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Chinese Ministries Release Subsidy Policy for Scrapping and Updating Agricultural Machines
Prof. Liu Yonggong
11 March 2020
On 3 March 2020, the Ministry of Agriculture and Rural Affairs (MARA), the Ministry of Finance (MOF) and the Ministry of Commerce (MOFCOM), jointly released an Official Notice on Subsidizing the Scrapping of Agricultural Machines. The policy document is formulated according to Regulations on the Supervision and Administration of Agricultural Machinery Safety (enacted in September 2009 and amended in March 2019 by the State Council) and the Guidelines for Speeding up Agricultural Mechanization and Upgrading the Agricultural Machine and Equipment Manufacture Industry (issued on 29 December 2019 by the State Council).
The document clearly stated the subsidy policy objective to speed up the scrapping of agricultural machines that are outdated, have low efficiency, are high energy consuming and cause high emissions. The goal is to encourage the adoption of modernized, energy-saving and environmentally friendly machines and equipment and to further promote agricultural modernization and green development. For implementing the policy, the central government will allocate special funds to subsidize farmers and enterprises who intend to scrap old and outdated machines.
The targeted beneficiaries include individual farmers, agricultural production organizations, farmer’s cooperatives, agricultural enterprises, etc.
Types of machines and eligibilities for scrap subsidy: The subsidy policy covers types of major agricultural and animal husbandry machines such as tractors, combine harvesters, rice transplanters, powder spray machines, thresher machines, feed and fodder (grass) grinder, mower, etc. The conditions and eligibilities for applying subsidies are also stipulated in the document: (i) agricultural machines with overdue depreciation years prescribed by manufacturers according to the technical standard for machinery scrap; (ii) machines that have not reached the prescribed scrapping years, but with high safety hazards, high frequent malfunctions, severe mechanical damage, and high maintenance costs, etc.
Standard of subsidy: The scrap subsidy will be granted on a lump sum basis; the concrete subsidy amount will be set up through consultation between the provincial department of agriculture and rural affairs and the department of finance. Scrap subsidy for tractors and combine harvesters should not exceed the maximum subsidy quotas set up by MARA based on the horsepower of the tractors and the designed operational capacity of the combine harvesters. In general, the maximum subsidy rate for other types of farm and livestock machines should not exceed 30% of the total expenditure for purchasing a new model of the same type. The maximum subsidy amount for scrapping one machine should not exceed 20,000 CNY.
The document also determined qualifications of enterprises responsible for recycling the scrapped machines such as operational procedures, scrap application, technical recognition and disposal; cancellation of the machinery license registration; payment of the subsidies, etc.
To ensure the effective implementation of the subsidy policy, MARA, MOF, MOFCOM and relevant local departments and bureaus at provincial and county levels will set up coordination mechanisms, establish a machinery scrap subsidy service system, strengthen the supervision mechanism as well as establish an information disclosure and reporting system.