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Wednesday, November 16, 2005

OECD on Chinese Agriculture

The OECD has a new report on Chinese agriculture (you can download a free read-only browse copy here).

According to the report agriculture accounts for 40 per cent of China’s workers, but produces only 15 per cent of economic output. This gap that can only be narrowed if farmers are re-deployed to other, more productive sectors sectors.

"The transfer of huge numbers of workers from low productivity agriculture to higher productivity manufacturing is one of the basic ingredients of China’s economic growth"

Fully 200m of China’s 248m rural households farm on plots of land of around 0.65ha. While output is high per unit of land, it is low relative to the number of workers employed. The result of this is that China tends to have a comparative advantage in the production of labour intensive crops, such as fruits and vegetables, and a disadvantage in the production of land intensive crops, such as grains and oilseeds.

The report also suggests that anywhere between 70m and 100m more rural workers will leave agriculture between 2000 and 2010 on current trends. The capacity of businesses in smaller towns to absorb them seems doubtful, so pressure on China’s larger cities is only likely to grow.

Much of the evaluation of progress in Chinese agriculture is positive:

Over the last twenty five years, China has made huge progress in meeting its agricultural policy objectives: agricultural production has risen sharply, rural industries have absorbed a large part of farm labour, poverty has fallen dramatically, and the level and quality of food consumption has improved significantly. In line with the improving economic situation, government priorities have shifted from increasing production, especially of food grains, to rural income support and, most recently, to environmental concerns.