Fundamental problems, causes and focuses of China’s agricultural supply-side structural reform

Abstract

This paper first analyzes three major problems facing agricultural supply-side structural reform in China, namely, “the simultaneous increase of three quantities”, “the concomitant rise of three costs” and “the concurrent inversion of four prices”, that is, the contemporaneous increase of domestic grain production, grain import, and total social grain inventory; the simultaneous rise of labor costs, land costs, material and service costs of agricultural production; inversions between domestic and foreign grain prices, production and marketing areas, market prices and minimum purchase prices, as well as paddy and rice prices. It is found from a comparative analysis of historical data and relevant data both at home and abroad that imbalance between agricultural supply and demand and costs of agro-products are two fundamental problems facing agrarian supply-side structural reform, which should be given top priority in order to reduce inventory, cut down costs, and improve weaknesses. Corresponding countermeasures and focuses are put forward to gradually alleviate the unbalanced supply and demand of agricultural products, such as variety optimization, quality assurance and brand building. Economies of scale will improve through various forms of scale management, labor productivity increased by enhancing agricultural mechanization rate, and efficiency and competitiveness enhanced by improving quality and adopting brand strategy, with a view to improve quality and efficiency and reduce costs.