Alert! These four types of cooperatives have already degenerated
In recent years, farmers' cooperatives have developed rapidly. As of the end of February this year, the number of farmers' professional cooperatives registered with industry and commerce departments had reached 1,337,400, a year-on-year increase of 28.74%. Over the past five years, an average of 300,000 have been added each year, but among them there is no shortage of “fake cooperatives” and “relabeled cooperatives.” The “ideal type” of a cooperative is the identity of member roles, the homogeneity of membership, and the coupling of governance structure. But in practice, because the homogeneity and identity of members are relaxed, dissolved, and drift to varying degrees, some cooperatives in reality deviate from the “ideal type.”
Four types of “degenerated” cooperatives
(1) Dormant cooperatives
Some farmers' professional cooperatives were created in response to preferential policies. When they find that the possibility of obtaining policy support is relatively small, they gradually enter a “dormant” state and do not go to industry and commerce departments to deregister. For example, a cooperative in Shandong was registered in July 2009. Its motivation for establishment was that the chairman of the cooperative saw that some cooperatives in other villages had obtained project funding support, so he imitated others' practices and registered a cooperative with the industry and commerce department, hoping to also obtain government financial subsidies. The cooperative had five members in total, and its office was at the chairman's home. During the investigation, the author found that its business license was placed in a corner, and no articles of association, organizational chart, or similar documents were seen; after its establishment, the cooperative did not carry out any business, nor did it hold any member meetings, board meetings, or similar gatherings; members did not know the specific name of the cooperative, nor did they know that they were members of the cooperative. Such a cooperative is just an “empty shell,” one that “only sets up the stage but does not perform.”
(2) Signboard cooperatives
In order to extract state financial support funds or enjoy related preferential policies, some agricultural enterprises use some farmers' relevant certificates on the basis of the enterprise to register farmers' professional cooperatives with industry and commerce departments, use the cooperative's signboard to apply for agriculture-related projects, and operate and manage them in an enterprise-like manner. For example, the chairman of a cooperative in Sichuan is an enterprise boss who invested a large amount of capital to contract 10,000 mu of mountain land to plant cherries and walnuts. In order to obtain more project support, he borrowed the certificates of more than 100 local farmers to register and establish a cooperative, and used the cooperative's signboard to strive for government projects. For another example, a cooperative in Beijing was originally an enterprise, and registering and establishing the cooperative was for the purpose of signing a supply agreement with the retailer Carrefour so that Carrefour could enjoy a value-added tax deduction preference.
(3) Association-type cooperatives
After the promulgation and implementation of the Law on Farmers' Professional Cooperatives, some farmers' professional associations registered as farmers' professional cooperatives. Although they put up the cooperative's signboard, they still operated in the manner of associations. This type of cooperative does not require members to contribute capital, the boundaries of membership are blurred, and the cooperative's surplus is not distributed among members.
(4) Cooperatives controlled by a few people
Some cooperatives established related systems, but only a few members had control rights over the cooperative. Most members existed only in the role of users and did not participate in the cooperative's governance. For example, the chairman of a cooperative in Zhejiang was a citrus broker and joined with more than 10 relatively large local farming households to establish a citrus cooperative. The cooperative's shares were mainly concentrated in the hands of board and supervisory board members, and only these members attended the member representative meetings.
Why does “degeneration” occur
(1) The specific environment of “industrialization first, organization later” determines the cooperative's special governance structure
Unlike cooperative development in developed countries and regions, China's cooperative development has lagged behind agricultural industrialization. The rural economic system reform at the beginning of reform and opening up established a household contract economy based on collective land ownership. Farming households gained complete control over labor within the household, complete operating rights over land, and complete control over most production results, and agricultural labor productivity was raised. However, because the function of village-level collective economy weakened, the effect of carrying out unified services for household operations was not obvious. Along with the deepening of agricultural commercialization, the contradiction between small farmers and the large market became increasingly prominent.
Under such circumstances, market-oriented agricultural industrialization, driven by effective carriers such as leading enterprises and guiding small farmers to jointly enter the large market, developed rapidly and became another great pioneering undertaking after the household contract responsibility system and the “sudden emergence” of township and village enterprises. “Supporting leading enterprises is supporting agriculture” became a consensus in theoretical circles and at the policy level. The 2004 No. 1 Central Document proposed that “finance departments at all levels should arrange special funds to support the development of agricultural industrialization and substantially increase investment in leading enterprises.”
However, it is difficult to establish a close interest linkage mechanism between leading enterprises and farmers. Against this background, developing farmers' cooperative economic organizations was regarded as a link connecting farmers and the market. The natural characteristics of agriculture and the dispersed characteristics of farmers determine that cooperatives will inevitably play a greater role in the process of agricultural industrialization. However, the development of cooperatives cannot be separated from the current industrial background, that is, agricultural enterprises represented by industrial and commercial capital have already penetrated deeply into rural areas and occupy an important position. Therefore, from the very beginning, the development of cooperatives cannot be discussed apart from enterprises. The profit-seeking nature of capital naturally determines that it hopes to conduct business activities through economic organizations owned by investors. Therefore, many cooperatives, whether initiated by capital owners or spontaneously established by farmers, have the shadow of capital in them. That is, in the initial stage of cooperative formation, there appeared the phenomenon of ordinary farmers relying on leading enterprises or large planting and marketing households to establish “dependent-type” cooperatives.
(2) The heterogeneity of members inevitably leads to control rights over the cooperative being controlled by members with stronger bargaining power
The Law on Farmers' Professional Cooperatives stipulates that members of a cooperative may be relevant interest groups on the same agricultural product industry chain with upstream and downstream business links, affirming the fact that heterogeneous members form cooperatives. The essence of different factor owners joining together to establish a cooperative is to form and obtain organizational rent, and the game within the cooperative always revolves around the division of organizational rent. The result of the game determines its internal governance structure.
If the members are relatively homogeneous small farmers, then the cooperative's decisions are more likely to be made in a relatively democratic atmosphere. When the heterogeneity of cooperative members increases, rent distribution is more inclined to be carried out by the party with power. At this time, unless the party with power has a spirit of dedication and still continues to implement the cooperative's democratic mechanism, democracy will inevitably be replaced by a mechanism in which one person has the final say. Compared with dispersed small farmers, capital or large professional households can obtain a larger share of rent distribution. Therefore, in cooperatives initiated and established by heterogeneous members, their governance structure inevitably reflects the bargaining status of different factor owners. When the weak position of dispersed farmers has not changed, it is unavoidable that the cooperative's governance structure manifests as control by a few people, especially control by capital.