AGRICULTURAL POLICY REFORM
IN CHINA IN LIGHT OF
OECD’S SUPPORT INDICATORS
Andrzej Kwieciński Development Division, Trade and Agriculture Directorate Landmark Hotel, Beijing, 24 October 2013
Support indicators were developed to:
• monitor and evaluate developments in agricultural policies
• have a common base for policy dialogue, domestically and internationally
• provide input into policy impact analysis
OECD: Analysis based on support indicators
4
Producers collectively Producers
individually
Consumers
Taxpayers
Key concepts: Flows of policy transfers
BT incl. revenue foregone
MPS (M) BT
MPS (X)
MPS (M, X)
MPS - Market Price Support BT – Budgetary Transfers M – imported commodity X – exported commodity
%PSE =
Total PSE Gross Farm Receipts
5
Key support indicators: Relative indicators
• %PSE: PSE as a share of Gross Farm Receipts
• %GSSE: as a share of Total Support Estimate
• %CSE: as a share of consumption expenditure
• %TSE: as a share of GDP
• NPC (Nominal Protection Coefficient): gap between domestic and border price as a ratio of the border price
6
Support to Chinese farmers tends to grow
driven by growing transfers from consumers…
7
-16
-12
-8
-4
0
4
8
12
16
20
24
28
32
36
-80
-60
-40
-20
0
20
40
60
80
100
120
140
160
180
Transfers, billion USD
Transfers from consumers Budgetary transfers
% Producer Support Estimate for China (right scale) % Producer Support Estimate, OECD average (right scale)
% PSE
…and from taxpayers. Area payments became
the largest component of budgetary support
8
0
5
10
15
20
25
30
35
40
45
50
55
Variable input useFixed capital formationOn-farm servicesPayments based on current A/An/R/I, production requiredPayments based on non-current A/An/R/I, production not requiredPayments based on non-commodity criteria
Billion USD
China’s level of support is close to that in
Mexico and Canada
9
0
5
10
15
20
25
30
35
40
45
50
55
60
65
% PSE, 2010-12 average
The level of implicit taxation of the Chinese
consumers is higher than the OECD average
10
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
% CSE, 2010-12 average
In China, the relative importance of transfers
differs across commodities
11
-5.0 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0
Eggs
Peanuts
Apple
Poultry
Rice
Maize
Pigmeat
Beef and veal
Sheepmeat
Soybean
Rapeseed
Sugar
Wheat
Milk
Cotton
% of commodity gross farm receipts
Single commodity transfers, 2010-12 average
China’s Total Support Estimate as % of GDP
remains high…
13
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
-150
-100
-50
0
50
100
150
200
Market Price Support (MPS) Budgetary transfers to producers
General Services Support Estimate (GSSE) Transfers to consumers from taxpayers
% TSE (expressed as share of GDP) - right axis
Billion USD % of GDP
… and is one of the highest among monitored
countries
14
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5
Australia
South Africa
New Zealand
Chili
Israel
Brazil
Canada
Ukraine
Mexico
EU27
Norway
OECD
United States
Switzerland
Russia
Kazakhstan
Iceland
Japan
Korea
China
Turkey
Indonesia
TSE as % of GDP, 2010-12 average
Evaluation of agricultural policy developments
in China
• China’s support to agricultural producers tends to grow
• Transfers from consumers show strong growth due to:
– Growing minimum purchase prices for rice and wheat
– Expanding range of other commodities subject to market interventions
– Appreciation of the Chinese Yuan
– Net import position for a growing range of commodities which triggers the impact of border measures on domestic prices
• Transfers from taxpayers grow each year, but…
– …to an increasing extent, they are paid at a flat rate per unit of land
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Recommendations
• Enhance efforts to improve rural infrastructure and access to basic public services for the rural population
• Over time, consider shifting from decoupled direct payments to investment in improving the productivity and sustainability of agriculture and food system
• Increase investments in R&D, technology adoption and transfer, farm training and extension services
• Narrow the scope of grains covered by the 95% self-sufficiency target
• Extend agricultural land use rights to match those in urban areas so as to enhance investment
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For more information
• Visit our website: www.oecd.org/agriculture www.agri-outlook.org
www.oecd.org/agriculture/PSE
• Contact us: [email protected]
• Follow us on Twitter: @OECDagriculture
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Trade and Agriculture Directorate
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