Subsidies to Maximize China's Farm Output

China's agricultural subsidies are cloaked in the language of environmentally friendly benefits for small farmers, but their main purpose is to industrialize agriculture in order to maximize extraction of resources from the land, water, and people of the countryside. 

As farmers prepare to plant their crops, China's Ministry of Agriculture and Rural Affairs (MARA) announced this year's list of 16 policy measures to "strengthen, benefit, and enrich the agricultural sector." 

1. Land fertility protection subsidy. An annual payment to villagers who hold rights to plots of collective farmland. 
2. Agricultural machinery purchase and use subsidy. 
3. Wheat spraying with growth promoter, herbicide and antifungal chemicals in the Spring.
4. Corn and soybean intercropping subsidy
5. Corn, soybean and rice producer subsidies
6. Crop rotation subsidy for rotating corn and soybeans in Northeastern region, double cropping winter wheat or rice with corn or oilseeds in other regions, growing soybeans under trees.
7. Non-governmental agricultural services subsidy to large-scale farms, cooperatives, and input suppliers.
8. Rubber and sugar subsidy for dissemination of improved varieties.
9. Culling diseased livestock subsidy.
10. Ocean fishing boat renewal and upgrade subsidy
11. Subsidy for fishing boats complying with moratorium on summer fishing and workplace safety measures
12. Subsidies for fishermen scrapping fishing boats and shifting to other activities.
13. Grazing ban compliance subsidy for cutting back animals in over-grazed areas of 13 pastoral provinces.
14. Agricultural insurance subsidies. Premiums for insurance are subsidized 25% or more by the central government with additional subsidies from provincial and local governments. Covers, grains, seed producers, sows and hogs, dairy cows, potatoes, oilseeds, sugar, rubber, forests, highland barley, yaks and Tibetan sheep. This year full-cost and income insurance for grains will be offered nationwide.
15. Subsidy for transportation of people from impoverished regions to jobs in other provinces--2 trips per year are funded (This subsidy may explain the surge of migrants using old-fashioned conventional trains instead of high-speed trains during the 2026 Lunar New Year holiday)
16. Aid for secondary or vocational education expenses for students from impoverished regions.

The list is not exhaustive. It does not mention, for example, minimum purchase prices for wheat and rice, transfer payments to grain-oilseed-hog-cattle-sheep counties, creation of high-standard fields, or the loan subsidy for upgrading agricultural equipment. In past years, this list included as many as 50 measures. The list does not reveal any budgeted amounts. There is no way to add up the total of subsidies since the amount varies by province, many are not publicized, and many are implemented as subsidized or earmarked bank loans. The last time China notified the WTO of its agricultural subsidies it reported nearly RMB 1.3 trillion (about $180 billion), all of which was claimed to be exempt from WTO's limits on subsidies. This month, the Agricultural Development Bank of China (ADBC) announced that it issued RMB 8 billion in 1-year bonds to finance expenses for Spring planting; all investors mentioned were Provincial State-owned Chinese banks. ADBC had a loan balance of RMB 9.6 trillion in 2024, the last time it reported its financials. 

The agricultural subsidies have a patina of conservation and environmental protection, but the primary theme of the subsidies is to maximize farm output. The "land fertility protection" subsidy, for example, gives villagers a payment of about RMB 100 per mu (about $87 per acre) to keep their land in grain production. They don't get the payment if they let the land lie fallow for a year or more of it they use the land for livestock, fish ponds, greenhouses, or nonfarm purposes (in most localities there is no requirement to improve the land's fertility). Crop rotation subsidies are meant to maximize crop output by enticing corn growers to plant more oilseeds and by growing 2 crops a year where possible. Insurance and livestock-culling subsidies are meant to encourage farmers to maximize production by subsidizing their risks of crop failure or animal disease outbreaks. Wheat and rice price supports are meant to insure farmers against declines in prices. The description of crop rotation subsidies mentions that Xinjiang is a region experiencing excessive groundwater extraction, yet Xinjiang has been targeted for expansion of grain production. While the grazing ban subsidy appears to be environmentally friendly, the overall strategy is to maximize cattle and sheep production by converting grasslands to fenced ranches, planting grass, and setting up companies to replace nomadic pastoralists on the steppes of Xinjiang, Inner Mongolia, and Qinghai. The subsidy for fishing vessels encourages extraction of aquatic resources as far away as the Galapagos and the coast of Africa. Meanwhile, China has shut down fishing in the Yangtze River after its fish stocks were severely depleted.

Chinese officials are engaged in a carefully orchestrated dance to present themselves as benefiting small holders while quietly shifting production to scaled-up farms and companies. Last year MARA launched a 3-year plan to expedite the shift to "new-style farm operations" -- large-scale "family farms," cooperatives, and agribusiness companies by giving awards of RMB 50,000 to expand operations by 50 hectares or more, guaranteeing loans, and other aid.

New-style farmer grows grain on a peasant's land and tells him he's getting a good share of the profits.
Source: "New-style farmers solve the problem of 'who will farm,'" Xinhua News Service, 2020.

MARA says the "land fertility" subsidy is "in principle" aimed at villagers who contract land from collectives but doesn't rule out giving it to "new-style" operations. The corn-soybean intercropping subsidy is only for scaled-up model farms to cover the exorbitant costs of seeds, machinery, labor, etc. needed for this technique. Scaled-up farms and cooperatives are supposed to provide "services" to smallholders, but the services predominantly are custom farming arrangements -- using their machinery to cultivate and harvest land rented from smallholders. Yak subsidies sound like they are for Tibetan nomads but in reality they finance companies that employ Tibetans confined to company dormitories where they can be watched and controlled. Subsidies also prop up State-run behemoths created in the 1950s collective farming era--State farms in Heilongjiang and Xinjiang and the Supply and Marketing Cooperative system are mentioned as recipients of the grazing and agricultural service subsidies, and they probably get funds from most of the subsidies on the list.