VZCZCXRO8854
RR RUEHGH RUEHVC
DE RUEHCN #0255/01 2980923
ZNY CCCCC ZZH
R 250923Z OCT 07
FM AMCONSUL CHENGDU
TO RUEHC/SECSTATE WASHDC 2639
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHCN/AMCONSUL CHENGDU 3201

C O N F I D E N T I A L SECTION 01 OF 02 CHENGDU 000255 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EAP/CM AND EB 
NSC FOR CHRISTINA COLLINS 
 
E.O. 12958: DECL:  10/25/2027 
TAGS: ECON ELAB EAGR PGOV SENV SOCI CH
SUBJECT: FARMLAND TO FOREST IN SICHUAN: TIME FOR REEVALUATION? 
 
CHENGDU 00000255  001.2 OF 002 
 
 
CLASSIFIED BY: James Boughner, Consul General, Chengdu, 
Department of State. 
REASON: 1.4 (b), (d) 
 
 
 
¶1. (C) Summary.  With an uneasy eye on the province's grain 
supply, Sichuan authorities are taking another look at the 
province's "Farmland to Forest Conversion" (tui geng huan lin, 
or FFC) program, originally implemented in 1999.  Although 
authorities claim that the program has brought substantial 
benefits to rural communities, concerns persist over loss of 
arable land, waste of funds, and inequities in the distribution 
of benefits.  Any changes to the program may have an outsized 
impact on minority areas.  And in the end, urbanization may be a 
far greater threat to farmland than the FFC.  End summary. 
 
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FORESTRY OFFICIALS: FFC SUCCESSFUL, BUT GRAIN SUPPLY WORRISOME 
--------------------------------------------- ----------------- 
 
¶2. (SBU) According to the Sichuan Forestry Bureau, Sichuan 
became a pilot province for FFC in 1999, and currently ranks 
third among all Chinese provinces in terms of area covered by 
the program, with 13 million mu (878,000 hectares, or 2,169,000 
acres) supposedly reforested, and 24 million farmers 
participating.  To date, FFC has occurred in three distinct 
phases: a trial period from 1999-2001, a promotion period from 
2002-2005, and a stabilization period from 2006-2007. 
Originally, farmers were to receive subsidies of cash and grain 
for two years for conversion of farmland to grassland, five 
years for conversion of farmland to commercial-use forest, and 
eight years for conversion of farmland to non-commercial forest. 
 
¶3. (SBU) FFC supposedly brought four principal benefits to rural 
Sichuan.  First, the program helped improve the province's 
environment through a reduction in soil erosion and landslides, 
with far less silt supposedly entering the area's waterways. 
Second, farmers' incomes increased - Bureau representatives 
claimed that one-third of Sichuan's farmers participate in the 
program, with FFC subsidies accounting for 12.5 percent of 
overall rural income (they claimed that this figure reached over 
25 percent in minority areas, and 50 percent in Ganzi 
Prefecture's Litang County).  Third, the FFC program supposedly 
helped stabilize grain production by encouraging farmers to 
concentrate on more productive lands.  Fourth, it helped reduce 
extreme poverty in remote and mountainous areas. 
 
¶4. (SBU) Now, according to the Forestry Bureau, FFC 
reforestation has been suspended in Sichuan, although a limited 
amount of reforestation will continue on uncultivated hills and 
mountains.  However, subsidies for land already converted to 
forest under FFC will continue, albeit on a reduced scale: 
previous nationwide standards called for farmers to receive 230 
RMB (USD 30) per mu (0.16 acres) of reforested land; now Sichuan 
will implement a two-tier system, with 125 RMB (USD 15) per mu 
going to FFC farmers generally, while farmers in minority areas 
will receive 230 RMB per mu, plus a 30 RMB (USD 3.95) 
"supplement" from the provincial government.  In addition, the 
provincial government will establish a special "FFC fund" to 
improve infrastructure and living conditions in mountainous 
areas, as well as to assist resettlement of farmers living in 
extremely poor areas. 
 
¶5. (SBU) Forestry Bureau officials referred repeatedly to the 
"red line," meaning the total area of land available for grain 
production.  Noting that China as a whole maintained a 1.8 
billion mu (288 million acres) red line, they claimed that 
Sichuan had its own red line, which they declined to specify. 
They also noted that in addition to province-wide grain 
production concerns, FFC farmers were required to maintain 0.5 
mu (0.08 acres) in grain production for each member of their 
households. 
 
¶6. (SBU) Asked about pressures on Sichuan's farmlands, Forestry 
Bureau officials admitted that urban expansion and real estate 
development also played important roles.  However, they claimed 
that such pressures were carefully monitored and regulated by 
the provincial Land and Natural Resources Management Bureau, and 
that through a policy known as "take one, create one" (zhai yi, 
bu yi), real estate developers who took farmland were required 
to create an equal area of farmland in another area (they 
provided no explanation of how this policy was implemented or 
enforced).  They also claimed that illegal logging was no threat 
to FFC lands, since authorities strictly enforced bans on such 
activities. 
 
--------------------------------------------- ---------------- 
ANOTHER VIEW: UNCHECKED PROPERTY DEVELOPMENT THE REAL PROBLEM 
--------------------------------------------- ---------------- 
 
CHENGDU 00000255  002.2 OF 002 
 
 
 
¶7. (C) In a separate meeting, Sichuan Academy of Social Sciences 
Rural Economic Research Institute Director Guo Xiaoming provide 
a somewhat more nuanced view of Sichuan's FFC experience, based 
on research conducted by his organization.  Although he admitted 
that the FFC had brought positive benefits to the province - 
environmental improvement, higher rural incomes - he also 
identified several serious problems. 
 
¶8. (C) First, said Guo, farmers are very concerned over the end 
of the subsidy period.  With no clear guarantees that payments 
will continue, he claimed many farmers are planning to convert 
reforested areas back into farmland in the near future, 
especially in poorer mountainous and minority areas.  Second, 
according to Guo, FFC payments to date have been simple 
government subsidies given to rural residents, and have not been 
used to improve rural infrastructure or living conditions.  He 
identified rural energy supplies as an area badly in need of 
attention from government planners. 
 
¶9. (C) Third, the FFC policy has been applied too arbitrarily, 
with little regard for local conditions.  According to national 
policy, said Guo, any terrain having slopes greater than 25 
degrees is eligible for inclusion in FFC.  However, much of 
Sichuan's arable land is in what he called "hilly areas," with 
slopes greater than 25 degrees, yet still highly usable and even 
terraced in many cases (he pointed to areas around Nanchong and 
Suining as examples).  As a result, a substantial proportion of 
FFC payments were going to relatively well-off farmers, while 
useful farmland was being removed from production.  Guo said 
that the policy needed to be applied more selectively, with an 
emphasis on more mountainous areas and areas populated by ethnic 
minorities. 
 
¶10. (C) For these reasons, Guo felt that a suspension of the 
policy is reasonable, to give the State Council and provincial 
officials an opportunity to reevaluate its implementation. 
However, he also said that the program needed to be maintained 
in minority areas, especially Ganzi and Aba Prefectures (Note: 
both Ganzi and Aba are predominantly Tibetan areas.  End note). 
Guo expressed the opinion that, when reimplemented, the program 
should be supplemented by vocational training for farmers as 
well as by the infrastructure spending mentioned above. 
 
¶11. (C) Guo disagreed with the claim that grain safety issues 
were driving the changes to the FFC program.  The biggest threat 
to grain safety, said Guo, came from unbridled real estate 
development, which was rapidly claiming the province's best 
farmland: "The New Socialist Countryside needs to be coordinated 
with urbanization."  In addition, he claimed that 40 percent of 
Sichuan's farmland was middle to low-yield land, and that 
farming practices in those areas needed improvement.  Asked 
about pressures on FFC lands from illegal logging, he admitted 
that such activities existed, and contributed to soil erosion 
and the silting of the area's rivers. 
 
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COMMENT 
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¶12. (C) The FFC program in Sichuan appears to have had some 
success in encouraging reforestation and raising rural cash 
incomes in some areas.  With the all-important question of food 
supply safety at stake, the time has come for a reevaluation of 
the project, but unfortunately the basic conflict between 
farmland and rapid urbanization does not yet appear to be 
addressed.  The question appears to be an institutional one, 
relating to the balancing of interests in a rapidly developing 
economy -- one more battlefront in Sichuan's efforts to make the 
New Socialist Countryside a reality. 
BOUGHNER