China's agricultural support program is expanding

China’s agricultural support program began in 2004 when it introduced three small subsidies targeted at grain producers: a direct payment, a subsidy for improved seed varieties, and a partial rebate for farm machinery purchases. The Government’s direct role in grain markets was reduced to an indirect one of buying and selling reserves to maintain food security and stabilize prices. Since 2004, expenditure on the initial set of programs has grown rapidly and new ones have been added. China’s support for agriculture is now large and wide-ranging. In 2012, China’s Ministry of Finance reported budgeted spending for agricultural production rose to $75 billion, equal to $127 per metric ton of grain produced. The programs shown in this Chart of Note accounted for about half of that total. Other major expenditures included $9.8 billion for subsidized loans and storage of commodity reserves and $17.3 billion for irrigation/water projects and onfarm infrastructure. Smaller amounts were spent on agribusiness support, drought mitigation, and technical services. This chart can be found in Growth and Evolution in China’s Agricultural Support Policies, ERR-153, August 2013.