According to statistics, agricultural subsidies in China exceed one trillion yuan every year. In reality, however there are often complaints that people receive little or no state subsidy. There are two main reasons for this problem. First, China has a large agricultural population base, and the agricultural population is generally relatively poor. Therefore, limited subsidies cannot satisfy everyone. More importantly, China's agricultural subsidies are not systematic, and there are problems of poor management in the specific implementation process, resulting in poor effect of agricultural subsidies.

Specifically, there are too many different kinds of agricultural subsidies and only a handful of people who know the exact amount of such subsidies. Yet, one thing is certain: the state's commitment to agricultural subsidies in recent years is no empty talk. Most related studies are based on 10% of the fiscal budget. A circular of the Ministry of Finance reveals that the national general public budget revenue in 2019 was RMB 1.90382 trillion. According to this data, it can be estimated that the amount of agriculture-related subsidies in 2019 should be between RMB 1.9 trillion yuan to RMB 2 trillion yuan. However, due to the deduction of agricultural subsidies that do not fall within the WTO definition, the actual figure is significantly reduced. In 2014, for example, the government spent about RMB 1.4 trillion on agriculture, rural areas, and farmers, but the actual agricultural subsidies after deduction amounted to RMB 317 billion. The per capita agricultural subsidy for farmers is about RMB 500. Hence, considering the large base of farmers in China, the share of agricultural subsidies is still small even calculated by the average value.

Moreover, the subsidies that farmers end up receiving will be curtailed because of problems such as management loopholes and corruption. First of all, agricultural subsidies involve a lot of fields: agricultural machinery and equipment procurement, agricultural project subsidies management, the construction project of breeding base examination, the certification management of aquatic products, pigs, vegetables, etc. Due to the lack of a strict hierarchical and responsible management mechanism for the declaration and examination of agricultural subsidy funds, the process is not standardized. Project audit is only open to the public in a certain small scope, which makes it difficult for the society and peers to conduct examination and supervision. Therefore, there is a big blind spot in supervision. The power of declaration and approval is essentially held by the functional departments at the county level or township level, which leads to the concentration of power in the hands of a few people at the grass-roots level. In the use of funds, they are in charge of the project application, review, report, etc. Once any of these people commit crimes in collusion with each other, it would be difficult to be found out their criminal activities. However, this is only the first stage of funds disbursement. When the funds come to the hands of local officials, "relatives supplement", "village head supplement", "enterprise supplement" and other problems can also be very serious. There was even the odd phenomenon of farmers having to apply for agricultural subsidies through "lottery". Therefore, to sum up, China's agricultural subsidy has the dual problem of the insufficient total amount, and insufficient disbursement. More importantly, China's current agricultural subsidies are still mainly focused on the way of "sending money to farmers", but this is not a sustainable way of subsidies.

Outside of China, agriculture is not a high value-added industry in most cases. However, agriculture has a direct impact on a country's food supply and food security, and has a pivotal position. Therefore, China is not the only country that provides financial support and subsidies to agriculture. Compared with the major developed countries in the world, China's agricultural subsidies are at a relatively low level. More importantly, the developed countries' experience suggests that direct payments are not the only form of agricultural subsidies.

For example, the United States began to provide agricultural subsidies in 1933. Agricultural subsidies in the U.S. have evolved over the decades and now the U.S. farmers are mainly supported through two ways: One is to bypass the WTO rules, and the other is through the strengthening of agricultural market regulation and control, balancing the relationship between the price at home and abroad, and maximizing the price advantage of U.S. agricultural products in international trade. The United States farm bill, in particular, wants to provide farmers with an income safety net. This is not just about supporting food production, but also providing a kind of income support to farmers, who get 40% of their income from agricultural subsidies. As the United States is a large agricultural country, its agricultural output actually tends to exceed the demand, because whenever the price of agricultural products is lower than the target price set by the government, the United States government will guarantee the income of farmers through "counter-cyclical payments". At the same time, the Commodity Credit Corporation of the U.S. Department of Agriculture is used to purchase surplus products, so as to ensure the balance of supply and demand in the market.

In Japan, agricultural subsidies are more about improving farmers' resistance to risk through the insurance system. Specifically, there are more than 470 kinds of agricultural subsidy programs in Japan. Farmland protection and disaster prevention and control, land improvement, basic water conservancy, and forest pest control have all received the government's attention, and all aspects of agriculture, forestry, animal husbandry, and fishery have received meticulous subsidies. Insurance, which complements agricultural subsidies, is also a powerful policy tool. Japan government has set up the Agricultural Insurance Scheme in 1947, which is a public insurance system implemented by the state in response to agricultural disasters. In addition, half of the aforementioned insurance premium will be covered by the state. With the help of a series of policies, Japan's agricultural subsidy level is basically around 47.3%.

The European Union (EU)'s agricultural subsidies can be traced back to the founding of the EU. The common agricultural policy (CAP), is one of the EU's oldest common policies. It was introduced in 1962 and accounts for 39% of the EU budget. The main objective of CAP is to regulate the prices of agricultural products so as to ensure that farmers' basic income does not affect by market fluctuations or dumping by other countries. However, due to the differences in national currencies (before the introduction of the Euro) and other problems, the EU has been trying to reform. Since 2003, the EU has completely abolished the original protective price purchase and storage policy and replaced it with a single "decoupling subsidy" policy. In other words, the subsidy is only related to the area of the land in the base period, and a fixed subsidy is given according to the area. In 2013, the EU further adjusted and improved the above policy, and determined the policy direction, subsidy standards, and total subsidy budget for 2014-2020. The seven-year budget totaled more than EUR 408 billion, an average of about EUR 58 billion per year. About 78% of the budget is spent on direct agricultural subsidies, with the remaining 22% is spent on rural development. The overall direction of the reform remains unchanged, and decoupling subsidies are still implemented, which further strengthens the relevance of subsidies to land, requires farmers to pay attention to the protection of land and the environment, and emphasizes market orientation. In terms of direct subsidies, the EU calculates the average for all member states at EUR 260 per hectare. The EU's direct subsidy policy has outstanding advantages: First, it has truly realized market pricing, and the price compensation is separated. Second, it is very easy to implement and highly transparent. Third, fiscal expenditures are controllable. Both the government and the farmers have known it in advance. Fourth, it belongs to the green box policy, and there are no trade disputes.

On the whole, there is a gap between China's agricultural subsidies and those of major developed countries, both in terms of the total amount and the specific implementation. However, the most important thing is that China's agricultural subsidies are seriously inadequate in a systematic way. It is well known that most of China's agricultural areas are poor, and the way to become rich is either by selling land or by reinventing basic agriculture. Ecological and food security concerns make it impossible for China to abandon agricultural production and use agricultural land for industrial production. For a long time in the past, there was a group of people who repeatedly said that China's goal of getting rid of poverty could be achieved by focusing on industrial production. The current international situation has made it clear that the dangers of such muddled understanding need not be overstated.

The key question going forward is that national policies should allow the agriculture industry to flourish, otherwise less people would be willing to involve in food production. Therefore, a systematic restructuring of agricultural subsidies is undoubtedly necessary, especially in today's deteriorating geopolitical and anti-globalization environment. Food security issues (and the energy security issues) can no longer be resolved by relying on the global division of labor. A lot of money has been spent, and the key depends on how it is spent and where is it spent? Therefore, we believe that it is quite urgent and necessary for China to rebuild the agricultural subsidy system.