Originally, it was planned to extend this reform from Anhui to the rest of China within several years after the start of the experiment. The State Council hoped to spread Anhui’s rural tax reform in one third of all provinces in 2002. However, recent problems with the system have appeared in Anhui. Although fees and taxes have been reduced, the fall in local revenues have limited the ability of the local government to implement a number of basic mandated expenditures, including the support of schools, health systems, and basic infrastructure maintenance. Recent government pronouncements have actually put the Anhui experiment on hold. It is likely that successful implementation of such a policy will require substantial reforms in other areas and a basic change in the way that government fiscal resources are shifted to poor areas to support basic services.In one of its most fundamental concessions , China agreed to phase out its export subsidies in the first year of WTO accession. Such subsidies have played considerable roles in assisting with the export of maize, cotton, and other agricultural products into international markets and in this way indirectly supporting domestic prices. In fact, after phasing out export subsidies, several of China’s sectors will likely be subject to much intensive competition from imports. Besides the elimination of export subsidies—which are “Red Box” investments, WTO also puts strict controls on the types and amounts of certain investments. In particular, domestic support to agriculture is divided into “Green Box” and “Amber Box” ones. As is the case with other WTO members, China faces no limitations in the amount that the nation can invest into those activities classified as Green Box, but face carefully circumscribed rules regarding the amount that can be invested into those activities listed as Amber Box policy. Hence, WTO will most likely force China to shift the composition of their investment portfolio. In planning their Amber Box investments, China accession protocol allows a de minimis level of investment that is equal to 8.5 percent of agricultural gross value product.
After intense negations this level was set somewhat below that enjoyed by other developing countries but above that allowed to developed countries . Moreover, the list of items that are used to in the computation of China’s AMS is wider than that used by other countries. For example, certain investment subsidies are not counted in the computation of AMS in developing countries. Developing countries also frequently can classify input subsidies for poor farmers as Green Box investments. Hence, on paper, China’s hands appear to be quite firmly tied in the scope of the investments that they are able to make after their WTO accession. However,vertical tower planter when one begins to add up the amount of fiscal funds that China has historically invested in these areas, it may be that the de minimis limits will not be binding.The biggest impact could be sometime in the future after China grew and its budget constraint was somewhat relaxed. At that time, however, China’s agreement should be thought of as fairly limiting as it closes future options to support its rural areas in ways that its neighbors in East Asia have done . In a post-WTO environment, China’s leaders will give more thought to how it can best use its de minimis budget. Most recently, a study by Huang and Rozelle shows that although most labor intensive agricultural commodities, such as livestock and horticulture, had negative NPRs in late 2001, the time just prior to China’s WTO accession, many land intensive products, including maize, wheat, oil seed crops and sugar, had NPRs ranging from 5 to 40 percent. Moreover, the crops with the positive NPRs are almost all under TQR management, a finding that has important implications how China may want to use its scarce AMS funds. Instead of continuing to support or subsidize these products, China may want to promote these crop productions through productivity enhanced investment measures, such as more agricultural research or transportation and communication investments. Since many of such investments have long gestation periods, the sooner leaders make the investments, the smaller the shock will be after China’s TQR management regime is removed. Although there are no limits on Green Box investments, fiscal constraints will make it so leaders must carefully allocate its investment into non-distorting procuctivity-enhancing activities.
Recent increases in the government’s support to enhance agricultural productivity growth indicate that China already has begun to respond to the challenges posed to China under the WTO regime and believes that investment-enhancing investments will play an important role in making China’s farmers competitive. For example, total agricultural research expenditures in real terms grew annually at more than 10 percent. Growth of these expenditures has grown during the late 1990s . Moreover, China currently considers agricultural biotechnology as one of the primary measures to improve its national food security, raise agricultural productivity, and create its competitive position in international agricultural markets. Public agricultural research investment in plant biotechnology has increased at a rate even faster than the rest of the research sectors . However, despite the growth in spending on agricultural research, investment intensity was only 0.44 percent in 1999, one of the lowest levels in the world . Much more needs to be done. Complementary investments are also needed. For example, financing agricultural technology extension is even more problematic . During China’s reform period, the expansion of the output of agricultural production due to the increased incentives from decollectivization ranks as one of the nation’s great achievements, though a significant portion of that gain arose from the mobilization of inputs. China’s future agricultural production increases, however, may not be able to rely on inputs as much as in the past. Other correlates of development, such as rising wage rates, environmental awareness, resource limitations, and recent China’s WTO accession, mean that there will be pressure on farmers to reduce input use and their production costs. As the nation’s farmers near input plateaus, further growth in output must begin to rely more on technological change and systems must be in place to generate the technology and extend it to farmers.Over the past several decades, tremendous improvements have been made in areas such as transportation, irrigation, and flood control. These projects should be continued in the future. Recent decisions to improve marketing infrastructure, including attempts to set up market and price reporting information and the standardization of agricultural product, are moving the emphasis of officials in the right direction. In other words, it is exactly these types of investments that the government is supposed to and is capable of making.
These are all Green Box policies, meaning there is no limit to the support China can give its domestic agriculture through such productivity-enhancing investments. Such investments may have a number of indirect effects, also. A better environment for China’s producers mean that investors, both domestic and from abroad may be will to transfer in better technology. The government should also invest in the activities that will help promote the import of technology and investment. In some case, productivity-enhancing technology can be more easily obtained by importing new technologies and inputs. In the WTO environment, opportunities exist to reduce the barriers that have been keeping China’s farmers from having access to the lowest cost technology in the world. Restrictions on the imports of seed, pesticides and herbicides and barriers keeping out foreign direct investment in the agricultural input sector should be expected to be gradually removed.Agricultural structure adjustment was considered as the central policy goal of the government in 2000 and further emphasized in 2001. This adjustment includes structure changes among agricultural commodities, quality improvement of China’s major commodities, and the promotion of regional specialization. These new policy efforts, in part taken as part of China’s effort to prepare for WTO membership, is called the “Strategic Adjustment of Agricultural Structure” . Key policies and measures to support these adjustments include many of the actions discussed above. The nation’s leaders believe that if they re-initiate grain marketing reforms,lettuce vertical farming redirect part of the government’s resource allocation from grain and cotton stables toward commodities in which they have a comparative advantage, such as horticulture crops, and the promotion of regional specialization. To do so, the focus of leaders is also new. They plan on relying more on technology improvement, investments in infrastructure, and setting up an environment in which local agricultural enterprises and integrated agricultural production and marketing can occur. Although out of control of those who are directly in charge of agriculture, there are a number of policies that can complement the structural transformation of agriculture and which will serve to make China more competitive in its post-WTO environment. For example, ultimately, agricultural producer must dramatically increase the scale of their operation. But, this will not occur until massive amounts of labor shift into the off-farm sector, in general, and into urban areas, in particular. Hence, policies that promote labor movement will also be good for agricultural income and production. While a complete discussion is beyond the scope of this paper, national leaders need to promote employment policies that will help lead to more urbanization , promote rural township development , and labor market development and irrigation. In addition, efforts to increase agricultural production and productivity should be in tandem with improvements in farmer’s ability to store food.The importance of agriculture in Mozambique stems both from a high percentage of the population engaged in agricultural activities, and from its economic contribution to the gross national product.
Agricultural productivity, however, remains very low, even by African standards. Zavale, Mabaya, and Christy report that maize yields are estimated at 1.4 tons/ha, far below the potential yields of 5 – 6.5 tons/ha. They also found that with the current technology, scope exists for fostering cost efficiency by 70 percent without any loss of the output.Besides cost inefficiency, a number of equally important factors are associated with low agricultural productivity in Mozambique. First, the use of improved agricultural technologies is very limited and unequal. Most of the production is rainfed, with extremely low use of external inputs, particularly among the poorest households, who also depend more on agricultural income. Additionally, of the 2 percent of farmers that used tractor mechanization in 2005, 49 percent were located in Maputo province, a region of relatively lower agricultural potential, but of better infrastructure, including roads. Second, associated with a lower use of improved agricultural technologies are credit and insurance market failures. Asset ownership, particularly liquid assets , and access to non-farm income activities have been shown to play an important role in overcoming credit constraints [10,11,12]. Furthermore, agricultural productivity rises significantly with increases in household income in parallel with the diminishing reliance on agriculture of wealthier households. Third, in Mozambique the beginning of the rainy season coincides with the highest rates of malaria incidence. Delays in some agricultural operations due to malaria or any other reasons usually translate into lower production per unit area. Farmer’s health status has been systematically ignored in adoption or impact assessment studies, much less malaria. Notwithstanding its importance, HIV/AIDS pandemic is given far more attention, one of the arguments being its potential effect on labor availability.Fourth, farmer’s nutritional status also plays a crucial role in enhancing agricultural productivity levels. Post-harvest losses significantly reduce household access to food during the dry season. When faced with prospects of high food storage losses, farmers are compelled to forego opportunities for inter-temporal price arbitrage through storage and are observed to sell their produce right after the harvesting season at prices lower than observed prices for purchases in the subsequent lean season. This has been dubbed “sell low, buy high” puzzle. As a result, many farmers are unable to purchase food during the dry season, debilitating their nutritional statuses, which deteriorate their ability to undertake some agricultural operations. To make matters worse, agricultural productivity and land availability appear to be shrinking for many Sub-Saharan African countries , including the apparently land-abundant countries like Mozambique. Jayne et al. found that the average per capita cultivated area has been declining over the last 40 years in SSA.