in 2009 ($80 million). In 2012, another 100 million yuan was added for beef cattle and sheep farms in eight western provinces. That seems to make a total of 2.5 billion + 500 million + 100 million = 3.1 billion yuan ($500 million).

4. Aid for animal disease prevention (780 million yuan, or $125 million). The government gives free vaccines for highly pathogenic avian influenza (poultry); foot and mouth disease, highly pathogenic blue ear disease, classical swine fever (pigs); and ovine rinderpest (goat plague, in Xinjiang). Funds are used to procure vaccines from manufacturers at the provincial level and distribute vaccines to farms through the government's veterinary system.  Costs of vaccines are shared by central and local authorities without compulsory fees for farmers. Funds support personnel costs for village veterinary stations. They support aid for culling diseased animals from HPAI, FMD, HP blue ear disease, and ovine rinderpest. Farms raising 50 or more pigs can get an 80-yuan subsidy to dispose of diseased animal carcasses.

5. Grassland ecological protection aid (15 billion yuan, or $2.4 billion). This program began in eight western provinces in 2011 with dual objectives of reducing stocking density on over-grazed land and pushing a transition from nomadic herding to intensive production of sheep and cattle. On severely degraded grasslands, herders are prohibited from grazing animals for five years--they get a 6-yuan-per-mu (about $6 per acre) subsidy as compensation. On grazing land where herders maintain a "reasonable" stocking density of animals, they get a subsidy of 1.6 yuan per mu. Herders can also get an improved breed subsidy (see no. 1 above), a 10-yuan-per-mu subsidy for planting improved varieties of forage on grassland, and a 500-yuan-per-family subsidy for input costs. In 2012, the program was expanded to include pastoral areas in five additional provinces (Shanxi, Hebei, Jilin, Liaoning, and Heilongjiang) and funding was increased from 13.6 billion yuan to the current 15 billion yuan.

6. Rural biogas construction. China has for many years been subsidizing village-level facilities to generate biogas from animal manure and other wastes. In 2013, "respecting the wishes and needs of farmers" the program will concentrate on poor areas in hilly and mountainous regions that lack gas supply. It promises to improve the service network.

7. "Green channel" marketing. Trucks carrying livestock products to markets are included in the "green channel" program which waives tolls on roads, bridges, and tunnels for vehicles transporting fresh and live farm products. Toll booths have to have a special booth to expedite their passage.

8. "Vegetable basket" product support policy (1 billion yuan, or $161 million). The vegetable basket system was set up in 1989 to guarantee supplies of meats, milk, vegetables and fish to cities. It entails building networks of farms, agribusiness companies, market facilities and testing labs. In 2012, the central government will allocate 800 million yuan in aid to support upgrades of 2,067 standardized livestock and poultry farms  upgrades (576 hog farms, 477 egg farms, 227 meat poultry farms, 347 beef farms, 440 sheep farms). It will spend 200 million yuan on aquaculture operations.

9. Subsidized agricultural insurance. National agricultural insurance began as a pilot program in 2007. Among the livestock included are breedable sows, dairy cattle, finishing hogs, Tibetan sheep, and yaks. In 2013 the scope will be expanded to aquaculture.

10. The article doesn't mention this, but there has been a hog price stabilization program since 2009. Basically, this program entails government purchases and storage of frozen pork to support the price when the ratio of hog and corn prices falls below 5.5:1 for several weeks. Strict implementation of this program was one of the first points in the 2013 livestock work guidance document.

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