February 9, 2015 / 9:51 AM / 4 years ago

China to direct farm machinery subsidies to growers of key crops

BEIJING, Feb 9 (Reuters) - China will give priority to growers of key staple crops as well as cotton and sugar under changes to its farm machinery subsidy scheme, as it seeks to guarantee food self-sufficiency amid a declining rural workforce, its top newspaper said.

Maintaining food security has been one of China’s top policy priorities for several years, as rapid urbanisation swallows up arable farmland and reduces the rural workforce by drawing farmers to better paying city jobs.

Beijing has allocated 120 billion yuan ($19.21 billion) to farm machinery subsidies since 2004, supporting the purchase of more than 35 million pieces of machinery, a report in the official People’s Daily newspaper said.

That has helped raise mechanisation levels across China’s farms to 61 percent last year from 33 percent in 2003, it said.

But the government plans to reduce the categories included in the scheme over the next three years to 137 items from 175, to prioritise the full mechanisation of its most important crops, Li Weiguo, director of the agriculture ministry’s mechanisation department told the paper.

Farm mechanisation is seen as a key tool in countering the decline in rural productivity. Machinery is already widely used in harvesting grain and Xinjiang’s cotton growers have also rapidly increased their use of mechanical cotton-pickers in recent years, significantly reducing costs.

But machinery is ill-suited to some regions, including mountainous terrain in the south, China’s key sugar cane-production area, analysts say.

Equipment is also often ill-adapted to China’s small farms, with average landholdings still around 8 mu, or slightly more than half a hectare.

“Since farming is still done mostly by households on a small scale in China, the use of agricultural machinery in most cases is often restricted to about 10 days of the year,” said Zheng Fengtian, professor at Renimin University, in an editorial in the China Daily newspaper.

He said the government should instead offer prepaid vouchers so farmers can rent the machinery they need.

Chinese construction equipment makers such as Zoomlion may benefit from the scheme, as they respond to a drop in demand for machines to build bridges and roads by targeting growing demand from agribusinesses.

Subsidies for farm equipment should typically not exceed 50,000 yuan or 30 percent of its sale price, but the amount can be as much as 600,000 yuan in some cases such as for large cotton-pickers, according to the agriculture ministry’s proposed revisions.

$1 = 6.2465 Chinese yuan Reporting By Dominique Patton; Editing by Himani Sarkar

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