From 2005, the Government introduced incentive policies for counties with large grain productions and offered direct subsidies to grain growers. Counties or county-level cities such as Longjiang, Zhaodong and Wuchang in Heilongjiang, a major grain-producing province, were placed in the list of major grain/oil-producing counties that could be rewarded. To maximize the effects of this favourable policy the Department of Finance of Heilongjiang province took the following measures in addition to publicizing the policy:

Definition of the scope of use. To improve funding use and management, the Heilongjiang provincial government produced the Methods described above. For the financial aspects in the Methods it should be used for basic expenditures of counties and townships, building rural public utilities, paying off township debts and constructing rural infrastructures. For the part that was added in 2008, as also stipulated in the Methods, it should be used for the development of the grain and oil industries and shouldn't be used for financial expenditures. Most of the reward funds were to be allocated to subsidize local agricultural insurance premiums, renovate logistical facilities, intensively process and produce grain and oil, and help maintain their safety, in the form of subsidized loans and allowances.Allowances are offered to cover expenditures incurred by agricultural insurance, logistical facilities renovation, grain production and grain/oil safety administration, while subsidized loans are provided to competitive projects including grain/oil processing and each project shall have a limit on the subsidized loans. Hence, the use of awarding funds can be standardized by defining the scope of funding use and the way support can be offered.

Timely distribution. To ensure that the reward funds are fairly and rationally distributed, the county-level administrative regions across Heilongjiang calculate the level of rewards for producers of 200 million kg of grain output on average over the preceding five years and 5 million kg of grain products are rewarded in line with the principle of openness, fairness, transparency and varieties. Results are also factored in, with grain products weighted at 60 percent, output at 20 percent, sown areas at 18 percent and performance assessment results at 2 percent. To promote production with the funds, every year the awarding funds are allocated to the province by the Central Government; the provincial finance department immediately allocates them to the counties or cities in the shortest time in accordance with the state-issued list of counties with large grain production to ensure timely and effective use of the funds.

Enhanced funding supervision and management. To avoid any violations in the use of the reward funds, the provincial finance department examines the use of the funds awarded to certain counties or cities on a regular or one-off basis after the funds are allocated by the Central Government to be used for financial purposes. From 2008 the provincial finance department requires each county or city that receives the awarding funds to report to the provincial government for the record of its implementation of the projects for which they have confirmed to use the funds. The projects which counties or cities have confirmed are to be invested with the awarding funds need to undergo the bidding and purchasing process conducted by procurement agencies at various government levels and be funded based on the bidding and purchasing results. By the end of each year, each county or city that
receives the awarding funds must deliver a comprehensive report on the use of the awarding funds to the provincial government. To make sure they live up to the national and provincial awarding standards, the provincial government carries out dynamic monitoring in strict accordance with the statutory statistical data.

For more information, please contact WFP China COE (wfpcn.coe@wfp.org)