Supply-side reform

Another highlight of the document is the implementation of a green mode of production to promote sustainable agricultural development. This mainly involves strengthening environmental protection of the agricultural production areas. At the same time, efforts should be made to implement environmentally-friendly production practices, prevent and control environmental pollution, and increase the output of high-quality products which are in line with market demand.

China's current agricultural structure is sufficient to meet its needs of food and clothing. In its current stage, producing the largest output possible has basically become the goal of agricultural production. But China now has 300 million people who can be considered as well-off consumers, and they have higher and diverse standards for food products. Thus, consumers' demand for high-quality and green agricultural products has significantly increased.

To meet these growing needs, it is essential to conduct supply-side reform in the agricultural sector and adjust agricultural production.

Take wheat as an example. In the past five years,

China's wheat production has grown at a rate of more than 2.5 million tons per year. From the perspective of supply and demand, China's total wheat production and consumption are essentially balanced, and sometimes even there is a slight surplus. For a long time, the goal of China's wheat industry was to increase wheat production, mainly for making noodles and buns. As a result, the production of gluten-rich wheat, which is used for making breads and cakes, has been somewhat neglected.

However, the younger generation of Chinese, under the influence of the Western way of life, has developed a taste for bread and cakes. As a result, people's demand for gluten-rich wheat has grown rapidly in recent years, leading to an annual import of over 2 million tons of high-quality wheat. To solve this new imbalance, it is necessary to improve the agriculture supply and marketing system.

The current wheat supply and marketing system runs like this: farmers plant and harvest wheat, and then sell it to intermediary agents, who then resell the produce to the state-owned grain reserve system or processing enterprises. This system is suitable for the general needs of wheat production, but it doesn't work when the market has a high demand for specific kinds of wheat, such as gluten-rich wheat.

Because high-quality wheat cannot always generate high revenue and its output is not guaranteed due to poor technology, farmers are unwilling to take the risk to try new varieties. They prefer to plant traditional wheat, which they know they can always sell to the state-owned grain reserve system.

Hence, it is urgent for China to develop a high-quality wheat planting base. A solution to counter the problem would be to establish a wheat grading, purchasing and storage system on the basis of quality indicators. Unfortunately, at present, China has yet to establish such a system.

Learning from experience

Yanjin County, located in central China's Henan Province, is a good example of developing high-quality wheat.

At present, the county has 500,000 mu (33,333 hectares) of high-quality wheat. On May 17, 2016, China's High-Quality Wheat Industry Technology Innovation Alliance was established by the county, with the main purpose of further increasing the growing of high-quality wheat. The county also supported the creation of Xinxiang Wheat Industry Group, which then established two industrial chains: flour-noodles-pastry-frozen food chain and liquor-packaging-labelling-logistics chain. This mode is an innovative way of encouraging the upgrade of China's wheat production.

Processing enterprises are also looking for solutions to improve their products with high-quality wheat. Jinmailang Foods Co. Ltd., a famous Chinese instant noodles manufacturer based in Hebei Province, launched the Jinmailang High-Quality Wheat Project in 2005. It created a 1-million-mu (66,666-hectare) agricultural demonstration park in Longyao County of Hebei Province.

"We developed high-quality wheat and raised the income of local farmers. We believe good crop variety is very good for farmers," said Fan Xianguo, Chairman of Jinmailang Group.

Despite these achievements, there is still a long way to go for a full-scale upgrade of high-quality wheat production in China, with the biggest difficulties - such as breeding system reform - still ahead of us.

(The author is professor at School of Agricultural Economics and Rural Development, Renmin University of China and researcher at National Academy of Development and Strategy)