Finance ministry announces billions in direct payments to farmers

China’s Ministry of Finance announced on Thursday that the central government had issued 211.5 billion ($29 billion) of transfer payments for agriculture ahead of 2023. 

The payments are intended to ensure national food security and stable production of food, as well as for the construction of improved farmland. 

The majority of the funds, 120.5 billion RMB ($17 billion) are simply direct payments to farmers to encourage them to grow grain. The central government, along with provincial governments, have increased direct payments to farmers to promote grain production as input prices have risen and land typically generates higher returns in other uses. 

As part of the direct payments, the Ministry notes that any land converted away from planting, for example, used as a poultry or hog farm, or any land that has not been cultivated for over a year, is not eligible for subsidies. 

34.6 billion RMB ($4.8 billion) is allocated to improving the quality of farmland. These measures typically include ensuring land is level and fields are contiguous so it’s easier to use mechanized equipment. Other improvements include irrigation or drainage infrastructure to improve drought and flood resistance. 

Purchases of farm equipment and efforts to improve mechanization received 14.5 billion RMB ($2 billion) as the government looks to reduce post-harvest losses and increase planting and harvest efficiency. 

Ecological protection efforts received 31.4 billion RMB ($4.3 billion) which is allocated to local governments for a variety of efforts including the promotion of conversation tillage, crop rotations, and grassland maintenance. 

Lastly, 10.5 billion RMB ($1.5 billion) was allocated toward fisheries and livestock operations including immunization efforts and modernizing aquaculture operations. 

2022 saw several rounds of ad-hoc payments to farmers to encourage grain production and provincial subsidies have typically been announced in the autumn after farmers had already made their planting decisions. 

The announcements of these large payments well ahead of the 2023 planting season seem to be an effort to motivate grain farmers to stabilize or increase their planted area.