How to increase the gains of farmers will top the government's agenda in future as China's entry to the World Trade Organization has a dramatic impact on the country's nearly 800 million farmers, said an article in China Economic Times.

The sluggish development of agriculture has been a thorny problem thwarting economic progress in China.

About two thirds of China's population live in rural areas, but agricultural output only makes up 16 per cent of the country's gross domestic product (GDP) and 4.9 per cent of exports.

Fears are looming up that the situation could get worse after China's WTO accession.

Low productivity is the Achilles' heel of China's agriculture, which could cost Chinese farmers competitiveness in the world market.

Although China has about 100 times the number of farmers of the United States, its exports of farm products only equals one fifth to a quarter of the latter's.

Once China opens the door to cost-effective American farm products, a vast number of domestic farmers will suffer and may lose their jobs and livelihoods.

Apart from ongoing challenges, the domestic market is already on a downward path given that the price index of farm products declined from 1996 to 2000.

The index dropped 22.6 per cent during the five years, eating into more than 300 billion yuan (US$36.2 billion) of farmers' profits.

The decrease in arable land and the slide in the grain price are the main reasons why farmers are making losses, according to the Ministry of Agriculture.

Despite the continuous price falls, however, prices of Chinese farming exports are still 20 to 40 per cent higher than the average standard in the international market.

The room for income hikes for farmers is increasingly small even if China maintains agricultural tariffs at the current level, because the international supply of farm products has kept surging and will drive prices down further.

The opening-up of the domestic market will be a win-win solution for both China and the world in the long run, but in the short term, the agricultural sector has to brave the fierce foreign competition, particularly that in the less developed western regions.

In 2000, farming took up 70 to 80 per cent of the per capita income of farmers in western provinces, compared to a 50 per cent average for the whole country.

The backward economy in these regions offers scant opportunities for farmers to find jobs outside agriculture - unlike those in prosperous coastal areas.

Poor infrastructure and transport conditions also add to the costs of farmers in western regions. In fact, the experience of many countries such as Canada and Australia has proven that farmers are likely to suffer in a global free trade system.

The government needs to take down-to-earth steps to cushion farmers from devastating impacts and minimize their losses.

It should change the current expenditure structure and increase investment in the farming sector.

Government spending on rural development accounts for only 10 to 15 per cent of its overall expenditure, or 1 per cent of GDP, although two thirds of the population live in rural places.

And the pro-active fiscal policy, adopted from 1998 to shore up the economy by measures like massive bond issuance and stimulation of consumption, is tipped in favour of urban residents.

The per capita disposable income of urban families increased 23 per cent from 1997 to 2000, compared to the 10.5 per cent of rural people.

Gaps are huge in urban and rural public services such as education, medical care, telecommunications and even clean water.

It is time for the government to spend more on agricultural development. It is particularly important to strengthen the research and use of new technology, which is key to the competitiveness of farm products.

Although China boasts a vast output of farm products, its backward technology has restricted quality and hampered exports.

China accounted for 22 per cent of the world's output of grain seeds, 38.2 per cent of peanuts and 34.9 per cent of tobacco in 1999. But the value of its exports of farm products was only 2 per cent of the world's whole.

In fact, investing in research and development of agricultural technology can yield huge returns. The profits for China could be even higher because the country's vast area of farmland offers boundless prospects for the use of new research techniques.

One of the most remarkable success stories in this aspect is the experience of Yuan Longping, a top scientist in China. His innovation of hybrid rice is now used in millions of hectares of fields all over the country and won him great fame.

The government's current investment in agricultural technology is about 10 to 15 per cent of its overall spending on agriculture, and is less than 0.1 per cent of GDP. This ratio should be elevated gradually in the future.

In addition, it is imperative to adjust the decades-old household registration system which restrict people to the places where they are born.