Shepherd Subsidies

China continues its agricultural subsidy binge by announcing a new animal-grazing subsidy program. The grassland protection compensation mechanism was announced in May and it is set to cover 1 billion mu of grassland in 8 provinces and autonomous regions and benefit 1 million members of animal-herding families. (English Peoples Daily article is here.) As usual, details of the program are sparse and vague, but the main idea is to compensate herders for reducing the number of sheep/cattle they graze so that grasslands can recover from overgrazing.

The program will herders give 6 yuan for each mu of pasture they are forbidden to graze animals on. There is a 10 yuan per mu subsidy for planting improved varieties of grass. There is also a 500 yuan payment to compensate herders for high costs of fuel and forage. There is also a subsidy for fine breeds of animals. Moreover, there will be awards to provinces that do "outstanding work" on improving pasture and raising incomes of herders. Special funds from the Ministry of Finance of 13 billion yuan per year ($2.1 billion) will be allocated for the program.

The program pays herders to reduce the number of animals they graze, moves them to new locations, and encourages grazing on enclosed pastures instead of the traditional nomadic mode.

A herder in Inner Mongolia said, “Our family of three will get 3000 yuan per person each year, a total of 9000 yuan. Although the pasture is reduced and we raise only a few sheep, our income will not be affected. After 4 or 5 years the pasture will be improved and we will have more space for development."

As usual, this subsidy program has a mash-up of objectives. China has a serious problem with degraded grasslands due to overgrazing and it makes sense to reduce the number of animals. On the other hand, it is also advertised as a program to increase income of herders, apparently spreading the grain subsidy model to a neglected population. This program has all the same elements of the grain subsidy program: a small direct payment, a quality seed/fine breed subsidy, a subsidy for input costs, and financial transfer payments to local officials. The funds are almost equal to the initial amount spent on grain subsidies--13 billion yuan per year.

The program reportedly has been in the works since last fall, and is the latest of several environmental compensation programs announced over the last few years. The timing of the announcement prompts some cynicism--it coincides with unrest in Inner Mongolia during May. An article about the program features Inner Mongolia specifically. The head of the autonomous region’s government said, "the state pays a lot of attention to Inner Mongolia’s grassland region" with funds of 4 billion yuan for Inner Mongolia.

While this program aims to restore grasslands, another program aims to expand corn production in Inner Mongolia. What sort of uncultivated land might be found in Inner Mongolia to grow more corn? Grassland, perhaps?