The fetish for a higher GDP.

It’s a mad race. In a long drawn chase with China, India has been trying desperately to showcase a higher economic growth rate. But while China has promised to slow down to a relatively more sustainable levels of growth, India appears determined to race ahead.

By readjusting the base year, India has successfully managed to raise its GDP growth rate by about 50 per cent, from the existing 4.7 per cent to an impressive 6.9 per cent in 2013-14. By doing so, India now joins the ranks of Nigeria and Ghana, which have revised GDP estimates by 90 per cent and 60 per cent, respectively. With the overall size of the $1.8 trillion Indian economy remaining unchanged, it doesn’t however mean more money in your pocket. But surely a higher GDP provides a feel good factor to the investors and policy planners.

The significant jump has been arrived at by simple arithmetic – shifting the base year from 2004-05 to 2011-12. Measuring the market prices in addition, the GDP for the current fiscal is projected at 7.4 per cent.

In a country where a high growth rate is mistakenly considered to be a touchstone for development, including job creation and poverty alleviation the fetish for a higher growth rate is simply astounding. With media screaming at the GDP figures every now and then, and with not many analysts even understanding that a high growth rate does not automatically translate into more jobs, the Finance Minister is continuously under pressure to show a higher growth rate. Whether we like it or not, such is the economic sanctity attached that GDP is being treated for all practical purposes as a report card of the government’s performance.

Adding smart phones and LED television into the GDP calculations is therefore one way to raise the growth rate. But there are some more innovative ways to measure the contribution to the domestic economy. In the “miscellaneous goods and services” category, Britain has decided to add the contribution of prostitution and illegal drug sales to the national accounts. Illegal drug sales and prostitution brings in 9.7 billion pound Sterling’s to the British economy – raising the GDP by 0.7 per cent, almost equivalent to the contribution of agriculture in British economy. Italy is another country which adds prostitution and drug peddling in its economic calculations.

That such calculations will become a global norm is evident from what Joe Grice, the chief economic adviser at the British Office for National Statistics was quoted as saying: "As economies develop and evolve, so do the statistics we use to measure them. These improvements are going on across the world and we are working with our partners in Europe and the wider world on the same agenda.” If this becomes the global norm, I am not sure whether a country’s economic growth can be seen through more jobs created in prostitution and among drug peddlers.

Sometimes back, senior journalist M J Akbar had in one of his columns given us an excellent peep into the way economic growth is being perceived. He quoted the then Russian Finance Minister, who in the wake of declining GDP in Russia, asked fellow Russians to at least start drinking more of Vodka, which in turn will increase the country's GDP. Similarly, if you cut down more trees, the GDP goes up. Now you have to decide whether you need trees or you need to raise GDP by axing them.

It may startle you. But the fact is that the more you destroy the environment (and the planet) the higher is the economic growth. You can bomb a city, and then rebuild it. The GDP soars. Similarly, if you allow the biotechnology companies to contaminate your food and environment, the health costs go up and so does the GDP. The more the application of all kinds of deadly pesticides and chemical fertilizers the higher is GDP growth.

Now tell me, if there is an oil spill along the sea coast where you live, would you take it as an opportunity for economic growth? Or would you it is an environmental disaster that could have been avoided? Well, a Houston-based oil pipeline company has in a written submission before Canada’s National Energy Board claimed that oil spills are actually good for the economy. Oil Pipeline company Kinder Morgan says “Spill response and clean-up creates business and employment opportunities for affected communities, regions, and clean-up service providers,” It provides business opportunities and creates jobs.

It is primarily for such blunders in national accounting that at least 70 cities and smaller countries have abandoned the GDP pathway last year, reports CNBC. Accordingly, Shanghai has become the first major city in China to drop the GDP metrics as “government policy shifts towards a focus on growth quality over quantity”. The report also quotes the Chinese President Xi Jinping as saying “we can no longer simply use GDP growth rates to decide who are the (party) heroes here.” Interestingly, 26 out of 31 mainland provincial governments in China have lowered GDP targets to more sustainable levels.

That the GDP is a flawed estimate of a country’s progress is now being increasingly realized. Nor does a high GDP mean more job creation. If that were so, there is no reason why India should have witnessed a jobless growth in the past 10 years, between 2004-05 and 2013-14, when its average annual growth had remained over 7 per cent. In the past 10 years when GDP on an average remained higher than 7 per cent only 15 million jobs were created. Every year, some 12 million people enter the job market.

Even during the period when India was on a high growth trajectory exceeding 8.5 per cent annual growth, between 2004-05 and 2009-10, a Planning Commission report states that 140 million jobs were lost in agriculture. Those moving out of agriculture are generally perceived to be joining the manufacturing sector. But another 53 million jobs were lost in the manufacturing sector. The illusion that more the GDP more will be the job creation has been clearly belied. #

This is how the World Bank destroys economies.

The moment you read an analysis like India to Become Fastest Growing Big Economy published in Wall Street Journal on Jan 14, 2015 (http://blogs.wsj.com/indiarealtime/2015/01/14/world-bank-india-set-to-become-worlds-fastest-growing-big-economy/?mod=e2tw) you realise how the World Bank destroys economies.

The article is based on a World Bank analysis. It says: "The Washington-based development institution raised its forecast for India, saying growth in Asia's third largest economy would accelerate in the coming years even as much of the world is slowing down. The reason? New Delhi is implementing changes that will make the country's economy more efficient and vibrant."

This is almost similar to how the World Bank had eulogised the economic policies of the previous NDA regime that led to the coining of the popular slogan: Shining India. The political debacle the ruling party had suffered as a consequence drove them out of power for the next 10 years. That's a slogan the party does not want to be reminded of.

But then, World Bank has nothing to lose. At a time when the global economy is down in dumps, World Bank needs a saviour to justify its existence. Such is the desperation for increasing growth that countries like Britain and Italy have already started including prostitution and drug sales in its growth computations. That surely is some development that the world should be proud of !

Going the China path is being aggressively advocated for India while at a time China itself has changed its growth roadmap. Former Chinese President had acknowledged that 12 to 14 per cent GDP growth was unsustainable and China will try to operate at an average of 7 per cent or so. After all these years of phenomenal growth in manufacturing, China now faces a slump. Its manufacturing exports have come down by 2.3 per cent, and as a study shows its manufacturing is now becoming uncompetitive. The first Chinese manufacturing company has already moved offshore to Africa, and it is expected China will lose 85 million jobs to Africa in the next few years.  With agriculture destroyed deliberately, and with farm lands turning unproductive because of massive pollution and also with more fertile land forcibly acquired, the bigger question the world faces is: Who will feed China in the years to come?

China is the world's worst environmental disaster. World Bank would never talk about the dark side. The reason? The bigger the disaster, the higher is the GDP. That's not the path that India needs to follow. India should be able to carve out a sustainable pathway for itself rather than following blindly the World Bank prescription. It surely has the acumen to work out an economic model that meets the aspirations of the person at the extreme end, and at the same time not push the country's environment into a disaster mode. I am hopeful that Prime Minister Narendra Modi would see through the global design, and not bend backwards to adjust to the failed economic thinking. As Jospeh Stiglitz rightly says the world is witnessing economic madness.

Some years back, the then Chinese deputy Minister for Environment Pan Yue had in an interview to the German publication Der Spiegel (Mar 7, 2005) had said: 'The Chinese miracle will end soon'. I share this interview again with the hope there would be some sensible people who would understand the disastrous implications of the World Bank prescription. It's an interview that every policy maker must read:

The world has been dazzled in recent years by the economic strides being made by China. But it has come at a huge cost to the country's environment. Pollution is a serious and costly problem. Pan Yue of the ministry of the environment says these problems will soon overwhelm the country and will create millions of "environmental refugees.

SPIEGEL: China is dazzling the world with its booming economy, which grew by 9.5 percent. Aren't you pleased with this speed of growth?

Pan: Of course I am pleased with the success of China's economy. But at the same time I am worried. We are using too many raw materials to sustain this growth. To produce goods worth $10,000, for example, we need seven times more resources than Japan, nearly six times more than the United States and, perhaps most embarrassing, nearly three times more than India. Things can't, nor should they be allowed to go on like that.

SPIEGEL: Such a viewpoint is not exactly widespread in your country.

Pan: Many factors are coming together here: Our raw materials are scarce, we don't have enough land, and our population is constantly growing. Currently, there are 1.3 billion people living in China, that's twice as many as 50 years ago. In 2020, there will be 1.5 billion people in China. Cities are growing but desert areas are expanding at the same time; habitable and usable land has been halved over the past 50 years.

SPIEGEL: Still, each year China is strengthening its reputation as an economic Wonderland.

Pan: This miracle will end soon because the environment can no longer keep pace. Acid rain is falling on one third of the Chinese territory, half of the water in our seven largest rivers is completely useless, while one fourth of our citizens does not have access to clean drinking water. One third of the urban population is breathing polluted air, and less than 20 percent of the trash in cities is treated and processed in an environmentally sustainable manner. Finally, five of the ten most polluted cities worldwide are in China.

Read the full interview here: http://archive.dea.org.au/~deaorg/archive_site/node/64

Importing food when there is no shortfall in production. It only destroys farm livelihoods.

Potato dumped on the streets in Punjab. Not an unusual sight. -- Tribune photo

There has hardly been a year in memory when farmers have not thrown potato on the streets in protest against low prices. And yet, the government has allowed import of potato for the first time ever. While the official explanation is that the imports are to augment the domestic supplies and curb inflation, the fact remains that production of potato has been almost normal this year with an insignificant shortfall by a mere 2.3 per cent.

While the Ministry of Agriculture has directed Nafed to float tenders to ensure shipments reach by the end of November, potato crop from Punjab is expected to hit the market by the middle of November. The domestic market would be flooded by time the imports come in and I wouldn’t be surprised if farmers are once again forced to dump cartloads of potatoes on the highways. I therefore don’t understand the economic rationale of allowing the import of potato when there is hardly any drop in production. Experts say the Kharif crop has been good, and the winter crop that is expected in mid-November onwards is also expected to be normal. India is the third biggest producer of potato after China and Russia.

But then, under pressure from a strong lobby of economists, food inflation is coming in as a handy excuse to open up the Indian market for import of fruits, vegetables and milk products. This is exactly what European Union is demanding under ongoing negotiations of the bilateral Indo-European Union Free Trade Agreement.

The domestic potato chip, fries and flake industry is now pressing for removal of the 30 per cent import duty on potato to make the imports cheaper. Since Pakistan is not in a position to supply potato this year, and had resorted to duty-free potato imports continuously from India from March onwards with some 3,000 trucks crossing over daily from Wagah border, potato imports into India are expected mainly from Europe and Australia. The Economic Coordination Committee of Pakistan Cabinet has reportedly approved the duty-free imports of potato from India till Nov 15.

Potato is not the only victim of an ad hoc import-export policy. On a visit to a food processing unit in Sonepat district in Haryana, I was shocked when I was told that tomato paste is being imported in large quantities from China at a time when farmers were forced to throw tomatoes onto the streets for want of buyers. When food inflation was at its peak, reports of dumping of tomatoes by farmers had poured in from several parts of the country, including Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Karnataka and Andhra Pradesh.

With tomato prices crashing to Rs 2 (and at several places to Re 1 per kg) farmers had no choice but to feed it to cattle or to throw it away. Just in one month, between Aug 28, 2014 and Sept 28, 2014, India imported US $ 376,009 worth of dried tomato and tomato products (like paste, pulp and juice concentrate) from China, followed by US $ 94,057 worth of imports from Nepal, and US $ 44,160 from the Netherlands.

Not many know that the popular brands of tomato ketchup, tomato puree and even tomato juices that we consume at home are made from tomatoes imported from China, Nepal, Italy, USA and the Netherlands. In other words, we are inadvertently helping tomato farmers of the countries from where we import while our own farmers are left to die. The food processing industry obviously justifies the imports but what remains unexplained is if the objective of the industry is to source cheaper products from abroad why does the Ministry of Food Processing claim that agro-processing is a boon to Indian farmers?

Take the case of pasta. While huge quantities of wheat rots in godowns, Indian import of pasta from Italy has been growing at a phenomenal rate of 39 per cent per year. Since pasta is made from wheat, I don’t understand why efforts should not be made to produce pasta within the country rather than importing it. India’s import market for pasta has grown in ten years from Rs 3.39 billion in 2003-04 to Rs 17.22 billion in 2013-14. And again, pasta attracts an import duty of 40 per cent, and it is expected the import tariff would be reduced to 20 per cent after the Indo-EU FTA comes into effect.

How irrational food imports destroy domestic production is evident from the way India deliberately encouraged edible oil imports at the cost of its millions of oilseed farmers. These were small holders in the dryland regions of the country for whom oilseeds was a cash crop. Their livelihood has been snatched for the sake of economic benefit to edible oil producers in Indonesia, Malaysia, Brazil and United States.

It is true that edible oil import bill has multiplied over the past three decades. For the year ending 2012 (edible oil year is from Nov 2011 to Oct 2012, for instance), the imports touched 9.01 million tonnes valued at Rs 56,295-crore. Between 2006-07 and 2011-12, edible oil imports have risen by a whopping 380 per cent. Former Agriculture Minister Sharad Pawar often used to stress on the need to increase oilseed production so as to reduce the edible oil imports.

But what was not being told was that India had attained near self-sufficiency in oilseeds production by 1994-95, importing only 3 per cent of its edible oil requirements. After 1994-95, the import tariffs were brought down systematically as a result of which the imports grew. Against a provision of 300 per cent import duties, India allows zero tariffs at resent. Imports are now more than 50 per cent of the domestic requirement. So much so, that after having destroyed its own Yellow Revolution, a strong lobby of economists has been battling for encouraging cultivation of  environmentally-destructive palm oil plantations.

Worldwatch Institute has shown how palm oil monoculture adds to desertification, and also exacerbates global warming by releasing 10 times more carbon dioxide into the atmosphere than tropical forests. Unmindful of the ecological damage, Ministry of Agriculture plans to bring in 1.03 million hectares of forests – mainly by cutting down lush green  forests in Mizoram, Tripura, Assam, Kerala, Andhra Pradesh and Karnataka – and growing palm oil plantation to produce about four to five tonnes of edible oil. The economic rationale is beyond my comprehension. First destroy the oilseed producers, and then cut down forests to produce edible oils. A remarkable model of development indeed ! #

1. Helping imports, hurting farmers. Orissa Post. Oct 22, 2014
http://www.orissapost.com/epaper/221014/p8.htm

2. Sourcing local farm produce rather than imported concentrate.
http://chssachetan.wordpress.com/2014/10/28/sharma-source-local-farm-produce-for-processing-rather-than-imported-concentrate/

3. No rationale behind potato imports. Hindustan Times, Chandigarh. Oct 26, 2014
http://read.ht/kYm

4. आयात का औचित्य Dainik Jagran, Oct 25, 2014
http://www.jagran.com/editorial/apnibaat-justification-of-import-11724002.html

While Indian farmers are forced to dump tomatoes in the streets, Indian food processing industry merrily imports cheaper tomato paste from China

Not able to get the right price for tomatoes, farmers often resort to throwing away the produce -- The Hindu pic

Some decades back, soon after the Ministry of Food Processing was set up in prime Minister Rajiv Gandhi's tenure, I was speaking at the M S Swaminathan Foundation in Chennai. While most speakers were busy hyping the importance of food processing in reducing food wastage, which I am not in disagreement, I stressed on the need to ensure that the nascent food industry focuses more on sourcing local farm produce in processing rather than importing the food concentrate. Illustrating the point I made, I gave an example of the orange juice being made available in tetra-packs.

At that time, I remember one of the popular orange juice brands had it written on the tetra-pack: "Made from freshly picked up oranges from California."

I am sure you will agree that if the orange concentrate is to be imported from California, all the talk of reducing food wastage becomes meaningless. Soon after my viewpoint was carried prominently by the media, the processing house at least dropped this sentence from their juice cartons.

Yesterday, on a visit to a food processing unit in Sonepat district in Haryana, I was shocked when I was told that tomato paste is being imported in large quantities from China. In fact, most of the big brands of tomato ketchup and tomato puree are using imported paste and pulp from China. This is happening at a time when farmers are repeatedly being forced to throw tomatoes onto the streets for want of buyers. This year too, when food inflation was at its peak, reports of dumping of tomatoes by farmers had poured in from several parts of the country, including Himachal Pradesh, Punjab, Haryana, Uttar Pradesh, Karnataka and Andhra Pradesh.

With tomato prices crashing to Rs 2 (and at several places to Re 1 per kg) farmers had no choice but to feed it to cattle or to throw it away.

This was happening at a time when the tomato processing industry was merrily importing tomato paste and up mainly from China. While politicians, TV commentators, editorial writers stressed on the need to strengthen food processing, not many know that the existing tomato processing industry was relaying heavily on cheaper import of pulp and paste. This is not the first year for such imports, a review of reports on Google showed that such imports are continuing over the years.

Not many know that the popular brands of tomato ketchup, tomato puree and even tomato juices that we consume at home are made from tomatoes imported from China, Nepal, Italy, USA and the Netherlands. In other words, we are inadvertently helping tomato farmers of the countries from where we import while our own farmers are left to die.

Just in one month, between Aug 28, 2014 and Sept 28, 2014, India imported US $ 376,009 worth of dried tomato and tomato products (like paste, pulp and juice concentrate) from China, followed by US $ 94,057 worth of imports from Nepal, and US $ 44,160 from the Netherlands. Some more research, and I find that in 2010 when traders were eyeing the market opportunities in Pakistan arising from devastating floods, the Indian processing industry was busy importing tomato paste from China. A news report in the Economic Times (Oct 20, 2010) quoted Pradeep Chordia, managing director Chordia Food Products Ltd saying: "We can't afford the high local prices so we imported 80 per cent of our requirement of tomato paste from China this year."

Another food processor, Akshay Bector of the Ludhian-based Rs 400-crore Cremica Group said: "There is a cost advantage in buying from China versus India where prices fluctuate." This company supplies to McDonalds, Taj Group, ITC Group, Jet Airways, Indian Airlines, and chains such as Barista, Cafe Coffee Day, Pizza Hut, Domino and Papa John's.

Go back a little more, and you find a lot of Indian companies importing tomato paste way back in 2005, and even before. No wonder, tomato farmers in India have been at a great disadvantage for several years now, if not decades.

I therefore have three suggestions:

1. Ministry of Food Processing should encourage food processors to mention on the label the place from where the raw material is being sourced. Traceability is now an important trade issue.

2. It should be made mandatory for the food processing units to source the raw material that is available in India, from domestic sources. This is the only way to develop the back-end infrastructure that will help reduce farm wastage.

3. A minimum support prices should be announced for tomato which should serve as a floor price for the markets.

China's ingenious way to increase GDP. Construct buildings, and demolish them even before they are completed.

This 5-star hotel in Nancang city in China was blasted in 2010. This 13-year-old hotel left behind 40,000 tons of construction waste. 

Sometimes back, senior journalist M J Akbar had in one of his columns given us an excellent peep into the way economic growth is being perceived. He quoted the Russian Finance Minister, who in the wake of declining GDP in Russia, asked fellow Russians to at least start drinking more of Vodka, which in turn will increase the country's GDP !

At a time when India's GDP has slumped to a little over 5 per cent, we are told that we are not alone. China too has a lower GDP growth of about 7 per cent. Well, I don't want to go into the reasons for the slowdown in economic growth, but I remember in his bestseller Confessions of an Economic HitMan, author John Perkins had stated that one of the best ways to increase GDP is to destroy a city and then rebuild it.

I didn't realise that China had been literally following it. Perhaps that's the reason why China had a stupendously high GDP growth for several years.

At a time when Chinese GDP was in the range of 8 plus year after year, Tyler Durden came out with an amazing explanation for the continuously high GDP: "Ever wonder how China can endlessly generate goal-sleeked GDP of precisely 8.00001% year after year? Or how it can constantly find use for the massive and ever-larger surplus of warehoused commodities? Simple - never stop building. Which, apparently means blowing up empty building before they are even finished and rebuilding them. Rinse. Repeat." 

In the article "China: Proudly Demolishing Buildings Before Completed In Pursuit of The Glorious Housing Bubble Perpetual Engine (here is the link: http://bit.ly/90EY1N) the author has provided us a snap shot of the Chinese methodology to increase GDP. The BBC later reported (July 13, 2012) that construction had dominated China's economy, accounting for 25 per cent of all economic activity and 15 per cent of all jobs. "Over the past decade, China is said to have built the equivalent of Rome every two months. As a result, ghost cities, as they are known, have sprung up across the country...Beijing alone is said to have nearly four million apartments standing empty"

What is therefore obvious is that GDP figures hide more than what it reveals. Unfortunately, planners, economists and senior journalists have often flaunted GDP figures as if it is the touchstone to development. #

Additional viewing: Here is the link to one of my talks (in Hindi) on what is this GDP. 
http://www.youtube.com/watch?v=j5y5FvejSgU&list=TLrlkxG2iD24g

China's agriculture growth has been ecologically devastating

Every time the issue of sustainable agriculture vis a vis food security crops up, the mainline economists in India cite the example of China. I have always felt amused with the way the economists play the China card, knowing well that they have little idea about the devastation that faces China from the aggressive policies they have followed all these years in increasing crop yields.

The Indian economist know for sure they will get the support of the political leadership of the left parties -- both the CPM and the CPI, which invariably they get. I am in fact more worried at the way Prime Minister Dr Manmohan Singh has been using the China card to push for the same policies that brought devastation in China.

But is China's agriculture really sustainable? Isn't China's agriculture suffering from severe doses of pollution and contamination of the environment? And is China realising that something is terribly going wrong with their agriculture? All these questions, and more, had remained unanswered as India follows the China route to destroy farming and agriculture. Interestingly, while India tries to blindly ape China in agriculture, China itself is trying to resurrect its agriculture to make it more sustainable in the long-term.

Behind the smile lies hidden a dark side of Chinese agriculture

The interview below, published in March 2010, is a must read for anyone interested in understanding the crisis that China faces in sustaining its farm growth. There are lesson for India.     

Heal poisoned countryside through eco-agriculture
http://opinion.globaltimes.cn/commentary/2010-03/511208.html

Global Times
9 March 2010

China has had bumper harvests for the last six years. But its overall agricultural picture is not so pretty, as the country faces problems of food safety caused by the overuse of pesticides and chemical fertilizers. Premier Wen Jiabao told the ongoing National People's Congress that the government plans to invest 818.3 billion yuan ($119.79 billion) in agriculture this year, while the first central policy document of the year, issued on January 31, highlighted the importance of developing modern agriculture as a major part in the transformation of the Chinese economy. How can productivity and ecological impact be balanced? Global Times (GT) reporter Li Yanjie talked with Wen Tiejun (Wen), dean of the School of Agricultural Economics and Rural Development, Renmin University of China, on agriculturally-caused pollution and agricultural development in China.

GT: You once said that agriculture has become the source of most severe pollution. Why?

Wen: Agriculture used to be a green industry, with very little pollution, but now it is an industry that consumes a lot of energy and also pollutes heavily. The overuse of chemical fertilizers since the 1990s, due to China's shortage of agricultural resources, is the biggest contributor. Excessive use of nitrogenous fertilizers weakens plants' ability to absorb and utilize them. Statistics from Henan Province show that only one-third of over 3 million tons of nitrogenous fertilizers had been absorbed by plants, while the other two-thirds went into the air, soil and water. 

A survey by the Chinese Academy of Agricultural Sciences shows that 17 provinces use far more fertilizer than the international standard of 225 kilograms per hectare. Chemical fertilizers also pollute rivers seriously, as China's best farmland is all around rivers. The first national pollution census bulletin, released February 9 by the Ministry of Environmental Protection, shows that agriculture is responsible for 43.7 percent of total water pollution nationally. The Liaohe, Haihe, and Huaihe rivers and Taihu, Chaohu and Dianchi lakes are six examples of seriously polluted waters. The land around all of these six, important food production areas, has been populated.

Pesticides are another source of pollution. China has become the largest producer and user of pesticides. Pesticide residue threatens food security. The recent discovery of toxic cowpeas in Hainan Province is a good example. In addition to this, large-scale breeding programs and livestock management are having an increasing influence on the environment. Many large stockyards don't have pollution control facilities and excrement and dirty water are discharged directly into nearby rivers and lakes. Livestock also discharges enormous amounts of methane, a greenhouse gas.

GT: Why do farmers keep using chemical fertilizers even though they cause pollution?

Wen: China is facing decreasing agricultural resources as its population and waste grow. The blind rush into urbanization is also consuming large amounts of land and water. Under these conditions, pursuing high yields naturally leads to the excessive use of chemical fertilizers. This in turn threatens food safety. These basic conflicts can't be solved by government policies or laws.

GT: Many experts warned about the dangers in China's agricultural development pattern, but they weren't heeded. Why?

Wen: First, the scientist and technocracy, closely connected with developmentalism, that were introduced into China in the last century have affected Chinese concepts of agricultural production. People have seldom broken away from these modes of thinking. Second, interest groups formed through such economic growth patterns control policy making. Policies are produced by maneuverings between such special interest groups. Most of China's chemical fertilizer enterprises are State-owned and contribute a large share of revenue. They have been supported by government policies and financial subsidies for a long time. They definitely fight for their interests, and thus affect agricultural production, but the whole of society has to bear the risk.

China's farmers have got used to using chemical fertilizers. Once they use less, they can't get a high yield, as farmland now contains few organic substances due to the excessive use of chemical fertilizers. For farmers, the most important issue is survival. Environmental pollution is not their major consideration.

GT: There is no unified law to deal with pollution in rural environments. How can we treat problems in unsupervised areas?

Wen: Departmental fragmentation has been an institutional problem. Reforming this and establishing big government departments can't be achieved in the near future. The government gives 17 billion yuan ($2.49 billion) in subsidies to chemical fertilizer enterprises every year but gives little support to treat rural pollution. Last year the public expenditure to treat rural pollution was 9 billion yuan, meaning 40 yuan for each farmer. I suggest China change its subsidy policies and support agricultural production patterns that produce no emissions and can absorb carbon.

GT: What's the best solution for agricultural pollution?

Wen: Eco-agriculture. Once we stop over-supporting the interest groups who control the current agricultural production patterns, it's possible to convert agriculture to being eco-friendly. Agriculture can be a green industry again. First, China should cut its subsidies to nitrogenous fertilizer producers and set reduction targets for chemical production and use. In fact, it has been proved that grain yield can be maintained at the current level with only 50 to 70 percent of current chemical fertilizer usage. Second, community supported agriculture (CSA) groups are helpful, too. A CSA group consists of a community of individuals who pledge support to a farm operation where the growers and consumers share the risks and benefits of food production. When urban citizens realize the damage done by agricultural pollution and desire eco-friendly products, they will be willing to pay more money for healthy food, and farmers will be willing to produce in a green way. CSA has been practiced in Germany, Switzerland, Japan and other countries and regions. The US has 1,210 CSA farms. China's Guoren Green Alliance is an ongoing experiment in CSA.

Eco-agriculture can be profitable. If eco-agriculture and eco-friendly rural areas can absorb a large amount of carbon, eco-agriculture might become a hot item in carbon market, attracting excess financial capital and aiding economic structure adjustment.

GT: Eco-agriculture has a longer production cycle and fewer yields, but China's policy is to increase farmers' in-comes. How can the conflict be solved?

Wen: Any countries practicing market system, especially those with a population over 100 million, can't let farmers get rich only via agriculture. Developed East Asian economies based on small holder farming always offer high subsidies to farmers to ensure their food safety and their farmers acquire a socially average income through benefits from various business areas managed by cooperatives.

GT: What are your ideal new villages? Will urbanization be a solution?

Wen: I can't oppose the major trends of industrialization and urbanization, since it would be like a mantis trying to stop a chariot. But we can't expect that China's 3.8 million natural villages and 600,000 administrative villages will all be industrialized and urbanized. I think the most important thing for new villages is stability, as China resolves its crises each time by using farmers, villages and agriculture as a base for a soft landing. Agricultural policies and national investment should emphasize the role that agriculture plays in environmental protection. Farmers' cooperatives can get national status in market negotiation, and comprehensive cooperatives of different levels should be established and communicate well. The government needs to increase public expenditure to provide more services for farmers. The governments at all levels should support farmers to maintain the diversity of rural culture. If all these five points can be realized, I think farmers, villages and agriculture will develop in a better way, and China can grow sustainably.