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Structural change seen in Chinese farmers' income
Last Updated(Beijing Time):2006-01-27 14:46

By Qu Changfu

Du Qinglin, Minister of Agriculture said on the National Agricultural Working Conference held in December last year that the annual per capital net income of rural residents was predicted to be RMB3250, increasing RMB314 compared with last year by 6 percent. In this case, the income of rural residents realized rapid growth again on the ground that the growth rate of farmer's income achieved 6.8 percent in 2004.

The relatively high growth rate for successive two years indicates that increasing income for farmers has reversed the tide of many years of low-speed wandering. However, what deserves our more attention is that such increase is not simple addition on the previous basis but begins to appear new connotation.

What's this new connotation? That is profound changes have been taking place in the sources of farmers' income, while concerning such structural changes will be of long-term significance.

We can see that in the sources of farmers' income in 2005, the income from planting and breeding grows rapidly, which has constituted the major sources of farmers' income for years. However, besides the increased income of farmers due to the stable prices of major agricultural products like grain in 2005, what deserves our attention is the incomes raised from those different from the traditional planting and breeding, a fair proportion of farmers' income comes from "selected breeding and special planting", in other words planting and breeding "famous, special and fine" products and planting and breeding products for processing have taken up increasing proportion.

Transfer income has increased considerably. Supporting farmers through finance is a shinning point in increasing farmers' income in recent two years. Jin Renqing, Minister of Finance, said recently that the central fiscal expenditure used in rural areas, agriculture and farmers in 2005 was predicted to exceed RMB300 billion; the transfer payments by the central finance to support rural tax-fee reform has reached RMB66.4 billion; total amount of direct payments for grain in 30 provinces, autonomous regions and municipalities across China has achieved RMB13.2 billion; 642 million farmers have received direct benefits.

Meanwhile, the central finance also allocated RMB5.5 billion of special funds to subsidize major grain-production counties; animal husbandry tax and taxes on special agricultural products except tobacco have been lifted across China; agricultural tax has been lifted in 28 provinces, autonomous regions and municipalities, while among the remaining 3 provinces, agricultural tax has been lifted in 210 counties/cities; 800 million farmers have been benefited.

Wage-like income creased significantly. Steady wages income has played a growing important role in increasing farmer's income. Fan Xiaojian, Deputy Minister of Agriculture, revealed that the employers in town enterprises were estimated to achieve 141.8 million in 2005 with an annual average increased number arriving 2.728 million during the period of the Tenth Five-Year Plan; the average per capita income of farmers from town enterprises reached RMB1100 in 2005 while it was only RMB760 in 2000.

Labor economy has become a major support for the increase of farmers' income. In recent years, as the environment of finding work in cities getting better, farmers' activity of finding jobs outside their villages has been further stimulated, improving the situation of falling number of outside working farmers from 1997 to 2002. Income from working in the cities has become the important source for many farmers.

Observing the four major sources of farmers' income under the background of China's macro economy, we are actually told from one angle that China's economy concerning agriculture, farmers and rural areas is now entering a stage of strategic transformation, and the deep factor influencing or deciding farmers' income has already emerged. This deep factor, from the policy level, are embodied as beginning to establish long-term effective systems like the comprehensive and steady rural social security system starting from reducing and lifting taxes and increasing subsidies; as far as the internal level of agriculture is concerned, the two major factors influencing farmers' income -- labor transfer and industrial structure adjustment, will further strengthen their forward stride.

In view of the practices in recent years, policy support is the direct and powerful driving force for the work of agriculture, rural areas and farmers. It is just motivated by a series of supporting policies that China has experienced increase in grain production for successive two years and rapid growth in farmers' income. At abroad, developed countries also carry out policy and finance support to sustain the development of agriculture. The strategy about the work of rural areas, agriculture and farmers and the principle of "giving more, getting less and governing less" made by the central government will certainly continue to stimulate more active changes in agriculture, rural areas and farmers. 

Farmer transfer is a big event in the field of agriculture, rural areas and farmers. Consequently, in a considerable length of time, whether the development of town enterprises or the development of small towns should consider taking in rural labors as an important link, and rules and regulations impeding farmer transfer should be eliminated.

Industrialization of agriculture concerns the orientation of the internal structure adjustment of China's agriculture. Only if planting and breeding, processing and selling are integrated by industrialization chains and planting and breeding in preponderant areas are directed by market processing industry, can we effectively solve the problems such as the output, quality and profit of agricultural products.

Surely, there are still many more things to do to realize the sustained increase of farmers' income. However, we will progress more rapidly if we have fixed the right destination. 
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