China to Subsidise GM Crops in Three Nongs Policy

In its first major policy announcement of the new year, China has revealed plans to boost spending on agricultural science and technology - continuing a trend towards rapidly-growing farm support in recent years.

The document, which was released last week by China’s State Council, says that subsidies will be redirected towards the most productive areas, with grain farmers in particular receiving more direct payments.

It also outlines plans for increased spending on genetically-modified crops, in a move which government officials privately acknowledged could be controversial.

However, despite the overall policy focus on science and technology, the broad focus of farm support will continue to reflect trends in recent years, sources said - with farmers receiving improved seeds, breeding stock, and farm machinery at lower prices.

Three ‘nongs’

In a sign of the political importance attached to agriculture in China, this is the ninth year running in which the first policy communication unveiled by the government has been devoted to the ‘three nongs‘, or three rural issues - agriculture, farmers, and the countryside.

While the announcement - known simply as ‘Policy Document no. 1′ - spells out the broad policy orientation for agriculture in the year ahead, it does not include detailed figures on topics such as spending levels for particular types of support.

Subsidy shift

The government will “increase the intensity” of farm subsidies, the document says, and redirect them towards the more productive regions, large-scale farmers, and co-operatives.

This would mean rice-producing areas in the south of the country could receive increased support, such as Hunan, Hubei, Guangdong, and Guangxi. Wheat-producing regions in the north and north-east of the country could also benefit.

All of China’s farm subsidies are notified as ‘green box’ support at the WTO - meaning they ostensibly cause not more than minimal trade distortion. A small amount of trade-distorting payments are also permitted, on the condition that they represent less than 8.5 percent of the value of production - known as ‘de minimis’ support at the WTO.

Coming at a time when the gap between rural and urban incomes continues to widen, the policy release is being seen as a sign that the government intends to tackle social inequalities - a potential cause of unrest in a country where around half of the population of 1.3bn still lives in rural areas, and over one-third works in farming.

GMOs: China ‘should not be left behind’

The government will continue to expand support for genetically-modified organisms, the new policy says, in a move which government sources recognised could be controversial among some.

“So far we only have had GM plants for cotton and horticulture, not for food,” one official told.

However, although the country does not grow genetically-modified soybeans, it does import them in significant amounts. In addition, a new policy introduced last year now allows Chinese farmers to grow genetically modified rice.

China’s US$34bn trade deficit for agricultural goods expanded by 47 percent in 2011, according to recently-released figures from the ministry of agriculture. While farm exports increased by US$61bn, or 23 percent, imports grew by US$95bn, or 31 percent.

Despite the growth in trade, the government nonetheless continues to see the production of ‘strategic products’ - wheat, corn, rice, cotton - as an area where it needs to remain self-sufficient.