A case study of farmer Tan Yejun's account books in JilinProvince concerning changes of grain growing cost benefit over the past decade

By Han Jun, Development Research Center of the State Council &JinSanlin, Research Department of Rural Economy of DRC

Research Report No 19, 2013 (Total 4268)

Tan Yejun, a farmer in Sijiazi Village, Daliba Town, Qianguo County of Jilin Province, has a three-member family (It was a six-member family till 2003; in 2006, his son and daughter got married, hence the present family size) with three hectares of contracted farmland mainly for grain growing. Over the past 10-plus years since 2000, he has kept recording each item of income and expense, whatever the amount, from the income earned through selling 35,000 kg of rice to the expense for a sack of fertilizer. Up to now, Tan has three account books which give a true-to-fact picture about the changes in grain-growing costs and incomes over the years. Actually, a case study of Tans' accounts sheds light on the substantial benefits the Party's agriculture-supporting policies have brought to grain producers as well as the prominent problems impeding the grain growers' income growth and their policy demands.

I. Grain Producers' Income Grows Year-on-Year, Which Is Mainly Attributable to Favorable Policies, Scale Operation and Rise in Grain Price

Thanks to the package of agriculture-friendly policies, the Tans' income from grain growing is on the rise. Net income from grain growing increased from RMB21,831 yuan in 2002 to RMB118,698 yuan in 2011, up by 4.4 folds; between 2004 and 2011, the grain-growing net income increase rate averaged 6.7% a year, out of which 7.2% from his own land and 5.8% from the contracted land . In 2011, the Tans' per capita income reached RMB39,500 yuan in 2011, at the upper level in his village; they have all the necessary home appliances, such as the computer, refrigerator, color TV and so on, leading a moderately well-off life.

Table 1: Jilin Rural Household Tans' Yearly Income from Grain Production

The Tans' account books reveal that the grain producers'income growth is mainly attributed to the following three factors:

1. Agriculture-friendly policy greatly contributes to farmers'income growth

With the abolition of agricultural taxes and administrative charges reinforced by implementation of agricultural subsidy policy, the taxes and administrative charges the Tans used to pay have been basically abolished since 2004, and they can get direct subsidies for grain growing and improved seeds along with general subsidies for agricultural production supplies. The favorable policy more than lightens their burden as it increases their income as well. The accounts concerning the deals between the Tans and the village in 2000 registered a contract value of RMB740.98 yuan, agricultural tax RMB405.47 yuan, labor cost RMB28.2 yuan, various project fees RMB 251.45 yuan among other expenses, amounting to RMB1,426 yuan in total, RMB237.7 yuan per person. In 2002, JilinProvince carried out trials for agricultural tax-for-administrative charges reform, exempting farmers from administrative and institutional charges and contribution to government fund, which reduced the Tans'financial burden by RMB342 yuan a year. Starting from 2004, agricultural tax was abolished and direct grain-growing subsidy was provided. That year, the Tans were exempted to pay taxes and administrative charges totaling RMB1,727.25 yuan, and got various subsidies at a value of RMB2,173 yuan. The lightened financial burden coupled with increased subsidy makes the Tans' yearly income increase by nearly RMB4,000 yuan.

Table 2: Changes Related to Reduced Taxes and Administrative Charges and Increased Subsidies for Tans'Family over the Years

Year	Taxes and Administrative Charges (RMB)	Subsidies (RMB)
2002	1057	0
2003	1325	0
2004	0	2173
2005	0	2051
2006	0	2451
2007	0	2797
2008	0	2319
2009	0	2506
2010	0	2506
2011	0	2698

Note: The yearly subsidy changes with the land acreage contracted from the village varying from year to year.

2. Scale operation drives forward grain growers' income growth

Under the agriculture-friendly policies, the Tans' income from grain growing is in steady increase year on year. Tan who had earned a good income from grain growing began to expand his tillage by contracting land from other farmers. In 2003 he contracted two hectares of land which was expanded to 3.7 hectares in 2006; together with his family's land quota, thecultivated land totaled nearly seven hectares at the highest. The net income from contracted land increased from RMB25,094 yuan in 2004 to RMB37,107 yuan in 2011, accounting for nearly 1/3 of the Tans' net income from grain growing and constituting the major source of the family income.

Table 3: Tans' Self-owned / Contracted Land Net Income Ratio (%)

Year	Gross Income		Net Income
	Self-owned Land	Contracted Land	Self-owned Land	Contracted Land
2004	60.9	39.1	66.7	33.3
2005	55.6	44.4	66.8	33.2
2006	45.8	54.2	60.3	39.7
2007	61.0	39.0	74.9	25.1
2008	60.9	39.1	73.0	27.0
2009	60.8	39.2	72.4	27.6
2010	56.3	43.7	66.0	34.0
2011	58.2	41.8	68.7	31.3

In SijiaziVillage there are more than 20 households with each contracting 7 to 10 hectares of land just like the Tans, making up for nearly 20% of all households in the village. The 20-plus major grain-growing households have contracted most of the land of their neighboring DenglongshanVillage, which not only promoted land circulation, but also realized scale operation and contributed to labor migration (Denglongshan is a village with Korean ethnic group living in a compact community, most of the farmers have left for South Korea as migrant workers.)

3. Rise in grain price contributes most to farmers'income growth

In 2011, the Tans' per unit land yield was 9,926 kg per hectare (rice), down by 10% than 2004, but the grain price (per unit) increased from RMB1.82 yuan in 2004 to RMB3.15 yuan per kg that year, up by 70%. The grain price increase led to the Tans' gross production income growing by 67% per hectare. From 2004 to 2011, the grain price grew by 8.1% on a yearly average and the Tans' yearly production income growth averaged 6.8%per hectare. It is clear the grain price increase contributed 120% to the Tans' income growth.

Table 4: Changes in Tans' Per UnitLand Yield and Grain Production Price

Year	Per UnitLand Yield (kg/hectare)	Price (yuan/kg)	Production (Gross) Income Per Hectare (yuan)
2004	10900	1.82	19838
2005	8364	1.9	15892
2006	10896	1.78	19404
2007	11098	1.94	21567
2008	8532	2.24	19091
2009	9000	2.6	23400
2010	9633	3.19	30708
2011	9926	3.15	31300
Annual Average Growth Rate (%)	-1.3	8.1	6.8
Contribution to (Gross) Income Growth Per Hectare (%)	-20	120	100

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¹Since 2004 the Tans’, apart from the income from the contracted land, has been earning extra income thanks to the agricultural-friendly policies, so the statistics are comparable.