Dim Sums: Agricultural Markets in China

China's new scaled-up farmers are losing money and abandoning rented land, according to recent reports from Chinese journalists. Liaowang reported that rice farmers in Fujian and Hunan Provinces lost money every year and cut back on leased land or switched to growing turf, tea, bamboo, or nursery crops. Another Liaowang piece reported on the same problem in northern provinces Shandong, Heilongjiang, and Henan. Economic Reference News interviewed farmers and village and provincial officials in Anhui Province and found that many "large grain farmers" (产粮大户) who lost money growing wheat on land leased from village collectives have tried to renegotiate multiyear land rental contracts, cut back on land rentals, or simply ran off and disappeared when they were unable to make ends meet. Both articles said declining grain prices and rising costs and inability to mitigate risks from bad weather make farming unprofitable for large-scale farmers. Most of China's farmers a...

China's high farm production costs stem from high land rents, incompatibility of fragmented fields with mechanized farming, and tenants' disincentive to make long-term investments, according to a recent article in Economic Information Daily . The article zooms in on bottlenecks in a countryside set up for small-scale subsistence farming that are "strangling" the competitiveness of newly commercialized Chinese farmers caught between the "floor" of rising production costs and the "ceiling" of low prices for imported commodities. The director of a government grain-buying station in Jiangxi Province identifies high costs as the root problem that keeps Chinese farmers from being internationally competitive. "If we don't address this problem, the volume of grain imports will be hard to reduce," he warns. The director of rice producers cooperative in Jiangxi said land rent of 350 yuan per mu per crop --farmers here commonly grow two rice...

Chinese authorities have launched a reform of their decade-old farm subsidy program that will divert funds for grain subsidies to "new-style" large-scale farm operations that don't currently get subsidies. Most subsidy funds will still go to villagers for their contracted land, but those subsidies are redesigned to make sure they plant grain on the subsidized land. The details on how the subsidies will be given are left up to authorities in five pilot provinces. The reform was initiated in an obscure document issued by the Ministries of Finance and Agriculture May 22, 2015. The reform focuses on so-called "three subsidies": a "general input subsidy" for grain producers a direct payment to grain producers subsidies for "improved seeds" for rice, wheat, corn, soybeans, rapeseed, cotton, peanuts, and highland barley. The document says the reform is necessary because changes in the countryside have rendered the subsidies ineffective in m...