By Reuters
February 5, 2017

China will promote high-quality, branded farm products as it reforms its agricultural sector to meet demand from a growing middle class and boost rural incomes, the government’s first policy statement of the year shows.

Beijing is trying to modernize its sprawling farm sector, the world’s largest, and rebalance output away from basic grains towards foods such as meat, dairy and other value-added products increasingly in demand from its urbanizing population.

But the policy document published late on Sunday suggested that local producers are struggling to compete with imports because of high production costs and inventory.

Known as the “number one document,” the statement sets out Beijing’s priorities in rural policy for the year.

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It reiterated earlier plans to modify the crop structure, encouraging farmers to grow less grain corn and more soybeans, corn silage and alfalfa for livestock.

It plans to promote new channels of demand for corn to help digest excess stocks, built up after years of buying from farmers to support their income.

After abandoning the policy last year, it still has an estimated 200 million tons in warehouses, according to some estimates, much of poor quality.

Meanwhile it will promote local and specialty products and geographical indications as well as organic products, with favorable taxes for start-ups in rural areas and innovation centers to support high quality produce.

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It will also encourage exports, and support companies to set up overseas production bases, particularly in countries that are part of its Silk Road initiative.

Beijing will also make use of anti-dumping and other measures to protect its producers, said the document.

It placed significant emphasis on making agriculture more environmentally sustainable, promoting major water-saving programs through technology such as drip irrigation, tackling overuse of pesticides and strict standards on handling manure as well as use of more technology such as large-scale biogas digesters.

Reforms must however “ensure that grain production capacity is not reduced, the income of farmers is not reversed and rural stability is not a problem,” added the document.

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