The Chinese policy challenge of making farming and cotton growing economically more attractive
Nov 26, 2013

Crop Protection Economics and policy

For emerging countries, and to a lesser extent for developing countries, the economic transition is attracting farmers out of agriculture. Farming population is reducing, following the trend that developed countries has known and where farming populations represent a few per cents of total labour.

Although farming populations in emerging and developing countries are still high, governments are showing concern for the threat of missing farmers. In China, this concern is translated into the political question of "who will farm tomorrow in China" for several years and a new policy has been recently set up on an experimental basis.

To people involved in the cotton business, China is well known for ranking first in production, in consumption and in imports. China is clearly a price-maker in the cotton market. From the agronomic perspective, it is worth emphasizing that China has overcome the challenge of feeding and clothing 18.6% of world population while accounting only for 7.0% of world arable land.

Productivity has been key in the above-mentioned status of China; it was the outcome of long term investment in research and in support to technology application by producers, although undesired effects have been observed. In terms of remarkable outcomes in cotton cultivation, plant growth regulation has been in practice for more than two decades; hybrids have been commercially launched in late 1980s and extensively adopted since then; a specific transplanting technique is generalized in cotton provinces of Yangtze River Valley because it enables to grow cotton after winter cereal, making China one of the rare countries where cotton crop in integrated into a double-cropping scheme. In the area of biotechnologies, Chinese researchers have carried out its particular technique of gene transfer through pollen tube in early 1990s; they are handling today a large portfolio of genes, albeit its composition is hard to capture from external observers. However, in terms of undesired effects, the efficiency of over and under fertilizing could be questioned, because of negative economic and environmental impacts. In addition, the cotton seed market has become so messy that producers are paying high prices without certainty of getting quality seeds of the expected varieties.

In China, owing to the vibrant two digit economic growth for almost three decades, agriculture is declining relative to other industries because it is becoming less economically attractive. Its annual growth has been less than 5.0%, although much higher than the population growth rate of less than 0.6% since year 2000. In 2010, agriculture accounted only for 10% of GDP, 37% in employment, and for the first time, there were less people living in rural areas than in cities. The income gap between urban and rural labor has continuously widened since China has committed itself to a market economy: in 2011, the income ratio was 3.6.

With reference to the tiny farm size (0.4 ha on average) and to the rates of durable consumer goods (e.g. 63% of rural households possessing washing machines), the fate of Chinese farmers is much better than the one encountered in many emerging and developing countries, but this is the outcome of large scale of commitment in off-farm activities. Farm heads, i.e. men in Chinese context, firstly involved, followed later on by their sons so that agriculture has been perceived as aging and feminized although more recently daughters are catching up in committing to off-farm activities. Because cotton growing is more demanding in terms of labour and cash flow –while labour cost has substantially increased– the phenomenon of moving out of agriculture could be exacerbated in some areas. Our surveys in Hebei province, a traditional cotton producing province, show that farmers' children are seldom involved in farming activities, hence raising the issue of who would take over farming in the next future.

The concern of maintaining some rate of farming people in China –although what this rate should be is not yet clarified, to my knowledge–, asks for reversing the trend of income disadvantage to farmers and more globally for restructuring the agricultural sector; but such a process will need time because several particular and structural features could only evolve gradually. One major feature is related to the residential registration scheme –or "Hukou"– which distributes Chinese people between urban and rural status according to their places of birth, if not the birth places of their parents. A Chinese citizen can seldom shift from one status to the other, notably from rural to urban. Consequently, most rural people migrating more or less temporarily to cities cannot enjoy welfare schemes there –while these schemes are usually missing in their rural hometowns. A second major feature results from the public ownership of land through which only land use right has been allocated to farming families (for 30 years) including to those which have actually given up farming and which are renting out land informally. Dramatic changes have already taken place, but a lot remain: primary and secondary school has been made free in rural areas since 2006; all taxes on farming have been waived in 2007; and in November 2013, for the first time, the revision of the "Hukou" system has been mentioned at the highest political level. The issues of upgrading health care and setting up a pension scheme for farmers are still overlooked.

The Chinese government has started coping with the issue of "who will farm in China" in 2007. In 2012, it introduced the concept of rural and city integration though a "blue book" which has been updated in 2013. In short, this concept points out that development in rural communities and cities does not imply similar economic model. More specifically, such model in rural areas should take jointly agriculture, farmers and rural communities into account.

In the framework of this integration concept, China has launched an experimental program of "family farmers". The introduction I made in an open session at the last 72nd ICAC Plenary session is attached below, as well as the analysis by one panelist which gave some international perspective from the Chinese case.

Similar programs might be conducted elsewhere; all cotton producing countries would benefit from getting informed of.
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