Corn-Soybean Rotation Subsidy in Heilongjiang Province

China's Heilongjiang Province announced a new pilot subsidy for farmers who rotate corn and soybeans. The subsidy is 150 yuan per mu (about $136 per acre). Eligible farms must have planted corn in 2015 and soybeans in 2016. The subsidy will be paid only to new-type farms that include large scale farms, family farms, and farmer cooperatives.

The subsidy appears to be part of two Chinese initiatives. First is the overhaul of grain subsidies which combines three separate subsidies into a single payment and makes payments to both small-scale landholders and new-style farms that rent in land. Second is a structural adjustment initiative which hopes to address the surplus of corn and deficit of soybeans by inducing farmers to shift land from corn to soybeans. A related initiative seeks to break the continuous mono-cropping of corn that has become predominant in northeastern China and degrades soil fertility.

The document announcing the subsidy offers no concrete details about how authorities will verify that farmers planted soybeans this year on plots where they planted corn last year. Local statistics bureaus are supposed to measure and verify the area subsidized, but this is impossible. Statisticians have had difficulty verifying the area planted in soybeans, so measuring area planted in corn in one year and soybeans in the next where there are no accurate records is an impossible task. According to the document, the subsidy will cover 6.5 million mu (over 1 million acres) in Heilongjiang. That would be about a fifth of soybeans planted in Heilongjiang.

This subsidy is a companion to Heilongjiang's grain subsidy for small-scale farmers announced in July. That subsidy is supposedly meant to compensate farmers for land fertility improvements, but there was no mechanism to verify that any improvements were made. Both subsidy payments appear to be general subsidies for grain producers dressed up as environmentally-friendly payments. By classifying the subsidies this way, officials may hope to claim the payments are exempt from limits on subsidies imposed by the World Trade Organization.

Heilongjiang farmers apparently will be eligible for a basic subsidy plus a corn or soybean subsidy, depending on which crop they grow on their land. The basic subsidy is a 71.45 yuan/mu "land fertility subsidy" for small-scale farmers or the 150 yuan/mu corn-soybean rotation payment for large scale farmers who rent land. Those who plant soybeans will also be eligible for a 130.87 yuan/mu "target price subsidy", and those who plant corn will get a "corn producers subsidy" of a similar amount. Rice producers will get the basic subsidy plus the assurance that the price will be supported by a minimum purchase price policy.