China has earmarked 605 million yuan (around 90 million U.S. dollars) from the central budget to bolster eco-agriculture. The funds will be used for 61 circular projects, projects which create economic development through environment and resource protection, including water recycling and standardized production, in 23 provincial areas to develop a sustainable rural economy, the Ministry of Finance (MOF) said in a statement Tuesday [22 August 2017]…Full Article: Xinhua Aug 2017

Key Point

  • The Ministry of Finance (MOF) will use the funds to establish ~45,000 hectares of agricultural demonstration zones in the provinces of Hebei, Shanxi, as well as Inner Mongolia Region. The demonstration zones will focus on water recycling and agrochemical (i.e. fertilizers and pesticides) usage reduction.

ChinaAg Comments

  • In May 2017, China’s Ministry of Finance announced it would lower the VAT on certain agricultural goods. Specifically, in July 2017, importers and distributors of forage (i.e. animal feed) and vegetable oil products would pay the reduced rate of 11% (from 13%). In general, China will adopt a VAT rate of 17%, 11%, and 6% for imported goods (13% will be eliminated).
  • In May 2016, China’s Ministry of Finance announced the establishment of an agricultural credit guarantee company for rural businesses and farms. The credit guarantee company will be initially be funded by the Ministry of Finance (contributing CNY 3 billion or ~US$456 million) and 11 provincial/regional institutions (contributing CNY 1 billion or US$152 million). The company’s financial capital is expected to increase to CNY 15 billion (US$2.3 billion) within three years (~2019).
  • In April 2016, China’s State Council approved a regulation regarding the construction/operation of irrigation systems.
  • In January 2016, China’s State Council published guidelines on instituting a tiered pricing system for water usage. These guidelines included stipulations that cash crop farmers and livestock companies would be charged a higher price based on their respective goods garnering higher values in the market place. Additionally, prices for groundwater would be higher than surface water if the former is in low supply.
  • In August 2015, China’s Ministry of Finance, Central Administration of Customs and State Administration of Taxation announced it would resume imposing value-added taxes on fertilizer sales and imports (halted in 1994).
  • In May 2015, China’s Ministry of Agriculture stated it hopes to limit the country’s water usage for irrigation to 372 billion cubic meters annually, while at the same time increase its coverage irrigation.
  • In 2014, according to China’s Ministry of Finance, farm machinery subsidies topped CNY 23.6 billion (US$3.9 billion).
  • In April 2013, China’s Ministry of Finance announced it had allocated 7.9 billion CNY (~US$1.25 billion) to support spring ploughing, combat plant pests, and enact drought prevention measures.
  • In December 2012, China established its first state-backed agricultural fund. The fund reportedly received CNY 1 billion (US$160 million) contributions from the Ministry of Finance, CITIC Group, China Agricultural Bank and Cinda Asset Management.
  • From 2003 to 2012, according to China’s Ministry of Finance, the government had invested CNY 6 trillion (US$930 billion) in the country’s agriculture sector.

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