07/09/2003
China Daily

More investment in agricultural science and technology is crucial to the country's rural development. Such funds will not only substantially raise domestic farm produce's competitiveness in the international market but also improve overall social welfare for Chinese farmers.

Due to the country's weak agricultural base, limited fiscal support and a long-standing investment deficit, the gap between China and developed countries in agricultural science and technology is widening.

The government's support in this regard had declined since the mid-1980s. The ratio of government spending on agricultural scientific research to gross domestic product in 1996 was merely 0.20 per cent. That is less than one-tenth of the average spent by developed economies, and only a third of the average spent by the world's 30 poorest countries in 1980.

China's entry into the World Trade Organization (WTO) in 2001 will bring about major opportunities for the country's agricultural development.

In the long run, China's WTO membership will help improve international policies and market environments for domestic farmers to expand their share of the world market, especially for labour-intensive farming products such as meat, eggs, milk, aquatic products, fruits, vegetables and flowers.

But the country's WTO entry also highlights its inadequate investment in agricultural science and technology.

First, most of China's farm products are low-tech and low-value-added products that cannot meet the market's demand.

Because of its limited land resources, China has no real quality or price advantage when producing staples like wheat, corn, soya bean and cotton in the post-WTO era. China's soaring imports of soya bean and their impact on domestic farmers expose the lack of international competitiveness in the country's agricultural sector.

And expanding importsadd to domestic farmers' difficulties in selling agricultural products, thus slowing their income growth and increasing employment pressure in rural areas.

Second, the country's overall level of agricultural-related scientific and technological research is 10 to 15 years behind world's best practice.

After achieving very high agricultural productivity and commercialization, developed countries are improving the quality and diversity of their farming produce more and more quickly. They have been applying sophisticated science and technology to improve their competitiveness in the international market.

But in China, backward agricultural science and technology are still undermining the sector.

Finally, a sound system has not been set up to connect agricultural production to market demand.

The country has a rural population of about 900 million. But most farmers still have to base decisions about what, how much and how to plant on their own experiences because they lack information on alternatives.

To fix all these problems, the government should above all enhance fiscal investment in agricultural science and technology.

In line with WTO rules, the government should focus its financial support on research, development and industrialization of key and high-tech farming sectors.

Construction of agricultural infrastructure like water conservancy works, granaries and service and information systems in rural areas will also facilitate the spread of new agricultural technologies.

A system to standardize agricultural production, trade, processing and distribution is also urgently needed.

Currently, the small scale of most agricultural production in China has limited farmers' capability to adopt new technologies.

The government should take the lead in financing agricultural scientific and technological research because financial institutions, enterprises and individuals are unable to do so.

Private or non-government investment contributes to less than half of all agricultural scientific research, even in developed countries where intellectual property rights are protected and agricultural technologies commercialized.

Nevertheless, efforts to attract private investment should still be strengthened.

Laws should be clarified on the rights of private investors to commercialize their scientific research and protect their investment interests.

And preferential tax policies should be drawn up to encourage enterprises and individuals to engage in the cause. Alleviating farmers' tax and fee burdens will help them afford new technologies and withstand potential risks.

In addition, the money spent on research should be used more efficiently.

Basic research is playing an increasingly important role in agricultural scientific and technological progress.

Nevertheless, for most of the period between 1985 and 1994, investment in basic research accounted for less than 3 per cent of the country's expenditure on agricultural research.

Insufficient spending reduced reserves for basic agricultural science and technology and hindered the development of applied technology.

The government should aim to raise that investment rate to 7 to 8 per cent in future.

The author is an official with the National Evaluation Centre for Comprehensive Agricultural Development under the Ministry of Finance.