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UPDATED: December 9, 2006 NO.48 NOV.30, 2006
Go hi-tech or go bust
With traditional growing in jeopardy, farmers may need to become more technologically urbane
By LAN XINZHEN
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To Li Zhonghai, a manager of a wholesale market for agricultural products in a southern Beijing suburb, the biggest industry change in recent years is price.

“Most of the agricultural products’ prices have dropped,” said Li, who is a seven-year industry veteran.

After entering into the World Trade Organization (WTO), more and more foreign agricultural products have been exerting enormous influence on China, now only formerly a big agricultural power. Ten years ago, China was the largest soybean producer. However, confronted with low-priced imported soybeans, many farmers cut the planting area of soybeans, making China only the fourth largest soybean producer in the world.

But what really is the future for Chinese agriculture? Will Chinese agriculture, which has endured for several thousand years, gradually be devoured by imported products?

Tariff too low

Tang Renwu, a professor with the School of Management of Beijing Normal University, believes that the constant falling price of agricultural products is due to the opening up of the agricultural product market.

From December 11, 2001, China adopted a tariff quota to agricultural products. A tariff quota refers to a certain quota on imports, above which a higher tariff is applied. The lower tariff rate applies to imports within the tariff quota.

From the December date, China was obliged to import 9.4 million tons of wheat, 5.3 million tons of rice, 7.2 million tons of corn, 894,000 tons of cotton and 3.3 million tons of soybeans every year with a 1 percent tariff (all part of the new tariff quota). This amounts to much lower tariffs on imports, and leads to a price fall of domestic grain products as well as vegetables.

Professor Tang Renwu pointed out that in 2002, the second year after China’s entry into WTO, the vegetable price hit a record low and dropped 36 percent compared to the prices in the previous six years. In 2002, the wheat price was only about 0.9 yuan per kg. Pushed by the government, the price of major agricultural products climbed in 2004, but declined afterwards.

As for city dwellers, the price decline is without doubt good news, as they can buy foods at a cheaper price. However, for farmers whose income is much lower than that of the city dwellers, this adds fuel to their frustration.

“China’s accession to the WTO, directly or indirectly, has lead to the price decline of agricultural products, which takes a toll on farmers’ income,” said Tang.

Tang pointed out that another disadvantage brought about by China’s accession to the WTO is that many farmers have lost their jobs.

China has a vast population but with limited land, leading to small-scale farming. Farmers are confined to their land. They labor on their farms in busy seasons and do other small businesses in town in the off seasons. Meanwhile, they do sideline businesses like breeding. After China’s accession to the WTO, hit by imported products that are highly subsidized by developed countries, the price of sideline products also dropped, forcing farmers to give up the side businesses. Therefore, many farmers have virtually nothing to do in a less demanding season.

But some other experts still believe that accession to the WTO also has a good impact on Chinese agriculture. Lu Liangshu, an academician from Chinese Academy of Engineering, stated that in the long run, the accession is good for farmers, although in the short term, the negative impact is more profound.

Lu suggested that because of accession, advanced agriculture technology and management experience will improve the level of the Chinese agriculture industry.

“It is an advantage brought about by WTO,” said Lu.

Ma Xiaohe, a researcher with the Academy of Macroeconomic Research under the National Development and Reform Commission, pointed out that enhancing agricultural cooperation in the agriculture field will bring in capital and technology, thus help change the traditional agricultural production pattern.

Ma pointed out that the majority of Chinese agricultural products are produced in large quantities, but their quality is much lower than that of developed countries. Therefore, they are not competitive in the international market. After China’s entry to the WTO, the international cooperation and the inflow of foreign agricultural products will force domestic farmers to adopt new technology and strive to improve product quality so as to boost competitiveness.

Think concrete jungle

The Chinese Government has done a lot to ease the negative impact on agriculture brought about by WTO accession. For instance, the government purchases the surplus grains from farmers at a protective price, speeds up the countryside infrastructure construction and has abolished the agriculture tax since this year. Although those efforts have provided limited help on improving the competitiveness of Chinese agricultural products, they have, after all, relieved the pressure on farmers and guaranteed the grain output.

Above all, people are more concerned about the future development of Chinese agriculture. “Chinese agriculture must be modernized,” said Professor Tang Renwu.

Nearly everyone recognizes the importance of agriculture modernization, which has in effect become a slogan in the past several decades. The current situation is that most of the arable land is cut into small pieces and distributed to each farm household and large-scale mechanized farming is still something beyond Chinese farmers’ reach.

Tang believes that narrowing the urban-rural gap is a better way. The agricultural population in most developed countries has fallen below 10 percent of the total population. The UK’s agricultural population was 2.6 percent in 2005. It was also 3.9 percent in the United States, and 6.7 percent in Canada. In addition, in those countries, farms have been changed into enterprises and the differences between agricultural enterprises and other companies have been virtually eliminated.

Hence, the first thing to be resolved is the agricultural population, which makes up 70 percent of the overall Chinese population. It is imperative to industrialize and urbanize the rural area, Tang said.

According to statistics from Ministry of Construction, the urbanization level has increased to 41.8 percent in 2005 from 17.9 percent in 1978. The urban population also increased to 540 million from a mere 170 million in 1978, which means that many farmers became city dwellers.

In spite of the huge progress, the Chinese agriculture population is still enormous and the agricultural production pattern and structure need upgrading.

China has launched a “new countryside” campaign, which is believed to be an effective method for solving problems relating to agriculture. The government wants to speed up the effort to transform the urban and rural structures and bridge the gap between the two.

But it won’t be easy for Chinese agriculture to be modernized overnight, as there are many conflicts and problems to be resolved.

“If the current slash on domestic agricultural products can really stimulate our agricultural modernization, it is after all worthwhile,” Li said.



 
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