Reexamining the Development Status of Smallholder Agriculture in China

“One bottom, two fists”

On May 11, 1964, while listening to a report from the Planning Commission Leading Group on the “Third Five-Year” Plan, Mao Zedong put forward the formulation of the national economy having two fists and one bottom. Basic industry is one fist, national defense industry is one fist, and agriculture is the bottom. If the fists are to have strength, the bottom must sit firmly. Thinking carefully about it, at that time the old man was expounding the strategic relationship between agriculture and industry, clearly and accurately. If industry is to be strong, agriculture must be stable, and in On the Ten Major Relationships it was even mentioned that industry at that time had to serve agriculture. One cannot help but admire the old man's profound strategic vision at the time. Now half a century has passed, and our agriculture today has again reached a juncture, or rather is undergoing an internal structural degeneration and transmutation. Sun Tzu said, “War is a matter of vital importance to the state, the province of life or death, the road to survival or ruin; it is mandatory that it be thoroughly studied.” We say, “A change in the agricultural situation is a matter of vital importance to the state and a concern of the people; it must be thoroughly studied.”

Agriculture's “one bottom, two fists”

At present, Chinese agriculture itself is also showing a phenomenon of “one bottom, two fists.” The overall trend of agriculture is quietly undergoing some changes, slow but more than enough to stir up waves. The “one bottom” is the traditional agricultural production system that still occupies the largest share at present; the “two fists” are, on the one hand, the modern agricultural production and marketing system combined with biology and information, and on the other hand, the modern socialized agricultural service system combined with new types of business entities. The rise and transformation of these two agricultural forces, traditional and modern, are the new context for understanding China's current agricultural situation and the basis for judging the direction of agricultural development. Even many current debates about agriculture originate from this change. Now that the overall trend has already emerged, we must objectively analyze these two agricultural forces that seem to represent two directions, neither remaining complacent nor losing our heads.

“One bottom”——the strength of smallholder agriculture

Traditional smallholder agriculture——extraordinarily strong adaptive capacity and vitality.

First, the word “traditional.” The smallholder economy is called traditional because China's smallholder economy was not born with the country, but only gradually evolved from “large farming” to “small farming” beginning in the Sui and Tang dynasties. According to historical records, in the ninth year of the Taihe era of Emperor Xiaowen of Wei (498 AD), the Equal-Field Decree was promulgated: men aged fifteen and above received 40 mu of dew field, women 20 mu, and men were given 20 mu of mulberry field as hereditary land that was not to be returned for life. The so-called “dew field” here was farmland, meaning the average household management scale was about 60-100 mu. In the seventh year of the Wude era of Tang (624 AD), the Equal-Field Decree was promulgated, stipulating that adult males and middle males each receive 100 mu of land, of which 20 mu was permanent-holding land and 80 mu was ration land, and the permanent-holding land could be inherited. That is, an adult and the eldest son could cultivate about 200 mu of land in total. According to existing historical data in China, the man-to-land ratio in China had already fallen to about 5.5 after the Southern Song dynasty, and the vast majority of farming households cultivated less than 25 mu. By the Qing dynasty it had even fallen to 2.83. According to surveys of 6 provinces and cities by Chen Hansheng and Xue Muqiao in 1933, poor and hired peasant households averaged 5.7 mu, and middle peasant households averaged 17.5 mu. At present, the average cultivated land scale of Chinese farming households is only 7.5 mu, equivalent to 1/40 of the EU and 1/400 of the United States, and less than 1/2 of Japan and South Korea. It can be said that after the Sui and Tang dynasties, China's smallholder agriculture underwent more than 1,400 years of evolution and formed what is called smallholder agriculture today. Only then were Chinese farming households called smallholders. It seems the term “smallholder” has a very deep historical foundation, and calling it “traditional” is not at all an exaggeration. 2. Now let us speak of the “greatness in smallness” within the strength of smallholders.

Modern society puts efficiency first. From scholars to officials, many say that “smallholders” are uncompetitive and are objects to be eliminated, and that the agricultural products they produce are even less competitive: not only is the price high, but safety is also hard to guarantee. For the moment, let us neither affirm nor deny the above view. I want to discuss from another angle the “unconventional” competitiveness of “smallholders”——the extraordinarily strong adaptability created by distributed characteristics. China's smallholders fit the typical characteristics of a distributed system. The greatest advantage of distributed systems is adaptability and elastic redundancy. And this precisely allows them to mesh closely with China's large population, limited land, and diverse agricultural environments. Everyone knows that competition in the biological world is very interesting. Every organism has its own unique survival strategy: some wait idly for prey, some take the initiative to attack, some are good at camouflage, and some are fierce with sharp weapons. This is what ecology calls “niche competition strategy,” namely that although everyone appears to be contending for the same resource, in fact, because various organisms adopt different strategies, their competition is not in the same niche, that is, the competition that occurs is not on the same level. In essence, this avoids direct competition among homogeneous entities. Organisms cleverly transform direct competition for matter into indirect competition, and each preserves itself. In this sense, in an open system, uniqueness is very important. In fact, the agriculture of every country is like this. If a country's agriculture lacks its own unique core competitiveness, it will be unable to remain untouched under the impact of global agricultural trade. What we need to focus on now is how to build the uniqueness of China's agricultural competitiveness in an open system. This competitiveness may be the protective advantage of a trade system, such as Japan's extremely high agricultural tariff system; or a frontier technological advantage, such as genetically modified crop breeding and agricultural mechanization in the United States; or abundant natural resource advantages, such as the vast land resources of Brazil, Russia, and Australia. Much of their agricultural resources are beyond our reach, and some are irreplaceable even for them. Then what about us? Perhaps somewhat unexpectedly, the unique competitiveness of our agriculture is precisely the characteristics of a smallholder economy with extraordinarily strong adaptability. Let us look at what special tools this “smallholder” economy has that nourished this nation through so many prosperous dynasties over more than 1,500 years, and what agricultural miracles it has created in our new century today.

Tool one: The perfect match between smallholders and resource endowments——intensive cultivation. More than a hundred years ago, in 1909, an American named F.H. King traveled across the ocean with his wife through China, Japan, and Korea to investigate the ancient farming systems of the three East Asian countries. These two Americans, both over sixty, eagerly engaged in deep exchanges with farmers of the three ancient farming peoples of East Asia, and wrote a book called Farmers of Forty Centuries. In it, he described East Asian agriculture as follows: “Nearly 500 million people have maintained such a way of life, relying mainly on small plots of land and a small amount of products to survive, with land areas even smaller than the improved high-quality farms of the United States”; “Almost every foot of land is used to grow crops to provide food, fuel, and fabric. Everything edible is regarded as food for humans or livestock. Things that cannot be eaten or worn are used as fuel. The excreta of organisms, the ashes after fuel is burned, and worn-out cloth all return to the soil, turning waste into the most effective fertilizer”; “These working people believe that one more effort brings one more reward. Rain and extreme heat cannot stop or delay their labor. This seems to have become a golden rule, or simply put, this is the common sense of the working people.”

In the eyes of an American who had studied soil for many years, this intensive cultivation was simply sacred and such an excellent quality of farming. In fact, this farming quality of traditional Chinese peasants continued right into the 21st century today. If one conducts surveys in various places, one will find that fields and field edges, in front of and behind houses, and even some odd corners of land are all effectively utilized, either for planting crops or for planting vegetables. The land plots of Chinese farming households are rather fragmented, averaging 7-8 plots per household, with each plot averaging only about 1 mu. In some places, a single household may even have more than a dozen or more than twenty plots, and most plots are only a few tenths of a mu in area. Land management is especially highly small-scale and dispersed. Under such farming conditions, by ordinary reasoning it would be very difficult to tap the productive capacity of the land. But it is precisely this unique distributed agricultural characteristic of Chinese smallholders that enables intensive cultivation of agriculture. This small-unit farming method not only has strong adaptive and self-regulating capacity on the one hand, able to adapt to different soil conditions, terrain conditions, and farming methods, but on the other hand also fully taps two kinds of potential: first, it develops the farming potential with the family as the unit; second, it fully uses the production efficiency of existing land and effectively expands the use efficiency of land. It should be noted that this smallholder farming model, which has countless ties with traditional clan society, has a natural stability and staying power, and this is also a tremendous stabilizing force for China's economic and social development.

Tool two: Smallholders and the relatively closed domestic market——let the winds blow from east, west, south, and north. Smallholders and closure seem to be closely linked, and this is also one of the much-criticized drawbacks of Chinese agriculture. But even if it is a drawback, we need to view it objectively. Moreover, whether it is a drawback is still open to question at China's current stage. When looking for a partner, we often say, “Only what fits is best.” As for whether it is advanced or not, that is actually not the most important decisive factor; sometimes being advanced is instead a burden. The country that best combines smallholders with a closed domestic market is Japan. Japan's average tariff rate on imported agricultural products is 42%, with a maximum bound rate of 1706%, and 777.7% for polished rice. It is basically impossible for foreign agricultural products to dump into Japan. In the past, because the production cost of our agricultural products was extremely low and prices had a great advantage internationally, the domestic market was relatively closed compared with the international market. Even now, China's agricultural product market, especially grain (except soybeans), still maintains a relatively independent trend compared with the international market. Looking at grain imports in 2014, China's imports of wheat, rice paddy, and rice all declined year on year, by 20.4% and 45.7% respectively, while corn imports increased slightly by 13.6%. Overall, except for soybeans, the domestic production and sales of major grain varieties were basically balanced. Compared with foreign grain prices, domestic grain prices have not experienced major shocks in recent years. From 2004 to 2014, the average annual fluctuation range of international market grain prices was about 20%. In particular, there were two major shocks in 2008 and 2012, with annual fluctuation ranges above 40%, while domestic grain prices remained stable throughout, with the purchase price of raw grain rising by about 10% per year and the retail price of finished grain rising by about 8% per year on average, with little change between years. This stability of grain prices, slightly closed in character, is especially important for a large country. Many countries want it and cannot get it. When the world is in turmoil, we can sit firmly on the fishing platform, letting the winds blow from east, west, south, and north, and avoid the impact of various international crises. This in fact buys us a rare stable environment and redundancy for our other reform processes. When people do not have to worry about food, the state has greater room for maneuver in doing other things.

Tool three: The integration of smallholders and modern science and technology——the external energy loop has been opened. A while ago I saw an article online analyzing the developmental limits of modern Chinese agriculture from the perspective of nitrogen fixation capacity, and it was also very enlightening. For thousands of years, whether in Europe or Asia, manure was regarded as the main fertilizer. According to A Brief Study of Average Grain Yields per Mu in Successive Chinese Dynasties (by Yu Yefei), the highest grain yields per mu in China's successive dynasties were in the Ming and Qing periods, with the northern average yield per mu at 1.302 shi (wheat, converted to 65.1 kg), and the southern average yield per mu at 2.604 shi (rice, converted to 130.2 kg). For several thousand years, the national average yield per mu remained far below 100 kg. One important reason was our capacity to obtain nitrogen fertilizer. The inability of external energy to enter plants quickly was a major constraint on agricultural development. Producing 100 kg of rice paddy requires absorption of about 2.2 kg of pure nitrogen, 100 kg of corn about 2.5 kg of pure nitrogen, and 100 kg of wheat about 3.0 kg of pure nitrogen; taking 2.5 kg as a middle figure, this is equivalent to 500-600 kg of human or pig manure and urine (standard decomposed fertilizer), or about 1,000 kg of decomposed cow manure and urine, or 500-1,000 kg of decomposed green manure (about the yield of 2 mu of green manure without fertilization). And these are respectively about the annual “output” of 2 adults, or 0.2 pigs, or 0.2 cows (converted to standard decomposed fertilizer). At the same time, it should be noted that although in terms of the ability to “provide” fertilizer, large livestock such as pigs and cows far exceed humans, one cow needs 20-30 mu of grassland or cultivated land (straw) to provide feed. Therefore, under a smallholder economy, the number of large livestock such as pigs and cows raised by farming households is limited; when cultivated land is insufficient, the area of mountain forest and grassland that can be squeezed out for planting green manure or retained to provide feed is also limited; therefore, the ability of farming households in an agricultural society to “obtain” fertilizer is extremely limited. Thus, the “prosperous age” of the traditional smallholder economy, after retaining the necessary firewood and grass hills (about 2.4 billion mu), was limited by the total amount of “reasonable cultivated land” (about 1.2 billion mu), with a national total grain output limit of 120 million tons and a reasonable supporting population of 300 million people. It was not until 1828, when a German chemist named Wohler first artificially synthesized urea, that the door to modern fertilizer was opened. This has continuously raised the limit of the population that can be supported per unit of cultivated land. One very important reason is that the scientific and technological means available today allow us to continuously introduce external energy cycles into agriculture's energy cycle. Once such external energy intervenes, agricultural development will usher in a qualitative change. From a deeper perspective, if there are more thorough means of importing external energy in the future, the form of agriculture will also undergo fundamental changes. Coupled with the corresponding revolution in germplasm resources, this distributed smallholder operation combined with modern agricultural science and technology allows traditional agriculture to be reborn again, and it still radiates tremendous vitality today.