More Farm Subsidies in 2010

A Xinhua News Agency release says that this year's agricultural subsidies will be 86.7 billion yuan (about $12.75 billion). This includes 15.1 billion yuan for direct subsidies to grain farmers and 71.6 billion yuan for the general input subsidy. This doesn't seem to include the other two major subsidy programs--machinery and fine seed subsidies--which are expected to increase. Peoples Daily says the central finance grain direct subsidy, input subsidy, machinery subsidy, and fine seed subsidy totaled 123.1 billion yuan last year, an increase of 19.4%.

The Ministry of Finance requires local governments to get the subsidies to farmers quickly (usually by April 1--before planting), supervise the process closely, and fine tune methods for distributing the payments.

Peoples Daily announces this year's greater support for farmers included in the No. 1 document that was made public this week. Last year central financial authorities allocated 716 billion yuan ($105 billion) for rural affairs, up 120.6 billion yuan from the previous year and a new record.

This year the kinds and scope of agricultural subsidies are being extended "so more farmers can feel the warmth of the strong policies to benefit farmers."

The 2010 No. 1 Document announced that subsidies for good potato seeds will be expanded, and new seed subsidies for a type of barley grown in Tibet and a peanut seed subsidy pilot. The machinery subsidy will be spread to more kinds of cultivation, livestock, forestry and irrigation and water-saving machinery. Previously the machinery subsidy was given in grain production areas, but now it will be spread to livestock production areas (probably milking equipment), forestry, and land reclamation areas.

The no. 1 document calls for minimum prices and market interventions to protect farmers' incomes and maintain production incentives. It calls for a minimum price procurement of wheat (1.8 yuan/kg white wheat, 1.72 yuan/kg for red and mixed wheat) and a higher minimum price for rice (not specified). There will be larger grain reserves in consumption areas. There will also be reserve purchase intervention programs for corn, soybeans, and rapeseed, and market control plans for cotton, sugar, and pork. Set up a national auction system for reserve commodities.