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Loan Subsidy Aims to Upgrade Agricultural Equipment and Facilities

Lack of investment is a roadblock to China's vision of a space-age agriculture with automated tractors and barns, internet-linked sensors, sprinklers, and heaters, and "green" recycling and circular systems. A new Chinese agricultural lending program aims to overhaul agricultural equipment and facilities to make a great leap toward high-tech and "green" priorities set by the 15th five-year plan, yet it has received hardly any publicity. 

China has several programs to promote investment: an agricultural machinery purchase subsidy, a subsidy for scrapping old machinery, and a program to construct high-standard fields with irrigation, roads and electric infrastructure. Still, China's agriculture produces 6.7% of GDP but only attracted 2% of the country's fixed asset investment in recent years. 

On March 9, China's Ministry of Agriculture and Rural Affairs issued a "Notice on Implementation of Policies on Loans for Equipment Upgrading in the Agricultural and Rural Sectors" that calls for relending of RMB 1.2 trillion in funds from China's central bank with 1.5 percentage-point subsidies on interest rates for renovation and upgrades of a wide range of high-tech equipment that includes:

  • greenhouses for seedling cultivation with automated sprinklers and fertilizer management; 
  • upgraded livestock barns with equipment for disease control, automated feeding, environmental controls and waste collection; 
  • industrial-scale fish ponds with intelligent control systems, eco-friendly new cages and walkways; 
  • grain-dryers and storage facilities for grain and oilseeds
  • county-wide replacement of cold-chain freezing and storage facilities with sorting and packaging machines and intelligent control and dispatch platforms
  • renovation and technological upgrades of processing equipment in major grain and oilseed producing provinces
  • equipment for recovery and processing of waste from plastic mulch, biogas production from manure, and collection, rendering and disposal of dead animal carcasses.
The RMB 1.2 trillion in investment is roughly double the annual fixed asset investment in agriculture in recent years, and it appears to be the first new program rolled out to implement the 15th 5-year plan. 

Yet the program has been given surprisingly little publicity. The document was posted on the Agriculture Ministry's obscure Department of Planning and Finance. It has not been featured on the Ministry's main web page nor in flagship news media. Livestock and agricultural machinery industry sites have posted the notice of the program. The hog industry article emphasized that the program "in principle" is not meant to finance expansions of business.


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