Beijing's food security concerns "overstated," Huang Jikun says, urging yield over acreage, farmers benefit over security obsession

PKU professor assesses culminating food security concerns in China, challenging policy priorities on self-reliance and rural repopulation.

China’s food security challenge is more limited than the government believes, and policy should encourage increasing yields with technology rather than expanding acreage, Professor Huang Jikun of Peking University recently says in a speech.

Specific government policies in block quotes are included below to provide a better picture of the speaker’s references. The original Chinese version of the speech can be found on the WeChat blog of the National School of Development (NSD) of Peking University.

Huang Jikun is Professor of the School of Advanced Agricultural Sciences at Peking University and Director of the University’s Director, China Center for Agricultural Policy. He made the speech during the July 13-14 Second Annual Conference of the Chinese Association of Environmental and Resource Economists (CAERE) held at the NSD.

---

粮食安全、农民增收和永续发展

Food security, increase farmers’ income, and sustainable development

Today, my main focus will be on food security. Speaking about food security necessitates a discussion on increasing farmers’ incomes, and, moreover, the sustainable development of agriculture.

By examining China’s grain production growth and its interplay with cultivated land area and yield per unit over the past forty-plus years, one conclusion can be drawn: boosting grain production isn't primarily achieved by expanding cultivation areas; instead, it hinges largely on improving yield per unit.

China’s success in improving yield per unit has achieving a concurrent rise in total grain production, thereby allowing the country to allocate a portion of its limited arable land to the cultivation of high-value products (HVPs) like cash crops, livestock, and aquatic products. Over the past four decades, there has been a 10 percentage-point reduction in the proportion of land soely dedicated to grain cultivation, shifting from 80% to 70%. Although this may seem minor, it has had a substantial impact on China’s agricultural landscape — China’s annual grain production growth rate has averaged over 2%, which is more than double the population growth rate of 1% during the same period; furthermore, the total agricultural output has seen a growth rate of over 5%. These changes have proven to be of utmost importance in boosting farmers’ income and improving the national consumption structure.

Regrettably, some current policies overly emphasize expanding the grain cultivation area, which deviates from past developmental experiences.

High-value agriculture (HVA) and the growth of total factor productivity (TFP)

The share of high-value agriculture (HVA) in this context refers to the percentage of vegetables, fruits, livestock products, and aquatic products in total agricultural output. In the past few decades, the growth of HVA has played a pivotal role in elevating farmers’ income in China. While safeguarding food security remains a critical national strategic objective, increasing farmers’ income and achieving common prosperity are also key goals of the Communist Party of China (CPC), which requires vigorous efforts besides food security concerns.

In the past forty-plus years, China’s agricultural output, adjusted for price changes, has experienced an average annual growth rate of 5.4%. Notably, 60% of this growth can be attributed to the increase in total factor productivity (TFP), while the remaining 40% stems from increased inputs. Statistics also show a decrease in labor input and an increase in capital input.

With green development high on the agenda, China’s economic growth needs to shift away from heavy reliance on excessive inputs of resources. I believe the key driver behind this objective is TFP growth. In the 1980s and 1990s, China witnessed an impressive average annual TFP growth rate of over 3% in agriculture. Presently, this rate stands at just under 3%, which is still significantly high. Globally, agricultural TFP typically grows at an average annual rate of about 1%, occasionally peaking at 2%, highlighting the substantial growth rate of China's agricultural TFP.

My research suggests four key factors contributing to agricultural TFP growth:

1. Institutional innovation, including innovations in factors of production [Karl Marx identifies three factors of production: land, labor, and capital], means of production [a Marxist term used to describe how land, labor, and capital are used to produce goods or services], and market mechanisms are of pivotal importance. Institutional innovation often generates value without requiring substantial investment, as exemplified by the household contract responsibility system initiated in 1978.

2. Technological advancement requires only modest investment compared to its substantial impact. Currently, agricultural R&D investment in China stands at just over 200 billion RMB ($27.4 billion) — a tiny fraction of the overall investment in agriculture and rural areas, which exceeds two trillion RMB ($274 billion). Much of China's past grain production growth can be attributed to technological advancements.

3. Market-oriented reforms have brought about significant changes in agricultural production structures, improving the allocation of factors of production in agriculture and significantly raising agricultural TFP.

4. Agricultural investment is essential to agricultural development, and investment in infrastructure and improving input quality are of paramount significance in agricultural investment.

Challenges and Strategies for China's Agriculture

Despite tremendous agricultural achievements, China has also faced significant challenges in the development of agriculture and rural areas since the beginning of the 21st century.

Challenge 1: Growing Urban-Rural Income Gap

As of 2004, urban residents were earning more than three times the income of their rural counterparts. This income disparity, already significant by international standards, posed a substantial risk to social stability. I am very grateful for the dedication of the rural population who, despite such a pronounced urban-rural income gap, persevered at work and in life. Acknowledging the severity of this challenge, the central government and relevant agencies initiated a series of policies starting in 2004 aimed at increasing rural incomes.

The long-term stagnation of farmers’ income not only affects the improvement of their living standards but also impacts grain production and agricultural product supply; not only constrains rural economic development but also overall national economic growth; not only hinders rural social progress but also the realization of a moderately prosperous society in all respects; not only a significant economic issue but also a major political problem.

— December 31, 2003, Opinions of the Central Committee of the CPC and the State Council on Policies Aimed at Boosting Farmers’ Income

Challenge 2: Escalating Concerns Regarding Food Security

From the early 21st century, China has witnessed a consistent rise in the imports of agricultural goods such as grains. By 2004, agricultural imports had exceeded exports, sparking grave concerns for the government over trade deficits.

Challenge 3: Resource and Environmental Deterioration

In the last four decades, China's agriculture has expanded at an annual rate of over 5%. Nonetheless, this growth has, to some extent, been achieved at the expense of natural resources and the environment. This has led to problems like declining groundwater levels, soil degradation, agricultural water pollution, and heightened ecological pressure. These issues indicate that the previous strategy for agricultural expansion was unsustainable.

China has been exploring solutions to tackle these three major challenges. A pivotal moment was in 2004 when the State Council initiated pro-farmer policies, including the reduction or elimination of the Agricultural Tax [a hefty tax levied on any individual or enterprise engaged in agricultural activities]. By 2006, China had completely abolished all agricultural taxes and various surcharges, which used to account for approximately 8% of the annual agricultural output. This marked a major policy shift.

In 2004, China also initiated agricultural subsidies and a system for purchasing and stockpiling agricultural products. These subsidies evolved from direct support for grains and high-quality seeds to encompass comprehensive subsidies for agricultural inputs and machinery. The system for purchasing and stockpiling agricultural products primarily involves setting minimum purchase prices and temporarily stockpiling grains to stabilize grain prices.

The system for purchasing and stockpiling agricultural consists of four components: Minimum Support Price (MSP); temporary procurement prices used by the government to buy in oversupply that has led to low market prices; guaranteed base price policies, where the government sets a base price and then directly subsidizes farmers with the price difference between the base price and the market price; and direct subsidies for the producers.

Starting from 2004, the No.1 central document focused has consistently on agriculture, rural areas, and rural residents to stimulate grain production and raise farmers’ income. [The No.1 central document is the first policy statement that the CPC Central Committee and China's State Council release each year, an important indicator of policy priorities.] From that, various policies underwent significant adjustments and changes, and fiscal investments have also increased substantially in the realm of agricultural and rural development.

However, several challenges have emerged with China’s agricultural policies. Notably, agricultural subsidies peaked in 2012, and when accounting for inflation, direct agricultural subsidies in China have been on the decline. While the original goal of these subsidies was to raise grain production and improve farmers’ income, research indicates that they have neither significantly increased grain production nor narrowed income disparities among farmers. Similarly, subsidies aimed at promoting high-quality seeds and agricultural inputs have not yielded substantial results.

The situation has arisen due to several factors. China's vast agricultural landscape, comprising over 200 million farming households, makes the distribution of agricultural subsidies from the central government based on criteria such as land area, seed purchases, and agricultural capital operationally challenging; Additionally, the vast population of farming households greatly diminishes the overall impact of subsidies, however substantial, on increasing farmers' income. Consequently, agricultural direct subsidies were eventually tied to the land contracts made in 1997-1998 and did not provide support for grain production after 2004. Moreover, the notion of boosting farmers' income through subsidies was inherently unrealistic. However, now that this subsidy mechanism had been embraced, there was no easy way, politically speaking, to disengage from it. Therefore, an alternative approach was taken, leading to a decline in agricultural subsidies in China since 2011 and 2012.

The importance of technology-driven agriculture is becoming increasingly evident in China’s farming landscape. While investments in agricultural technology have been on the rise, they still fall short of what's needed. This highlights that there's ample room for improvement in China’s policies aimed at promoting agricultural development and ensuring food security.

In recent years, policies such as the MSP and temporary procurement have quietly undergone reforms. While not explicitly stated in central documents, these policies have shifted from liberalization to protectionism and are now gradually returning to a more liberal approach.

For instance, starting in 2014, the MSPs for rice and wheat stopped their upward trajectory, a departure from the previous continuous increase. A similar yet more troublesome situation unfolded with soybean subsidies. In 2014, the temporary procurement policy for soybeans was discontinued and replaced with a guaranteed base price policy, which not only boosted domestic but also imported soybean prices since 85% of China's soybeans are imported—China, in fact, accounts for about 60% of global soybean trade. Consequently, most of the subsidies intended for domestic soybeans ended up benefiting the United States and Latin American countries. As a result, soybean subsidies were phased out starting in 2017. In addition, temporary procurement policies for rapeseed and sugar were discontinued in 2014 and 2015, respectively, and the temporary procurement policy for corn shifted to “delinking subsidies from prices” [synonymous with guaranteed base price policies] in 2016.

That leaves China’s reforms with only the guaranteed base price policy for cotton in Xinjiang and the minimum purchase price policy for rice and wheat. My research in Xinjiang suggested that implementing a guaranteed base price for cotton was also challenging. At the time, the guaranteed base price was set at 18,000 yuan ($2466), while the market price was only 9,000 yuan ($1233). The price gap had to be bridged using government subsidies. The process of subsidy reimbursement involved numerous steps, with just the measurement of cultivated land area requiring multiple government assessments. Determining production volume is also susceptible to issues like fraud.

In conclusion, China's agricultural policies have undergone a period of setbacks and detours. However, after a significant period of policy adjustment, various aspects of agricultural policy are gradually returning to a more balanced and effective track. Historical experience tells that the path to agricultural development depends on the interplay of markets, institutions, and technology.

The True Food Security Issues

Before delving into the topic of food security, I’d like to emphasize two points:

• First, China is the world's largest producer of main agricultural products, for instance, rice, wheat, vegetables, fruits, and tea. Although China's population takes up only 18% of the world’s total, its production figures for various agricultural products in 2020 exceeded this percentage. To illustrate, China accounted for 28% of global rice production, 18% of global wheat production, more than 50% of global vegetable production, nearly 50% of global tea production, almost 40% of global pork production, 35% of global egg production, and over 50% of global aquatic product production.

• Furthermore, China ranks as the world’s second-largest producer of corn and poultry. In 2020, China contributed 22% to global corn production, and it is poised to become the world's largest corn producer in the coming years. China also ranks second in global poultry production, representing 16.5% of the world's total, with only a slight difference compared to the United States (17.4%). I believe China will soon surpass the United States in poultry production.

Therefore, from the perspective of food security, staple grains like rice, wheat, and corn remain relatively secure in China. Assertions of an ongoing food security crisis may be somewhat overstated.

The biggest challenge facing China’s future food security is the scarcity of water and arable land. China possesses only 5% of the world’s freshwater reserves and 8% of global arable land, placing it among the countries with the scarcest water and land resources on a global scale. Research suggests that China’s water scarcity will worsen over the next 50 years. Given this context, optimizing trade becomes essential in guaranteeing national food security and sustainable land use.

Moreover, taking into account the amount of arable land available per person, major countries around the world can be classified into three categories: those with less than 0.12 hectares of arable land per capita, those with 0.12 to 0.26 hectares, and those with more than 0.26 hectares. China, for instance, has a per capita arable land area of only 0.09 hectares. This graph [which is not provided in the Chinese transcript and therefore regrettably unavailable in the English translation] highlights that despite the increasing food imports in China, its per capita net imports remain relatively modest, positioning it among the countries with the lowest per capita net imports compared to its counterparts.

Between 1990 and 2020, China experienced a consistent upward trajectory in its imports of cooking oils. This is directly attributed to the enduring nature of Chinese dietary preferences, which are notably resistant to change. In recent years, China’s corn imports have also been on the rise, peaking at 28 million tons in 2021 and registering a slight dip in 2022. For a vast nation like China, it’s worth noting that apart from soybeans, the import quantities of all other agricultural products remain relatively modest on a per capita basis and are manageable.

Consequently, China's food security issue is, to a certain extent, a soybean security issue. Regrettably, there is a confound shortage of experts on soybeans in China, and the government's investment in soybean R&D is modest, hence low yields and economic returns from cultivating soybeans.

Currently, China relies heavily on soybean imports from North and South Americas in order to meet two key demands: the production of domestic livestock protein feed and the population’s growing appetite for cooking oils. China’s increasing demand for animal products has reached a point where further growth without a corresponding expansion of domestic livestock production would undoubtedly result in dependence on imports. It's worth noting that the livestock sector, unlike many other industries, is vulnerable to various animal diseases, which would disrupt imports and consequently threaten to both food safety and food security. From this perspective, China's food security is more of an issue with animal products and feed than with staple foods.

Many are concerned over the global food production capacity and the potential for a food crisis if China ramps up its imports, but they have failed to factor in several considerations:

• First, there is substantial potential to increase global food yields per unit of land. Presently, approximately 30% of the world's food supply comes from countries with yields below 3.5 tons per hectare — and there are dozens of them. The global average food yield hovers at a mere 2 tons per hectare, underscoring the significant room for improvement in yields even with existing agricultural technologies. Moreover, these technologies are expected to advance further, offering even more opportunities for increased food production.

• Second, there is substantial potential to arable land area globally. The United Nations Food and Agriculture Organization predicts an expansion of global arable land in the next 50 years. Currently, there are 3.5 billion hectares of arable land worldwide, but only 1.42 billion hectares are actively cultivated. Much of this untapped arable land is situated in regions like sub-Saharan Africa, South America, Eastern Europe, and others. When crop prices rise, such as those for soybeans and corn, a considerable portion of this available land can be converted into productive arable land. Therefore, one potential strategy to safeguard China's food security involves supporting these developing countries in expanding their food production capabilities. This approach would not only benefit China's food security but also contribute to global food security and the development of these nations.

• Third, the world has seen two global food crises over the past century, excluding regional price increases resulting from regional conflicts like the war in Ukraine; nonetheless, concerns about a reduction in global food trade during these crises never materialized. The first crisis, in 1974-1975, was triggered by the wars in the Middle East and natural disasters such as severe droughts around the world, causing crude oil prices to skyrocket from around $10 per barrel to $55 per barrel in a short period of time. However, when agricultural prices have risen two to three times, farmers will convert much of their available land into arable land, resulting in an oversupply of food. Consequently, food prices began to plummet sharply from 1975 onwards. This global food crisis lasted for approximately a year and came to its end.

  The second global food crisis occurred in 2008 and lasted for less than a year. This crisis was the result of the energy crisis compounded by the development of biofuels. The energy crisis began in 2007, leading to a twofold increase in crude oil prices. Meanwhile, with the advancement of biofuel technology, when the price of crude oil exceeded $65 per barrel, it became more economically viable to use crops such as corn, sugar crops, and oil crops as raw materials for biofuels. Major agricultural exporting countries in North America and South America, among others, significantly increased the production of biofuels using these crops as raw materials. The combination of these two factors caused international food prices to rapidly rise from the end of 2007 to September 2008. However, this phenomenon lasted for less than a year, and by the autumn of 2008, prices had returned to the levels before the food crisis.

  It is noteworthy that during the 2008 food crisis, some countries initially announced export bans but then lifted the bans after a certain period of time. The fact that global food trade volumes in 2008 and 2009 did not decrease but, in fact, increased sheds light on the situation. However, most media outlets primarily reported on the export bans and largely ignored the subsequent lifting of these bans by these countries, creating a certain misconception. The global food crisis was a highly unusual and short-lived event. Even in the midst of the war in Ukraine, food prices in many countries remained unaffected. Only those countries closely connected to the war experienced a short-term increase in food prices. However, I believe this was a regional phenomenon.

Problems with Current Policies

Let's first review how rural economic transformation has unfolded over the past four decades in China. I categorize the transformation of rural economics in China into four stages. In the last forty-plus years, China's rural economy has traversed the first three stages, starting with an emphasis on grain production [a policy focus of the Great Leap Forward period from 1957-1960], moving on to a diversification of agricultural production in the early 1990s, and subsequently, since the early 21st century, witnessing an increased division of labor between agriculture and non-agricultural sectors. Presently, China is in the phase of promoting environment-friendly, efficient, and high-value agricultural development.

Reflecting on China's agricultural journey, I believe that factors such as institutions, policies, and investments play a pivotal role, and the sequence in which they are introduced holds great significance. Each stage of rural economic transformation has been accompanied by corresponding institutional changes, policy adjustments, and targeted investments.

The growth of HVA and the expanding employment in non-agricultural sectors, over the course of rural economic transformation, has brought about a consistent increase in agricultural productivity and farmers’ income. This trend is expected to persist and is challenging to reverse. However, certain recent policies seem to be going against the trend and aiming at altering the transformation model.

For instance, HVA development are facing challenges due to prevailing emphasis on grain production.

China has been expanding gain planting area and aiming for higher grain output for years, despite declining population and amassing grain stockpiles. China Agricultural Outlook 2023-32, a report compiled by the Market Early Warning Expert Committee of the Ministry of Agriculture and Rural Affairs, projects China’s grain output growth to outpace the growth of consumer demand over the coming decade.

In addition, policies that encourage certain individuals to return to farming require closer scrutiny, given the limited availability of arable land and water resources in each village. The policy priority should not be to increase the number of farmers but rather to reduce it. Doing so can consistently enhance agricultural productivity and elevate farmers' incomes.

The Chinese government, on high alert against the “hollowing” of rural society, has attached great importance to promoting rural vitalization. The 14th Five-Year Plan on Human Resources Developemt in Agriculture and Rural Areas (2021-2025) sets a target of surpassing 15 million individuals returning or moving to the countryside to start businesses or pursue innovations by 2025. Another campaign was launched in July, 2023, encouraging university students and retired professionals to return to their home villages.

Certain measures implemented by local governments in recent years to stimulate grain production are also worth noting. Here are a few examples I have identified in my recent research in rural areas:

1. Local governments tend to focus on expanding the cultivation of rice, wheat, and corn when addressing food security, which may not suit the status quo. China is currently grappling with an oversupply of rice and wheat, with stockpiles that can cover a year’s consumption. This surplus has led to stagnant rice and wheat prices, and in some cases, wheat prices even dip below those of corn. It's not uncommon to see wheat being used for animal feed. In reality, the critical concern for food security lies in the availability of feed grains, particularly soybeans, which serve as the primary source of protein feed in China.

2. While the government has acknowledged soybeans as a vital aspect of national food security, policy measures aimed at promoting soybean production often do not align with the circumstances. Soybean production, for example, is not a highly profitable endeavor, and farmers often lack enthusiasm for cultivating soybeans, necessitating government subsidies to incentivize its growth.

   Currently, Soybean yields per mou (a Chinese unit of land measurement that is commonly 806.65 square yards/0.165 acre/666.5 square metres) are relatively low, with just slightly over 100 kilograms, whereas corn yields can reach nearly a thousand kilograms per mou. When soybeans are grown in conjunction with other crops, particularly corn, overall grain production tends to decline. To tackle this issue, many regions have introduced government subsidies for farmers to adopt “strip intercropping of corn and soybeans”, where a few rows of soybeans are planted between rows of corn. However, this method is considered outdated and has been abandoned by farmers in the past due to its labor-intensive nature, involving tasks like plowing, weeding, and harvesting. Additionally, the intercropping approach is challenging to mechanize, which is also why farmers transitioned to cultivating single crops.

   The Chinese government started promoting “strip intercropping of corn and soybeans” on a national scale in 2022, recognizing it as a crucial tool for unlocking land potentials. Before that, this farming method had been vigorously promoted in the Huanghuaihai Plain, Northwestern, and Southwestern areas of China, with reports of successful implementation also emerging from coastal areas like East China’s Shandong Province.

   Policy makers have also overlooked the characteristics and applications of domestic soybeans, resulting in practical challenges. Typically, domestic soybeans have an oil content of around 15%, which makes them suitable for the production of various soybean products but economically less appealing for soybean oil and soybean meal (protein feed) extraction. In contrast, imported genetically modified (GM) soybeans have a higher oil content of around 20% — more suitable for the generation of soybean oil and meal. With domestic soybean prices typically 1,000 yuan per ton higher than imported soybean prices, domestic production of soybeans has exceeded demand. Domestic soybean prices are typically about 1,000 yuan per ton higher than imported soybeans, but when domestic production exceeds demand, as seen in 2022 due to increased cultivation, the price gap diminishes and the government stepped in with subsidies for soybean production, procurement, and processing all at the same time. To decrease reliance on imports, it's more practical to invest in R&D to breed soybean varieties with higher oil content than blindly expanding production.

3. In an effort to safeguard food security, many regions have implemented policies supporting the establishment of new agricultural entities like cooperatives and enterprises — only to yield reverse effects. Both domestic and international studies indicate that individual households or family farms are the most suitable entities for agricultural production. My recent research on the pilot reform of grain production cooperatives initiated in 2014 in a specific county has shown rather disheartening results: presently, all cooperatives except for one (which is also in a quagmire) have ceased to exist.

   Moreover, running a business out of grain cultivation contradicts the fundamental principles of agricultural production. My investigation in August 2022 on land leasing in several counties in the same province suggests that 1) as production scaled up, yields have significantly decreased due to government subsidies to enterprises; 2) land rents have increased, affecting the livelihoods of many skilled farmers; 3) the grain yield per unit area, from highest to lowest, follows this sequence: moderately-sized individual farmers, large-scale plantations with over 1,000 mou of land, farmers’ cooperatives, and enterprises trusted with rural land or supply and marketing cooperatives. If an enterprise manages 1,000 mou of land and assume a profit of 100 yuan per mou, it earns 100,000 yuan; if it expands operations from 1,000 mou to 10,000 mou, even if the additional 9,000 mou only yield a profit of 10 yuan per mu, the enterprise will still want to increase its scale of operation because the total profit can increase to 190,000 yuan. However, if the same 10,000 mou of land is allocated to 10 family farms, the profit will undoubtedly exceed 1 million yuan. More importantly, government subsidies will lead to a decrease in the crop yields of enterprises.

4. Recently, many regions have adopted measures to “resolutely stop any attempt to use farmland for purposes other than grain production.” However, this approach often adopts a "one-size-fits-all" policy implementation that frequently falls short of achieving the desired results. My research shows that while practices like growing rice in modern vegetable greenhouses or cultivating wheat in soil-filled fish ponds expanded grain cultivation areas, many of them failed to harvest. Challenges included the inability of machinery to enter greenhouses and the prohibitive cost of manual labor for grain cultivation within them; lack of experience for fish farmers in successful grain cultivation; continuing field operations after sowing often led to greater financial losses; fraudulent calculation of grain output. This rigid “one-size-fits-all” approach deviated from the original intentions of the central government's policy.

   Establish a clear priority order for land use. Implement special protection and usage control for arable land, strictly regulating the conversion of arable land into forests, orchards, and other types of agricultural land. Permanent basic cropland, designated as high-quality arable land according to the law, should be primarily used for the development of grain production, especially for ensuring the planting area of rice, wheat, and corn, the three major cereals.

   …

   Stringently regulate agricultural production and business activities on permanent basic farmland, and forbid actions that involve using permanent basic farmland for forestry and fruit cultivation, digging ponds for fish farming, illegal soil excavation, or any other actions that disrupt the arable soil layer.

   — December, 2020, The State Council Opinion on Stop Any Attempt to Use Farmland for Purposes Other Than Grain Production

5. Some local governments have reversed their approach from “turning marginal farmland to forests” to “turning marginal forests to farmland.” While it may appear convenient to increase arable land area by reverting land converted under previous administrations, these converted areas typically have very low productivity and are unlikely to significantly enhance grain production. Due to the inaccessibility of these areas to agricultural machinery, both cultivation and harvesting pose significant challenges.

Two Visions for Agricultural Development: and How Policies Should Be Devised towards Them

Over the past four decades, China's economic structural transformation has followed a consistent trend: while agriculture has experienced growth, the industrial and service sectors have expanded at an even faster pace.

My first vision for agricultural development is, looking ahead, it's imperative to address the structural deviation to strike a balance between agriculture and industry/service in terms of both employment and GDP contributions. This is essential for narrowing the income gap and aligning productivity between the two sectors, and ultimately attaining common prosperity within the national economy.

To achieve these objectives by 2050 [the year marked by the Second Centenary Goal of the CPC which aims to build China into a modern socialist country in all respects], the share of agricultural employment must decrease from 24% in 2020 to 4.3% in 2050. Even at that point, labor productivity in agriculture will still lag behind the industrial and service sectors by around 20%. This implies that farmers will need to seek non-agricultural employment to attain the average income of all citizens.

This 4% goal is not entirely impossible; it is comparable to Japan the late 1990s present-day South Korea. However, this also means that China's agricultural labor force must decrease from 177 million in 2020 to over 320 thousand in 2050, with more than 290 thousand engaged in crop cultivation. Even if China maintains the redline of 1.8 billion mou (120 million hectares) by 2050, each labor force member will have an average of only 61 mou (6 hectares), highlighting the persistent “large country, small farms” reality.

I want to emphasize that reducing the agricultural labor force by 145 million over the next 30 years is an immensely difficult task. In the past 30 years of accelerated industrialization and urbanization, China’s agricultural labor force only decreased by 165 million. In 2022, due to factors like the pandemic and an overall economic growth slowdown, the number of agricultural workers increased instead of decreased, returning to the 170 million level seen in 2020.

To achieve increased income for farmers and shared prosperity while ensuring food security, we face significant challenges. Over the past decade, the proportion of households with less than 10 mou (0.67 hectares) of arable land has consistently remained above 85%, with changes of less than 1 percentage point in ten years. If households with such small landholdings continue to focus on grain cultivation, it will be challenging to ensure sufficient income for their families. Therefore, many small-scale farmers have turned to developing HVA on their limited land. Although this comes with significant market risks, it also offers higher income opportunities.

The problem is, these small-scale HVA farmers are not only faced with market risks, but also policy risks. That brings out my second vision for agricultural development: ensuring food security while achieving common prosperity for farmers. As animal husbandry, one of the two primary sources of increased income for farmers, is gradually encroached by capital and enterprises, policies should now place primary emphasis on the other source, which is crop cultivation.

In crop cultivation, I have recently proposed a “20-80 pattern” development strategy, which I believe is crucial to achieving common prosperity for both large-scale and small-scale farmers while ensuring food security. Large-scale farmers, representing 20% of rural households, mainly produce staple crops like grains, with their primary role being to ensure national food security. They rely on moderate-scale operations and government subsidies to increase their income. Small-scale farmers, comprising 80% of rural households, primarily focus on HVA and depend on market improvement and policy support to increase their income. Their role is to enhance national nutrition.

Finally, I’d like to emphasize a few points for policy orientation:

• First, genuinely implement the “food crop production strategy based on farmland management and technological application”. Technological application means increasing investments in agricultural R&D, yet presently, fiscal expenditures for agricultural R&D amount to slightly over 25 billion yuan ($3.42 billion) — just over 1% of the total government expenditure on agriculture and rural areas. The key to farmland management is enhancing land fertility, but the reality is quite the opposite: the intensive use of land to boost grain yields has resulted in decreased land fertility and worsening water shortages.

• Second, expedite the high-quality transformation to modern, efficient, and environment-friendly HVA while ensuring grain security.

• Third, unleash measures aimed at common prosperity for both large-scale and small-scale farmers. Crop cultivation should embrace the “20-80 pattern,” establishing policy support systems tailored to large and small households respectively.

• Fourth, enact policies aimed at common prosperity for both farmers and the entire population, creating more non-agricultural employment opportunities for rural labor in medium and small cities, counties, and townships.

• Fifth, promote China’s development in tandem with global development, advancing global trade and enhancing governance systems; while contingency plans are necessary, they must not be allowed to dictate day-to-day development; China should help developing countries improve food production.

These drivers of agricultural productivity growth encompass technological innovation, institutional innovation, market reform, and investment innovation. They have played a significant role in the development and reform experience of the past four decades, and they will continue to be vital for ensuring food security, increasing farmers’ income, and achieving sustainable development in the future. Regarding technological innovation, the priority should be biological, digital, equipment, and ecological technologies; in terms of institutional innovation, the focus should be on improving institutional frameworks, policies, and investment approaches.

Yu Yongding calls on Beijing to stimulate growth via fiscal expansion, believes 6% growth achievable

Love Troubles by Prof. Wanning Sun

Internet-based Philanthropy in China

Life as a Migrant Food Delivery Rider in Shanghai

Huawei was driven out of China by European rivals, contrary to Desmond Shum's Congressional testimony