Interpretation of the impact of agricultural supply side reform on the real economy

[ China Agricultural Machinery Industry News ] In 2016, the reform of the agricultural supply side has made substantial progress, and the reform objectives have been further clarified. It is emphasized that on the basis of ensuring national food security, the main goal is to increase farmers' income and ensure effective supply, so as to improve agricultural products. Supply quality is the main direction, with institutional reform and mechanism innovation as the fundamental approach. As the focus of economic work in 2017, what impact will the promotion of agricultural supply-side reforms have on the economy and the market?

With regard to the impact of agricultural supply-side reform on the real economy, the report analyzes it from three aspects: economic increment, price mechanism, and institutional reform.

First of all, in terms of quantity, it can help the economic downturn and improve the income of rural residents, helping poverty alleviation and poverty alleviation. The report believes that the agricultural supply-side reform has a positive but limited impact on GDP. In 2017, with the strengthening of national support for rural infrastructure construction and the advancement of agricultural PPP projects, the growth rate of industrial investment will remain stable. However, considering the low proportion of agriculture in the economy, the impact of agricultural supply-side reform on the economic aggregate is positive but limited overall. In addition, the reform is more meaningful to increase income and benefit the people. The 2016 Central Rural Work Conference clearly stated that it is necessary to increase the income of farmers and help poverty alleviation.

Second, in terms of price, it is mainly to optimize the pricing mechanism of agricultural products. The report believes that the low food purchase price policy started in 2004 will help to improve the interests of farmers and the enthusiasm of growing grain, but it also brings about the problem of market price distortion and unreasonable grain supply structure, in which the imbalance between supply and demand of corn and soybean is compared. protruding. The national market has made the supply of corn surplus, and the corn storage and storage system was abolished in 2016, which is an important step in the reform of the agricultural supply side. The report pointed out that the reform of the purchasing and storage system aims to optimize the price formation mechanism of agricultural products and thus improve the grain supply structure. In contrast to oversupply of corn, soybean production is low, supply and demand gaps are expanding year by year, heavily dependent on imports, and soybean acreage continues to decline. However, in 2016, the Ministry of Agriculture issued a plan to promote soybean production to promote the supply-side structural reform of soybeans.

Later, in terms of the system, the reform of the rural land transfer system will release the vitality of the elements and improve the economic growth momentum. In 2016, the relevant conference classified the reform of rural land system into “agricultural supply-side reform”, emphasizing the need to refine and implement the “three-power split” approach to contracted land, deepen the reform of rural property rights system, and promote rural land acquisition and collective management. The land use market and homestead system reform pilot. This means that the 17-year rural land system reform or accelerated.

On the other hand, the report believes that it is imperative to establish a market-oriented trading system from the confirmation of land to the transfer of land. The impact of the land transfer system reform on the economy will be more profound, and it can promote and adapt to the trend of rural labor migration to the secondary and tertiary industries, and increase the scale and intensification of agricultural land and increase production efficiency. However, the report pointed out that the current land transfer is still limited to the rural interior. In the future, if the land use restrictions are liberalized, it will have a great impact on the supply of land for industry and real estate.

The impact of the reform of the agricultural supply side on the capital market is reflected in two aspects: First, the adjustment of the supply and demand pattern will have a direct impact on the price of physical assets of agricultural products, represented by corn; second, the structural industrial policy will be relevant. The industry brings opportunities.

The report believes that the increase in corn prices under destocking may be more limited, mainly based on four factors. First of all, the destocking of agricultural products is to go to the high-end varieties of stocks, and the supply status does not support large price increases. Second, substantial price increases and fluctuations are contrary to the state's requirements for stable food production. At the same time, the government has ample food reserves and the ability to keep prices within reasonable limits. After that, foreign supply will remain accommodative and prices will remain low, while domestic food prices are higher than foreign countries and it is difficult to rise sharply.

The goal of agricultural work in 2017 is “four advances and one stability”: promoting structural adjustment, promoting green development, promoting innovation drive, promoting rural reform, and stabilizing food production. The report pointed out that among the five major work objectives, the highlight of structural adjustment is the revitalization of the dairy industry. In recent years, the comprehensive production capacity of China's dairy industry has steadily increased. In 2015, the production of raw milk and dairy products ranked third in the world, but the per capita consumption of liquid milk in China is much lower than that of other major countries in the world. This means that the future consumption of dairy products is broad.

In promoting green development, we emphasized the implementation of zero growth in the use of chemical fertilizers and pesticides, comprehensively promoted the utilization of agricultural waste resources, and accelerated the establishment of a green-oriented agricultural subsidy mechanism. The data shows that China's fertilizer consumption is high and its utilization rate is low. The report believes that zero growth in the use of chemical fertilizers and pesticides is not only conducive to “cost reduction”, but also helps to build a green ecology. With the establishment of subsidy mechanisms, the future green ecological agriculture will usher in a broad space for development.

(Original title: How does agricultural supply-side reform affect the real economy?)