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Agriculture in China

Agriculture in China

Banning of the production, sale and use of ‘lean pork meat’ (clenbuterol) powder
On 1 October 2011, the Chinese Food and Drug authority announced to have banned the production, sale and use of clenbuterol tablets. These tablets – often added to pig’s feed – are also known as ‘lean meat powder’ as they speed up muscle building and fat burning, resulting in leaner pork meat.

Earlier this year, in March, Henan Shuanghui Investment and Development Co ltd, a prominent pork producer in China, had to publicly apologize for the fact that pork tainted with clenbuterol had been found in their products.

The decision was made after a consideration of the risks and potential dangers of the excessive use of the powder to human health. Existing clenbuterol tablets will be destroyed under the supervision of local food and drug departments.

Draft rules on the naming of Agricultural Plant Varieties under consultation
On 27 September 2011, the Ministry of Agriculture (“MOA”) released for comment the draft Provisions on the Naming of Agricultural Plant Varieties. The Provisions shall apply with respect to the naming of any agricultural plant variety that is subject to an application for (i) crop variety certification, (ii) the right of the new agricultural plant variety, or (iii) the assessment of the safety of an agricultural genetically modified organism, as well as in the naming of the seed-parent directly applied to the variety.

The Provisions set a principle of “uniqueness” for the name of the varieties, i.e. any agricultural plant variety shall use the same name at all times whether it is cited in an application for agricultural plant certification, in an application for protection of a new plant variety, in the assessment of the safety of a genetically modified organism, or whether it directly enters the production or sales links. The Provisions furthermore specify the standard for the naming of the varieties, providing that the name of a variety uses characters, English letters, Arabic numerals, Roman numerals or a combination of them.

The deadline for submitting comments was 30 October 2011.

For access to our China law special on this issue, please click visit http://lgl.kn/b7d82.

Ministry of Agriculture issues its five year plan on Agriculture (2011 – 2015)
On September 22, the Ministry of Agriculture promulgated the 12th five year plan for agriculture (the “Plan”). The Plan focuses on meeting the increased domestic demand of agricultural products, realizing the self-sufficiency of grain, cotton and sugar, and enhancing the self-sufficiency of vegetable oils.

According to the Plan, within the period from 2011 to 2015, the main objective is to have enough main food for the domestic market. It contains targets on planting areas and production capacities of various agricultural products.

Particularly interesting is that the Plan indicates that several agricultural subsidies will remain in place and that the amount of subsidies will increase. Furthermore, the mechanism for agriculture means of production subsidies will improve. The subsidies for agriculture machinery and pesticide will be slightly increased. Contrary to previous policy, cotton and rape production companies are now eligible for agricultural subsidies.

Another inspiring supportive policy is that local governments will be no longer required to provide financial support, such as the food risk fund; all the financial support will be provided by the central government. This will encourage local governments to develop large agriculture production capacity by applying for financial support for agriculture infrastructure construction and agriculture development.

The plan shows the country’s confidence in expediting the development in the Chinese agriculture industry. This will certainly create a more investor-friendly business environment, as well as new opportunities for agriculture companies to be granted a fetching subsidy package.

For more information on this subject, please click here: http://lgl.kn/7deb9

New preferential Corporate Income Tax policy for Agriculture, Forestry, Herding & Fishery Enterprises
In September 2011, the State Administration of Taxation (“SAT”) released the “Announcement of the State Administration of Taxation on the Implementation of the Preferential Corporate Income Tax Policies for Agriculture, Forestry, Herding and Fishery Enterprises”.

The Announcement states that processing fees charged by enterprises which are appointed to process qualifying agricultural products may be exempted from corporate income tax (“CIT”). However, proceeds from sale of tea leaves after the selection, consignment and packing processes shall not be exempted.

The Announcement further specifies that pelagic enterprises certified as “Qualifying Pelagic Enterprises” as approved by the Ministry of Agriculture within the valid period may be exempted from corporate income tax for proceeds derived from oceanic fishery. The new policy has retroactive effect as of 1 January 2011.

NDRC and MOF lower charges on quarantine of animals and animal products
On 19 September, the National Development and Reform Commission (“NDRC”) and the Ministry of Finance (“MOF”) jointly issued the Notice on Lowering the Charging Standard for Quarantine of Animals and Animal Products, which specifies that the basis of the charges for the quarantine of animals such as pigs, cattle, sheep and the animal products shall be changed from percentage into a specific quota, and the charges for quarantine shall be reduced greatly as well.

The charges for the quarantine of livestock and poultry such as pigs, cattle, sheep, dogs, chickens and ducks have been reduced by more than 30%.

Public consult on ten National food safety standards (including eggs and egg products, cold drinks and canned foods)
The Ministry of Health (“MOH”) on 30 August released for comment ten national food safety standards including the National Standard on Food Safety – Eggs and Egg Products.

The foods covered by these standards mainly include: eggs and egg products, edible soybean meal, cold drinks, seaweed and seaweed products, canned foods, quick-frozen flour or rice-made products, etc.

The deadline for submitting comments was 10 November 2011.

New Administrative Measures on Production and Operation License of Crop Seeds
On 2 August 2011, the Chinese Ministry of Agriculture (“MOA”) promulgated New Administrative Measures on Production and Operation License of Crop Seeds. The measure replaced the former Administrative Measures on Production and Operation License of Agriculture Seeds, and came into effect on 25 September 2011.

The new measures introduce a number of amendments, which need to be taken into account by enterprises engaged in the seed business.

They firstly increase the minimum registered capital for crop seeds production and operation licenses:

– RMB 5 million minimum registered capital is required for a main crop operation license and main crop production license;

– RMB 2 million minimum registered capital is required for a non main crop operation license (no production license is required for non main crop);

– RMB 30 million minimum registered capital is required for a production and operation license for hybrid paddies and hybrid maize;

– RMB 30 million minimum registered capital is required for a seeds importing and exporting license; and

– RMB 100 million minimum registered capital is required for combing breeding, producing and operating.

Secondly, the New Measures shorten the approval period from 30 working days to 20 working days and provide additional clarity on the scope of activities covered by the production and operation license.

Thirdly, the supervision over the compliance of the licenses is enhanced. Regular reports to the approval authority are likely to become mandatory. This will result in an extra administrative burden on licensed enterprises in the seed business.

Lastly, to cope with the rapid development of the seed industry, the MOA newly established a separate Seeds Bureau to replace the internal Seed Office. We cannot fully foresee the practical implication of this new Seeds Bureau. The upgrading of the administrative ranking of the office does however give a clear sign of the increased importance of the seeds sector in China.

Kristie Tien

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