China needs to modernize its agriculture

There are many ways to lower the production cost of agriculture. For China, the most practical way is to allow farmers to rent out their small patches of land, so as to form bigger farms and liberate more surplus labor from the countryside. Meanwhile, the state needs to adjust its financial policies to sponsor the transformation of rural China, says an article of Beijing News. Excerpts:

The question of whether China needs to increase its grain imports has led to a heated discussion in the country. Some people say increasing grain imports can save the government a lot of agricultural subsidies, protect the natural environment, and save water. Others worry that over reliance on imported food will threaten China's national food security.

The price of China's agricultural products is much higher than the world market, because the government purchases grains from farmers at a high price, and because China's agricultural production is very inefficient, as farmland in China is divided into small patches making it unfit for modern agricultural equipment.

The obvious price gap between home and abroad makes imported food much more competitive in China. Were it not for the imported grains, the price of food in China would be much higher, and people would need to spend more money buying food.

But China is not a large-scale grain importer yet. Last year, the price of wheat, corn and rice on the domestic market was 5 percent, 6 percent and 25 percent higher than that of the imports after tariffs. And the price gap of bean, rape seed and pork is about 15 percent. It means China has the potential to lower the prices of its agricultural products, if its land reform can be well implemented to pave the way for the modern agriculture.

In China, people spend more than 36 percent of their income on food. The fluctuation of food prices directly influence people's livelihood.

The high food prices have already become a negative factor affecting the people’s buying power.

In stead of resorting to imports to lower the food price, China urgently needs to make breakthroughs in its rural land reform and promote agricultural finance. If these reforms can realize their goals, China has the conditions, in the long run, to become a net exporter of agricultural products.