China’s agricultural paradigm shift
By Tristan Kenderdine
China’s agricultural support policies are moving towards marketised institutions, after a decade of state subsidies for direct production resulted in oversupply. A new framework of indirect support will focus on two measures: developing crop insurance for farmers, and developing futures markets for price discovery.
These ‘Insurance plus Futures’ policy pilots currently underway in China represent a giant paradigm shift for global grain and oilseed production. China is simultaneously ending state procurement on much of its agricultural product, while also opening the processing industry to imports.
There are four systemic reforms currently underway to transform China’s agricultural production system from state-procurement to market-priced production: agro-industrial upgrading, agricultural credit, agricultural insurance, and futures price-setting on agricultural commodities.
Agro-industrial upgrading will remain state subsidised, and agricultural credit has proven too difficult to effectively reform. But insurance and futures reforms are soon to move out of the pilot stage and into mainstream policy.
Photo courtesy of Global Water Forum.