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Beijing serves up food solution

By CNN's Senior China Analyst Willy Wo-Lap Lam

Chinese Premier Wen Jiabao, who is taking action to stop the trend of falling food production in his country.
Chinese Premier Wen Jiabao, who is taking action to stop the trend of falling food production in his country.

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Wen Jiabao

HONG KONG (CNN) -- Much of China's weighty agrarian problem is summed up by a figure recently revealed by Premier Wen Jiabao: the country's grain production is short by 68.7 billion jin (34.4 billion kilo) a year.

Although the Chinese Communist Party (CCP) leadership has long given up the Maoist doctrine of self-sufficiency, it is state policy to rely as little on imports of wheat, rice and other staples as possible.

And while the prospect of warfare -- including limited military action to "teach the Taiwan separatists a lesson" -- is remote, Beijing still abides by the Cold War standard that China must have close to two years' supply of grain to guarantee national safety.

In an internal briefing on the economy last month, however, Wen pointed out China needs 930 billion jin of grain a year, while last year's yield reached only 861.3 billion jin. Harvests have now declined four years in a row.

Diplomatic sources in Beijing said a recent official count showed grain storage nationwide could last little more than six months.

Apart from unpredictable weather -- which has been exacerbated by decades of ecological degredation -- Wen cited as main culprit the loss of arable land.

He disclosed at the briefing that owing to rapid industrialization, arable land had dropped from 1.7 billion mu (113.3 million hectares) in the 1990s to 1.4 billion mu.

The total area of economic zones or "technological development zones" created in the past decade or so adds up to about the same size as Taiwan.

And this does not include prime farm land that has gone to real-estate development as well as recreational facilities such as golf courses, which are springing uo along the coast like bamboo shoots in spring.

• Interactive: More by Willy Wo-Lap Lam 

It is understood that at the National People's Congress next month, the leadership of President Hu Jintao and Premier Wen will give top priority to boosting grain yield and related agricultural goals.

For example, the target for grain output this year is set at 910 billion jin, more than 5 percent up from the 2003 figure.

The big question, of course, is that with the country's quasi-capitalist economic policy filtering down from the cities to the countryside, it is all the more difficult to force farmers to grow wheat and rice.

After all, grain production is the least profitable of agrarian pursuits. Chinese agronomists reckon that with the current tax rate of 8.4 percent, farmers specializing in grain could barely eke out a living.

It is mainly with this in mind that Beijing unveiled last Sunday the CCP No. 1 Document for 2004, which is devoted exclusively to boosting agricultural production and improving the farmers' lot.

The gist of the 9,000-character document can be summed up in another one of those catchy slogans coined by the Hu-Wen team: "Give more, take less, and render [farming and farmers] alive."

A commentary in the official Xinhua news agency called the document the party and government's "warm and magnanimous gift" to the nation's 900 million farmers.

For example, with the exception of tobacco, tax for cash and other commercial crops will be abolished.

And levies on grain will be drastically curtailed. While no specifics were given by the document, it is understood that grain taxes will be lowered to 2.4 percent in five years.

While peasants' income has increased in the past five years, the growth rate is less than one-fifths that of city dwellers.

As leading agrarian expert Chen Xiwen pointed out, low living standards in the countryside not only dampened enthusiasm for farming but also hurt Beijing's plans to boost the economy by stimulating domestic consumption.

In addition to alleviating farmers' financial burden, the No 1 document pledged better treatment for the 100 million peasants who have migrated to the cities in search of jobs.

While the Hu-Wen team has spelt out a much-anticipated new deal for farmers, there is widespread perception that the dispensation could be too little, too late.

In a recent internal talk, Wen said the remission on grain levies would engender tax losses of around 42 billion yuan.

Last year, however, state coffers raked in 2.15 trillion yuan worth of revenue, an increase of more than 200 billion yuan over 2002.

Given this relatively solid fiscal position, can't the Hu-Wen leadership afford to be substantially more generous with the long-suffering peasants?

A more serious drawback is the leadership's apparent failure to make far-reaching structural changes in the all-important agrarian distribution and commercial systems, the bulk of which are still state-controlled.

Last year, the prices of many agricultural products jumped by more than 10 percent..

This hike, however, has not translated into heftier earnings for farmers. And more expensive fuels and fertilizers are only one of the reasons.

Farming experts say peasants' margins are being skimmed off by state-owned distributors and other middlemen.

According to liberal agronomist Wen Tiejun, "the most fundamental problem on the farm is monopoly" by state-held concerns in areas ranging from banking and insurance to marketing and distribution.

Considering also the fact that peasants have little say over the prices of produce, it is unsurprising that many young farm hands would rather drift to the cities and try their luck in one of those mushrooming economic zones.

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