According to the requirements of the Third Plenary Session of the 18th CPC Central Committee and the No.l Central Document to improve agricultural product pricing mechanism, the central government abolished temporary storage policies for cotton and soybean, and initiated a target price reform for the two products. The goal of the program is to explore a way to form an agricultural product pricing mechanism without the influence of governmental subsidies, in order to give full play to the role of the market in on the premise of protecting farmers, interests.
1. The main content of target price reform pilot program
Firstly, temporary storage policies for cotton and soybean were abolished. The market would determine the price of related products, and the government would not intervene.
Secondly, the pilot program on subsidizing target prices of cotton and soybean was initiated. The target prices for cotton and soybean should be released before the growing season. When setting the target price, factors such as cost, international prices, financial expenses and related WTO rules should be considered. When market prices for cotton and soybean were lower than the target prices, governments would subsidize farmers in the pilot areas based on the difference between the target price and the average market price in the pilot area; no subsidies would be paid when market prices were lower than the target prices. Thirdly, the subsidy payment method was improved, taking into consideration of factors such as planting area, yield and sales volume.
2. Major works were carried out by the Ministry of Agriculture
The MoA followed the requirements of the CPC Central Committee, the State Council and departments of the Party, to focus on four key issues, including setting target prices, confirming market prices, ensuring subsidies to reach individual farm households, and alleviating sales difficulty. The ministry actively participated in the design, decision-making, enforcement and evaluation of the reform program.
Firstly, the ministry participated in the design of the reform program. It conducted researches on details of the reform and collaborated with other ministries such as the National Development and Reform Commission and the Ministry of Finance to review reform plans, which improved the design of the program.
Secondly, the ministry participated in the setting of target prices. Based on the principle of protecting farmers， basic profits, the ministry collaborated with provincial governments of Xinjiang Autonomous Region, Heilongjiang, Jilin, Liaoning and Inner Mongolia Autonomous Region, and worked with the National Development and Reform Commission and the Ministry of Finance. They set the target prices based on the average profits in the past three years, price inflation, and cost increase.
Thirdly, the ministry participated in the monitoring of market prices. It took part in formulating the cotton and soybean target prices monitoring plan. It established a nationwide monitoring system of cotton and soybean target prices based on the agricultural product prices monitoring system. Several trainings were carried out for price researchers. Some 126 price-monitoring stations were built in Xinjiang Autonomous Region, and the data were submitted before 3 p.m. on a daily basis; 82 price-monitoring stations were built in Liaoning, Jilin, Heilongjiang and Inner Mongolia Autonomous Region, and the data was submitted twice each week. These were important reference data for confirming the market prices of cotton and soybean.
Fourthly, the ministry participated in enacting regulations measures. An emergency response plan for cotton target price reform was released; support measures of coordinating leading companies to purchase seed cotton were enacted; subsidy standards for inland cotton producing areas were released.
Fifthly, the ministry conducted supervision and researches. It assumed the supervisory and research tasks in Yili Prefecture, Changji Prefecture, the sixth and eighth division of the Xinjiang Production and Construction Corps, and Inner Mongolia Autonomous Region. The ministry paid close attention to problems of policy enforcement and farmers, needs, analyzed the production and sales situations of cotton and soybean, and enacted measures accordingly.
Sixthly, the ministry organized policy evaluations. It assumed the tasks of evaluating target price reform pilots. The ministry conducted several researches, convened several conferences, and built a system coordinating the central ministries and provincial governments and inviting experts to conduct independent evaluations. Two reports were released on the cotton target price reform pilot program and the program on soybean, which served as references for improving the reform program and enforcing the policies.
3. Basic situations of cotton target price reform pilot areas In April 2014, the National Development and Reform Commission, the Ministry of Finance and the MoA announced that the cotton target price was set at 19 800 yuan per ton. In September, the NDRC and the Ministry of Finance released a document on the cotton target price reform pilot program in Xinjiang Autonomous Region, which clarified prospective subsidy recipients，application procedure, selection criteria, price monitoring, subsidy payment methods and other support measures. The document set several rules: Firstly, 60 percent of the cotton subsidy amount should be based on the cotton planting area, and the other 40 percent should be based on the seed cotton sales volume, and special cotton varieties would be paid 30 percent more; secondly，all the cotton growers in the pilot area are prospective subsidy recipients, including farm households, state-owned farms, farms owned by judicial offices, military farms, companies and other cotton growers; thirdly, the market price should be based on the average price in the whole region rather than the price set by individual farms; fourthly, measures were designed to prevent the purchase and subsidy of cotton grew outside of Xinjiang Autonomous Region, prevent false report on planting area and ensure the allocation of the purchase funds.
In Xinjiang, the subsidy payment procedure was divided into two stages. The first stage was set before December. In this stage, the central government researched and calculated the total amount of subsidies, and allocated the fund to the autonomous region government and the Production and Construction Corps. The second stage was set before the end of February and after the first stage. The autonomous region government and the Production and Construction Corps allocated the funds to lower level governments and divisions based on planting area and yield, which would eventually reach farmers and other cotton growers. Based on the difference between the target price and the average price, the central government allocated 24 billion yuan of subsidies to the autonomous region government and the Production and Construction Corps.
4. Basic situations of soybean target price reform pilot areas
In May 2014, the NDRC, the Ministry of Finance and the MoA announced that the soybean target price in Heilongjiang, Jilin, Liaoning and Inner Mongolia Autonomous Region was set at 4 800 yuan per ton. On Dec.2， 2014, the State Council approved the soybean target price reform pilot program, which clarified prospective subsidy recipients, application procedure, selection criteria, price monitoring, subsidy payment methods and other support measures. The four provincial governments later released publicity materials to adopt various methods to publicize the policy. The central government calculated the subsidy amount based on the difference between the target price and the market price and the yield of soybean, and decided the subsidy amount in April. The total amount was 3.25 billion yuan, among which 500 million yuan was for Inner Mongolia Autonomous Region, 18 million was for Liaoning, 180 million was for Jilin, and 2.56 billion was for Heilongjiang.
