The net income of Chinese farmers is expected to grow 5 percent this year, the greatest increase since 1996, said Vice Minister of Agriculture Fan Xiaojian.

The figure means a great deal to China, where 60 percent of the population -- about 800 million people -- is rural.

In first quarter of this year, the average income of each farmer was 834 yuan (US$101), climbing 9.2 percent from the same period last year, according to the ministry.

“The increase in farmers’ income was at the same pace as that of urban residents in the first three months, which is very rare,” said Fan.

The gain was in part the result of higher grain prices since last October, but mainly the direct effect of a policy of support adopted earlier this year.

Major incentive policies, including a lower agriculture tax and direct subsidies to grain growers, provided assistance to farmers who use fine grain strains and bottom purchasing prices for staple grain products.

“It was a real turning point when the government gave subsidies directly to us rather than collecting money,” said Jiang Wenliang, a farmer in north China’s Hebei Province.

Jiang said every farmer in his village got 8.2 yuan (US$1) per mu, or 123 yuan (US$15) per hectare in direct subsidies by June.

“The money isn’t a lot, but it’s a new beginning in the country’s agriculture policy,” said Jiang. “In the past, we had to pay money to the government to plant grain. But now the government helps us instead.”

However, for Sun Jiqing, a farmer in east China’s Shandong Province, the slashing of agriculture taxes is more helpful than direct subsidies.

“I have gotten 15 yuan (US$1.8) in subsidies for every mu (US$27 per hectare), but that money can only buy half a bag of chemical fertilizer,” said Sun. “The tax reduction, though, is very significant. In the past, I had to pay 80 yuan (US$9.7) in agriculture taxes per mu (US$145.5 per hectare). This year I only paid half of that. It saved me a lot of money,” said Sun.

He said he heard that his agriculture taxes would be waived next year.

“It’s heartening news. The burden on grain growers was really lifted, so that we can save more money than before.”

By June 15, the country had allocated more than 11 billion yuan (US$1.3 billion) in direct subsidies to farmers. Agriculture taxes totaling more than 23 billion yuan (US$2.8 billion) were reduced or rescinded.

Sheng Huaren, vice chairman of the Standing Committee of the 10th National People’s Congress, said increasing farmers’ incomes is difficult but essential to solving problems in agriculture as well as improving livelihoods in the countryside.

Sheng said farmers will regain their enthusiasm for grain production only when they see real benefits from planting.

China’s economic reform began in the countryside in 1978 and brought tangible benefits to farmers. However, since 1997 they have been facing great difficulty in raising their incomes.

From 1997 to 2003, the annual per capita growth rate of rural net income was less than 5 percent, with the lowest only 2.1 percent and highest 4.8 percent. That’s about half the urban average.

In 1997, rural per capita net annual income was 2,090 yuan (US$253) while urban per capita disposable income was 5,160 yuan (US$624), a ratio of 1 to 2.5. Last year, the gap enlarged to 1 to 3.2, with rural income standing at 2,622 yuan (US$317) and urban at 8,500 yuan (US$1,028).

With returns so low, farmers planted fewer grain crops and last year the country’s grain output plummeted to the lowest point since 1981.

Fan Xiaojian said although the policies adopted this year proved helpful to resume grain planting, many farmers are concerned about whether the policies will last.

“We need to set up a long-term mechanism to support grain production and increase farmers’ incomes,” said Fan. “The comparative returns of grain planting is very low, so the country needs to fix its supportive policies even if the grain output rejuvenates.”

(China Daily July 5, 2004)