III. Strengthening Agriculture as the Foundation of the Economy

and Striving to Increase Farmers’ Income

Agriculture, rural areas and farmers are of great importance to the reform, opening up and modernization drive. During the period of the Tenth Five-Year Plan, we need to give top priority to implementing the Party’s basic rural policy, strengthening agriculture as the foundation of the economy and increasing farmers’ income. We must focus on the following aspects of this work:

Accelerating restructuring of agricultural production and the development of the rural economy. This is the fundamental way to improve economic returns in agriculture and increase farmers’ income. While effectively protecting the cultivated land and stabilizing our grain production capacities, we need to restructure the patterns of farming, focusing on improving strains, quality and economic returns. We need to accelerate the development of animal husbandry, forestry and aquaculture. We need to adjust the patterns of agricultural production appropriately in different regions, taking into account their local comparative advantages. Agricultural production needs to be developed in light of local characteristics, and scale of economy and specialization need to be developed to raise the proportion of production marketed. Great efforts need to be exerted to promote the industrial management of agricultural production, to support leading enterprises, and to spread the practice of farmers working with companies or producing crops on a contract basis. We need to develop industries for processing, storing and transporting agricultural products and keeping them fresh in order to gain better returns from intensive processing of agricultural products. Town and township enterprises need guidance in restructuring, technological progress and institutional innovations. Small towns and cities need to be expanded, and steady progress needs to be made in urbanization in order to increase job opportunities and sources of income for farmers. We need to work diligently to reinvigorate agriculture through science and education. We need to strengthen the research, development and application of biotechnology, information technology and other high and new technologies, and spread the use of improved strains and advanced technologies. Great efforts need to be made to stimulate the industrialization of agriculture by applying agricultural science and technology. Market information systems for agricultural products need to be established and standards and inspection procedures need to be formulated to ensure food safety and quality. In restructuring agriculture, we need to proceed in light of local conditions and follow the principles governing the development of the market, and we need to protect farmers’ right to independence in production and operation and refrain from pressure and coercion.

Actively promoting the reforms in rural areas. While keeping the system of stable, long-term land contracts as a foundation, areas where conditions permit should be encouraged to explore a land operation rights transfer system. In light of the new situation in grain production and distribution, we need to continue to deepen the reform of the grain distribution system. While increasing the central grain reserves appropriately, the main grain-consuming areas should accelerate the pace of market-oriented grain distribution, and their need for grain should be met by establishing long-term and stable purchase and sale relations with the main grain-producing areas and by renewing and regulating the central grain reserves. The relevant departments in the main grain-producing areas should continue to adhere to the three policies of purchasing surplus grain from farmers without limit at protective prices, of having state-owned grain purchase and wholesale businesses sell grain at a profit, and of ensuring closed operation of grain purchase funds and the reform of state-owned grain purchase and wholesale businesses. These departments need to purchase surplus grain from farmers without limit at protective prices, and they will continue to receive funds from the central treasury to make full use of their superiority in grain production. This will expand the grain market for the main grain-producing areas and promote a reasonable rise in grain prices. This will also be conducive to adjusting the agricultural structure in the main grain-consuming areas and broadly increasing farmers’ incomes. Basic farmland should be protected, and conversion of cultivated land to non-agricultural land without authorization will never be allowed. This is where we draw the line. The system of administrative fees and taxes in rural areas needs to be reformed by raising the current rates of agricultural tax and special agricultural product tax where it is appropriate, and at the same time abolishing all administrative fees imposed exclusively on farmers, such as contributions to township and village public accumulation funds. This is a sound policy for safeguarding the legitimate rights and interests of farmers and reducing their burden. Reform needs to be accelerated with a review of the experience gained from pilot projects in Anhui Province. As a result of the reform of taxes and administrative fees, it will be necessary to decrease the number of the administrative bodies and employees in towns and townships, and reduce the number of village and group functionaries receiving government subsidies. It will be necessary to dissolve or merge some townships and towns where conditions permit. We need to continue to deepen the financial reform in rural areas and actively seek a financial system that helps stimulate rural economic development. It is necessary to accelerate the reform of the management system for rural credit cooperatives in light of local conditions. It is of particular importance to clearly establish ownership, exercising better control over rural credit cooperatives by bringing them within the legal person framework, and hold individuals responsible for preventing and defusing financial risks. Adhering to their mission of serving agriculture, rural areas and farmers, rural credit cooperatives must strengthen their operation and management, and expand their roles as the dominant financial force in rural areas and as the financial link between farmers. The Agricultural Bank of China and other financial institutions should also give more support to agriculture and the rural economy. The reform of rural supply and marketing cooperatives should be deepened.

Stepping up the construction of agricultural and rural infrastructure. More investments need to be made to accelerate the harnessing of big rivers and lakes. No time can be lost in constructing pivotal projects on major rivers and reinforcing decaying reservoirs to improve their flood-control, flow-management and storage capabilities. Great efforts need to be made to upgrade the water conservancy projects in large irrigated areas, and farmers need to be encouraged to play a more active role in building irrigation and water conservancy projects. We should do a good job in water and soil conservation. Efforts to build national commodity grain bases and quality agricultural product bases need to be intensified to stimulate comprehensive agricultural development. We need to continue to increase the construction of power grids, telecommunications, radio and television installations, roads and water supply facilities in rural areas to improve the production, living and marketing conditions there.

Continuing to fight poverty in rural areas. Although the seven-year plan to help 80 million people out of poverty has been basically fulfilled, it will be an arduous task for a long time to bring about a fundamental change for the better in poverty-stricken areas. Priority needs to be given in our anti-poverty endeavor to ethnic minority areas in central and western China, the old revolutionary base areas, border areas and destitute areas. Assistance to the poor needs to continue to be development-oriented. More funds need to be put into anti-poverty efforts in every possible way. We need to expand the scale of programs that provide jobs as a form of relief and support efforts in poverty-stricken areas to improve the infrastructure.