Enhancing Agricultural Quality and Efficiency through Reform

How should China carry out the agricultural supply-side structural reform to create an efficient supply of agricultural products? The answer lies in the quality of agricultural products. China’s agriculture requires a quality revolution. Only that will solidify effective agricultural products supply to meet the demands of social development. 

China’s agricultural production must transform from the previous mode of only pursuing yield increases to a mode featuring moderately prosperous agriculture which sets higher requirements on product quality, food security, health, and ecological protection, so as to meet Chinese consumers’ growing demand for quality agricultural products. Achieving this goal not only requires structural adjustment of agriculture and changes in production modes, but also the remodeling of the entire industrial chain from source to circulation. 

By 2020, China will become a moderately prosperous society in all respects. Consumption habits of the Chinese people will greatly contrast the times when only basic needs such as food and clothing were satisfied. They will attach greater importance to food quality, health, security and environmental protection. 

For decades, China’s agricultural production has been quantity-oriented. The country’s annual agricultural statistical indicators are mainly based on grain yields, and high-quality agricultural products are scarce. Several major factors influence this phenomenon. 

From the angle of production, although China is home to a great number of farmers, they don’t possess strong negotiation abilities in the purchasing process. Intermediaries do not raise acquisition prices for agricultural products which use less fertilizers and pesticides. From the angle of sales, the current industrial chain for China’s agricultural products is not complete. Producers have no idea of where their products go or who ultimately consumes them. Similarly, consumers don’t know exactly who produced the agricultural products they purchased. Trust is hard to build between producers and consumers, which makes improvements in quality and yield of agricultural products difficult. Agricultural products turned out in large numbers but of poor quality were easily accepted by consumers when they barely had enough to eat and wear, but they hardly meet the requirements of consumers who already lead fairly well-off lives. 

To improve the quality of China’s agricultural products and meet the upgraded demands of an increasing number of  consumers, the entire industrial chain needs to be reshaped from the bottom up. 

First, a diversification strategy should be employed in seed breeding. Increasing yields should no longer be the major goal of seed breeding. Varieties aiming for higher quality should be promoted and utilized. At present, the popularization of agricultural product varieties places too much emphasis on yield increases, which knocks out high-quality but lower-yield varieties. While this practice may be profitable for producers, it causes enormous losses to consumers. 

Second, the entire industrial chain should be simplified and restructured, and integrated production should be employed. There are now too many links from production to consumption, which makes quality control and management a mere formality. When facing grain procurement from big companies, farmers don’t have any negotiation power and can only rely on quantity. And it is impossible for these enterprises to properly check the quality of products from each farmer. As a result, the companies and farmers don’t trust each other, which further hurts product quality. 

Solutions for such problems should include: Big companies should establish agricultural bases to set up a closer relationship with local farmers or employ integrated production. Farmers can join up to establish cooperatives and set up their own brands. Through integration of the primary, secondary, and tertiary industries, production won’t be limited to previous categories and the industrial chain will be extended. Farmers should establish their own sales terminals and make direct connections between production and sales. Such strategies will not only increase the incomes of farmers, but give consumers the ability to trace the origins of the agricultural products they purchased and get trustworthy food. 

In the past few years, with China’s confirmation and certification of land rights in rural areas, rural land property rights have become clearer, and the cumulative area of land transferred in the country exceeds 30 percent of the total. Various new business entities, including big growers, family farms, farming cooperatives, and leading agricultural enterprises, are developing fast. These new business entities bring higher demands for many things such as capital turnover and mortgage guarantee, which requires preferential policies for farmers as well as supportive fiscal and monetary policies. In the future, China’s agricultural development should take measures such as carrying out scale operation, reducing unnecessary use of fertilizers and pesticides and offering social services. Such measures are expected to reduce production costs, enhance agricultural quality and efficiency, and improve the weak links in agricultural supply such as agricultural infrastructure construction, thus rebalancing the agricultural product structure now plaguing the Chinese market.  

The author is a professor with the School of Agricultural Economics and Rural Development at Beijing-based Renmin University of China. He has long been committed to research on issues of agriculture, rural development and farmers.