China's new rice subsidy payment is designed to replace the crop's 15-year-old price support program as it is phased out, officials say. Information about the subsidy is sparse, even though it is a major new policy designed to benefit millions of growers of one of the country's staple crops.
Scattered references to a rice subsidy began to appear in official Chinese news media in early 2018, but there was never any major announcement of the program. More reports about distribution of subsidy funds in several provinces appeared in December, and other propaganda has appeared this month explaining that the subsidy is intended to offset the gradual reduction of the support price and wean farmers off their habit of growing rice to sell to the government.
The most detailed explanation is a December report from "Voice of Rural China" radio assuring farmers that the rice subsidy in Heilongjiang and Liaoning Provinces would be paid out by the end of the month. A brief article announced rice subsidy distribution in Guangxi Province, and a document issued by Hunan described that province's subsidy program. Several articles over the past month announced distribution of funds in various prefectures.
The rice subsidy generally operates as a block grant, much like the corn and soybean producer subsidies: the central government issues funds to provinces who then divide the funds among farmers. Different provinces and prefectures have varying provisions, but in most localities the funds are divided by the area planted in rice to set a payment per mu of land (15 mu = 1 hectare) made to each grower.
Hunan's document allows county governments to add their own funds to increase their local subsidy up to a limit of 20-percent above the provincial average. In Guangxi (which describes its payment as a "target price subsidy") a payment is given for each kilogram of rice produced.
One article this week explained that the rice subsidy is intended to compensate farmers for the reduction in minimum prices for rice over the last three years and notes that the Minister of Agriculture promised that subsidy funds would be much larger this year. The article explained that the government is reducing its purchases of grain to encourage farmers to produce high quality rice that the market demands.
An article in Rural Observer informs farmers that the reduction of the minimum price is a signal that the reserve system is being reformed and admonishes farmers that they should no longer expect the government to buy whatever they produce. Rural Observer warns that grain prices may fluctuate more in the future due to reduction of minimum prices--and possible elimination of the policy altogether--but the subsidy payment is intended to give farmers a cushion to stabilize their income. The article moans about rising production costs, including a 20-percent increase in fertilizer price and a doubling of land rent in three years.
An article published in June 2018 explained that rice, corn, and soybean producer payments are in addition to the so-called "land fertility subsidy" which combines three previous subsidies (direct payment to grain producers, improved seed subsidy, and general input subsidy). That article speculated that the rice payment would start at about 100 yuan per mu and later be raised to 150 and 250 yuan. (The land fertility subsidy was 71 yuan/mu in Heilongjiang Province in 2017, according to this article.)
Subsidy amounts will be set by each county government and have not been revealed. The Voice of Rural China report last month reported that the rice payment is 70 yuan per mu in one county of Liaoning. The 620 million yuan allocated to Liaoning Province for its rice subsidy divided by the province's area planted in rice last year works out to 83 yuan per mu. Some have guessed that the Heilongjiang subsidy will be 80 yuan per mu, according to Voice of Rural China.
The subsidy is to be paid to farmers who actually grow rice, including new-type farm businesses such as "family farms" and farmer cooperatives. Land is ineligible if it has been reclaimed without permission, is not designated for farming, if the land is in a land retirement program, or if it is idle or has been requisitioned for other uses.
Most descriptions emphasize production of high-quality rice to change the entrenched practice of producing volume to sell to government depots without regard for quality. Guangxi's new subsidy is 200 yuan per metric ton for generic rice and 380 yuan per metric ton for high quality rice.
Some provinces (including Guangxi and Hunan) give extra subsidies to scaled-up farms or to farms using "green" production. The Rural Observer article revealed that Hunan gives a 50-yuan/mu subsidy to rice growers who plant 200 mu or more (13.3 hectares). When land is rented there should be a written agreement specifying which party collects the subsidy--the lessor or the lessee. Landlords who receive the subsidy are instructed to reduce the rent. In Heilongjiang counties are instructed to cut the subsidy by 40 yuan/mu for farmers who irrigate rice with groundwater to discourage depletion of aquifers.
In Liaoning, all rice growers are eligible, but many provinces only give the subsidy in major producing areas. Guangxi only gives the subsidy in counties designated as "functional areas" for rice. Hunan gives a 20-percent bonus in funds to counties classified as functional areas and it discounts funds by 20 percent to counties in urbanized regions.
Most farmers receive modest payments. Anqing Prefecture authorities in Anhui Province said they distributed 18 kinds of rural subsidies valued at 2.69 billion yuan ($393 million), but the average was 1,793 yuan ($262) per household. On the other hand, Su-ken Agricultural Development--a company run by the state-farm bureau in Jiangsu Province--said it received 65.56 million yuan (nearly $1 million) in rice subsidies, which exceeds its reported profit of 58 million yuan.
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