Accelerate agricultural supply-side reform

Since 2012, the stock of China's three staple crops has greatly increased, corn, in particular, faces great stock pressure. Too much crop storage not only puts pressure on the national finances, it also results in the failure of the whole grain industry chain. Eventually, this has a negative influence on food supply. Destocking aims to accelerate the processing and transforming of crops.

Meanwhile, increases in direct production costs are the major factor for the rising cost of agricultural production. Material costs such as fertilizer and pesticide, land rents and labor costs account for more than 80 percent of the overall agricultural production costs.

Due to the high production costs, many Chinese agricultural staple products lack international competitiveness. Reducing costs and increasing the effectiveness and competitiveness of agricultural production means increasing the technological input, developing larger scale operation, and reducing the unreasonable use of fertilizers and pesticides. Currently, the technological content and scale of China's agricultural production is still comparatively low. Making up for the deficiencies in agricultural production means enhancing the weak links in agricultural supply, such as agricultural infrastructure construction, and increasing the production of agricultural products that are wanted by consumers.

Several things need to be considered when promoting agricultural supply-side reform.

First, the government should play a better role in the process. The government should guide local sectors to make regional and differential policy according to their comparative advantages.

Second, the market should play the decisive role in the distribution of resources. The authorities should improve the market system to stimulate the market's vitality and increase the efficiency of resource distribution.

Third, agricultural supply-side reform is a process that cannot be accomplished at one stroke, and good preparation is needed for it to succeed.

The author is head of the Research Center for the Rural Economy at the Ministry of Agriculture.