14 April 2016

China's 13th Five Year Plan: Agriculture

China’s 13th Five Year Plan calls for ‘agriculture to be the foundation for building a moderately prosperous society in all aspects and to achieve modernisation’.

The Plan continues the previous theme of modernisation of the Chinese agriculture sector while reiterating the objectives and requirements of the previous Plan. This includes restructuring China’s agriculture sector, introducing improved technology innovation and effective agricultural socialisation service systems.

The key features and objectives for China’s next five years include:

  • Improving grain productivity to increase food security: speeding up designation of permanent basic farmland; encouraging large scale development of farmland capable of producing stable yields which are able to withstand drought or flood conditions; improving quality of farmland; and protecting and improving productivity of major grain producing zones.
  • Promoting restructuring and modernisation of the agriculture sector: supporting leading enterprises in agricultural industrialisation; promoting cooperation between agriculture and business industry; advancing the integrated development of the primary, secondary and tertiary industries; implementing “Internet Plus” modern agriculture by adopting suitable technologies; embarking on a path to modern agriculture that improves yields, safety, and conservation, and minimises environmental impact.
  • Ensuring sustainable development of safe agricultural products: including reduction of the use of pesticides and fertilisers and the introduction of measures for water and food control andsafety management from farm to table.
  • Exploring additional sources of rural income and increasing income of farmers: promoting cost saving measures to improve efficiency; encouraging relocation of rural labour forces; increasing policy support to strengthen agriculture, benefit farmers and enrich rural areas.

Targets

Overall, the Plan is focused on concurrently improving the quality, profitability and safety of the sector. This, in part, is a response to the food safety issues in China in recent years. To achieve this, the government has set some nominal targets in the plan, including the development of 500 demonstration counties and achieving an overall rate of around 70% mechanisation in tilling, sowing and harvesting.

In addition, the Plan calls for the following measures as part of the overall blueprint:

  • Improving price mechanisms: implementing additional subsidy regimes for low income farmers, expanding the scope of ‘Green Box’ subsidies, and improving ‘Amber Box’ policies.
  • Increasing subsidies for agricultural scientific research.
  • Supporting integration of agriculture and e-commerce: promoting the application of big data in agriculture and strengthening information services.
  • Developing modern seed industry: supporting seed technology R&D and testing of seed quality, and building a number of seed breeding and producing bases, including 100 regional certified seed breeding bases.

The land of opportunity?

Opportunities for international businesses in China

There is considerable opportunity for investment into this traditionally somewhat protected sector. Importers and companies with advanced production methods are likely to see the greatest opportunities. This is particularly the case where production methods can be transferred and further developed within the Chinese agriculture sector.

Notwithstanding enduring challenges that will slowly be alleviated by reforms in the sector, international companies with a strong track record of producing high quality food will benefit from the renewed focus on agricultural reform. They are likely to see improved market access as domestic consumers continue to demand better quality agriculture products.

Opportunities for local businesses in China

The Plan emphasises international agricultural cooperation, which suggests increasing opportunities for strong domestic market participants to strengthen their position by increasing exports and importing in demand products (eg dairy, beef and other proteins). We expect to see more opportunities for international partnerships with Chinese companies.

From planning to implementation

The Chinese government has proposed a number of specific new initiatives to improve the sector, including:

  • create new types of agricultural management entities in an attempt to reshape China’s complicated rural ownership structures
  • refine the agricultural support and protection system
  • improve quality and safety of agricultural products in the wake of numerous food and health scandals
  • encourage international cooperation to transform and upgrade the Chinese agriculture industry.

Please contact one of our China experts to understand how the Plan is likely to impact you or to discuss new developments as its implementation progresses.


For an in-depth analysis of opportunities and implications for other key sectors, please see China’s 13th Five Year Plan: the land of opportunity.

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