Caixin
Nov 23, 2016 07:57 PM
ECONOMY

China's Land Restoration Drive Marks Government Thinking Turnaround, Analysts Say

A farmer works in the fields of Rongjiang, Guizhou province, on Feb. 24, when the local peak farming season begins. Photo: Visual China
A farmer works in the fields of Rongjiang, Guizhou province, on Feb. 24, when the local peak farming season begins. Photo: Visual China

China's move to let 1 million acres of farmland lie fallow or put it under crop rotation is a sign that the country's pressing food-safety and environmental woes have become a higher priority on Beijing's agenda.

The country's unrestrained economic expansion of more than 30 years has been accompanied by a marked rise in pollution, desertification, water shortages and other environmental disasters that are posing serious threats to the food chain.

The central government said in June that it will hand out nearly 1.5 billion yuan ($218 million) in subsidies to farmers in a drive to restore the health of 6.16 million mu (1.01 million acres) of farmland on a trial basis, according to a joint announcement by the Ministry of Agriculture and other departments.

Under the plan, more than 191,000 acres will be left unplanted to deal with depleting underground water supplies in the northern province of Hebei and repair heavy-metal-contaminated fields in central China's Hunan province. It is also intended to begin the rehabilitation of ecosystems in Guizhou and Yunnan in the southwest, which suffer from stony desertification, and Gansu in the northwest, which is plagued by soil salinization and other problems.

The other nearly 824,000 acres will have different crops planted in rotation to increase land fertility, save irrigation water and reduce soil-borne pests in Inner Mongolia and the northeastern provinces of Liaoning, Jilin and Heilongjiang.

The policy has been rolled out in the areas since June with "smooth progress," the state-run Xinhua News Agency reported, citing an official meeting last week on the coordination of the project.

Analysts said that the pilot program reflected a change in thinking of the Chinese government, which has long been concerned with maintaining high crop yields to ensure grain self-sufficiency and the ability to feed 1.4 billion people.

"The introduction of the policy shows that the Agriculture Ministry has realized that it is unsustainable to pursue excess supply of some crops at the expense of the environment," Wang Jing, Greenpeace East Asia's food and agriculture senior campaigner, told Caixin.

Data on soil pollution used to be kept by authorities as a "state secret."

But an increasing number of food safety scandals, such as rice and vegetables laced with toxic substances that include cadmium, arsenic, mercury and lead, have rattled the public and placed the government under pressure.

A vice minister of land and resources revealed at the end of 2013 that about 8 million acres of the country's farmland had "medium- to high-level pollution." Official data showed nearly 20% of the country's arable soil contained higher levels of chemicals than allowed by national standards by the same year.

"Agricultural production activities are key causes of farmland pollution," the Ministry of Environmental Protection said in a statement in May, listing wastewater irrigation, unreasonable use of fertilizer, pesticides and plastic film, and livestock and poultry breeding as the main culprits.

Ma Jun, director of the Institute of Public & Environmental Affairs, a nonprofit environmental research organization based in Beijing, said the government's decision to let land recuperate and to start the initiative from regions with "the most severe problems" showed policymaking has come "on the right track."

"Letting land lie fallow will improve the quality of farmland and help ensure grain security and food safety," he said.

China has been struggling to save enough land for farming during rapid urbanization and industrialization. Meanwhile, the government, mindful of historical famines like the one that began with the Great Leap Forward in the late 1950s and early '60s and the ensuing social unrest, has been reluctant to leave land idle.

But the food security issue appears to have become less compelling now that the agricultural industry has enjoyed bumper harvests for 12 straight years, with grain in some state reserves reportedly piling up for years without being consumed.

"The grain supply has indeed become excessive, which paved the way for letting farmland lie fallow," Ma Wenfeng, an analyst with Beijing Orient Agribusiness Consultant Ltd., which is linked to the Ministry of Agriculture, told Caixin.

China's grain reserve-to-consumption ratio is the "highest in the world," with total reserves, 80% of which is in state storage, sufficient for the whole nation's consumption for half a year, he said.

Meanwhile, the government's higher-than-market-level procurement prices, which are meant to lock up some profits for farmers, have become a huge drain on fiscal resources.

Some experts argued that, for example, tens of billions of yuan could have been saved if the government had bought imported corn to fill official reserves, according to previous reports by Caixin.

Prices per ton of domestically produced wheat, rice and corn — the three main grains in China — were 823 yuan, 790 yuan and 428 yuan more respectively than those of the imported crops, China National Radio reported earlier this month.

And despite the expensive government procurement prices, farmers' profits have nonetheless continued to decrease in recent years due to rising costs of fertilizer, land and labor.

The average net profit on wheat, rice and corn production tumbled to 119 yuan per acre last year from 757 yuan in 2014, according to Ma of Beijing Orient Agribusiness Consultant.

He predicted the figure will further plunge into negative territory this year, with farmers expected to lose 487 yuan per acre.

The government has said that it hopes the land restoration and 1.5 billion yuan subsidy plan, if implemented successfully, will help address all the problems.

"Crop rotation and leaving farmland fallow in some areas at a time when domestic and external grain supply is abundant will not only be conducive to recovering the strength of arable soil and sustainable agricultural development, but also help ease the grain supply and demand conflict, stabilize farmers' income and reduce fiscal pressures," Yu Xinrong, a vice minister of agriculture, said in a statement in June.

But analysts cautioned the current area covered by the pilot program is too small and its actual effects depend on how the policy will be executed by officials at the grass-roots level.

"The (usual) one-size-fits-all approach must be avoided, … and (the government) should make sure the subsidies will not cause more unfairness in rural areas," Wang said.

Contact reporter Fran Wang at (fangwang@caixin.com); editor Ken Howe (kennethhowe@caixin.com)

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