Practical Methods for Smallholder Farmers to Raise the Level of Scale Operation

Since 2013, Sheyang County in Jiangsu has promoted an agricultural scale production method of “stable land rights and cooperative operation”, achieving fairly notable results. According to the author's preliminary survey, in 2014, in the farming areas of Sheyang County where this production method was piloted, the wheat output value/cost ratio increased by about 192%, and the rice output value/cost ratio increased by about 30%, significantly improving agricultural competitiveness.

Six Major Features of the “Stable Land Rights and Cooperative Operation” Model

The core feature of “stable land rights and cooperative operation” is that land is not transferred between farming households; instead, scale operation is achieved through production and operation cooperation, improving grain production efficiency. Officials and residents of Sheyang County call this scale production model “joint cultivation and joint planting”. In fact, this model is breaking beyond the cultivation stage and developing toward integrated cooperative operation. This model has six major features:

First, farmers themselves set the markers for plots with different ownership, and during actual cultivation the field ridges and boundary lines are removed to facilitate mechanical cultivation.

Second, cultivation time is unified to reduce the loss of operational efficiency caused by the inconsistent cultivation times of smallholders and to improve the efficiency of using light and heat resources during the crop growing period.

Third, mechanical cultivation routes are planned in a unified way to eliminate blind spots in mechanical cultivation to the greatest extent possible; the area occupied by mechanical cultivation roads is minimized.

Fourth, village officials or cooperative leaders coordinate, while farmers determine the types of production materials such as seeds and chemical fertilizers, which are then used uniformly on relatively large field plots.

Fifth, if the soil fertility of different farmers' land differs, at harvest the combine harvesters operate separately, and each household takes away its own product; if the soil fertility of the farmers' land is similar, yields are measured, harvesting is unified, sales are unified, and the monetary income is recorded in each household's account. The latter situation is still relatively uncommon at present, but as unified cultivation advances, the fertility of each household's land will gradually become similar, and this method will become the mainstream.

Sixth, the entire production process ensures that farmers are informed or involved; the production coordinator (village official or cooperative leader) does not make arbitrary decisions, nor does he carry out unified independent operation according to the requirements of an agricultural enterprise.

Because “stable land rights and cooperative operation” has the above features, farmers psychologically believe the land is still their own, and the land management rights have not been transferred. At present, this model is generally welcomed by farmers, has a strong demonstration effect, and is spreading relatively quickly.

The Innovative Significance of the “Stable Land Rights and Cooperative Operation” Model

Since the implementation of the household land contract system, China's main grain-producing areas have developed different forms and degrees of scale operation, improving agricultural economic efficiency. Compared with the existing main forms of agricultural scale operation, Sheyang County's “stable land rights and cooperative operation” model has its own distinctive features.

First, compared with “smallholders + socialized services”. “Smallholders + socialized services” is the basic way for China's agriculture to achieve “partial scale operation”; it mainly benefits from the specialization of agricultural production, and the scale operation nature within it mainly occurs in the production service link, that is, agricultural service providers serve multiple smallholders. Compared with full smallholder operation, this model undoubtedly has huge advantages, but its drawbacks are also obvious, mainly reflected in the fact that socialized services facing smallholders cause some inconvenience in scale operations, leading to reduced efficiency. Under the “stable land rights and cooperative operation” model, however, because boundary constraints are weakened and the uniformity of cultivation is strengthened, these problems can basically be overcome.

Second, compared with “corporatized agriculture”. The corporatized agriculture that has already emerged in China is generally not highly efficient. First, because the degree of production standardization is low and work measurement is complex, it is very difficult to supervise hired labor; second, corporatized agriculture often relies on government administrative intervention to transfer land, and farmers' psychological costs enter into the determination of the land rent rate, causing the land rent rate to usually account for more than half of agricultural net income, greatly increasing the operating costs of agricultural companies. Under the “stable land rights and cooperative operation” model, however, farmers do not leave operation, there is no land rent cost, and farmers' accounting can still be maintained, so the drawbacks of corporatized agriculture at the current stage can largely be eliminated.

Third, compared with “land trusteeship cooperatives”. It can be considered that the “land trusteeship cooperative” model also does not involve the transfer of land management rights; farmers actually purchase the full-process services of the trustee. Usually, because farmers' boundaries must still be retained, this model is actually rather similar to the “smallholders + socialized services” model. Moreover, this model mainly suits areas with a high degree of labor transfer and high non-agricultural employment pay. By contrast, if the proportion of elderly people and women remaining in villages is relatively large, the “stable land rights and cooperative operation” model can better meet the requirements of smallholders.

Fourth, compared with “smallholders + cooperative services”. From international experience, it is very difficult for smallholders to form cooperatives in the true sense. Only cooperatives formed by large farmers or family farms can give play to the advantages of specialized and scaled services. In agriculturally developed countries, genuine cooperatives do not directly intervene in field production; field production is entirely the business of the farm owners themselves. Smallholders and genuine cooperatives are not a good “couple”. Strictly speaking, most of the cooperatives in Sheyang County are also not cooperatives in the true sense; they are merely production coordinators under the “stable land rights and cooperative operation” model, but this coordination plays a positive role in promoting scale production.

Overall, Sheyang County's “stable land rights and cooperative operation” model is relatively well suited to the requirements of developing agricultural scale production under the conditions of unstable transfer of China's agricultural population at the current stage and farmers' strong attachment to land, and its degree of scale operation is higher than that of other models, with more obvious economic efficiency.

The Promotion Value of the “Stable Land Rights and Cooperative Operation” Model

Sheyang County's “stable land rights and cooperative operation” model helps raise the level of agricultural competitiveness of China's densely populated main grain-producing areas. According to estimates, about 80% of China's grain output is produced in areas with agricultural conditions similar to those of Sheyang County. The main features of agricultural production in these areas are relatively dense population, unstable labor transfer, and elderly people and women “guarding” agricultural land. Apart from a small amount of corporatized agriculture and rented-land family farms, about 50% of grain in these areas is still produced using the “smallholders + socialized services” model. It can thus be seen that drawing on and applying Sheyang County's “stable land rights and cooperative operation” model to further raise the level of China's agricultural scale operation has relatively universal significance.

The significance of the “stable land rights and cooperative operation” model also lies in the fact that it can smoothly transition to a higher level of scale production. Smallholders can cease to intervene in production and operation and no longer make any input into production; the existing production cooperation organizer will become the main body of unified operation and establish a contractual relationship with smallholders, so that smallholders only obtain a fixed income, or establish a “dianquan” contractual relationship, obtaining a one-time “dianrang” income, with this income reflecting the farmer's identity as a land property rights holder. This in fact realizes the transfer of land property rights (including management rights). Of course, it must also be clearly recognized that the transition of Sheyang County's agricultural scale operation model to the family farm model still requires a relatively long time and the following conditions must be met.

First, surplus agricultural labor must achieve stable transfer and bid farewell to “migratory bird-style” mobility. According to the author's estimate, when about 30 million farming households remain nationwide, a level of “urban-rural income equilibrium” will roughly be formed. Advancing this process still requires more than 20 years. To achieve this goal, the government needs a more active urbanization policy to encourage rural people who meet the conditions to move with their whole families into various cities and become settled urban residents.

Second, improve the social security system and gradually weaken the economic root of farmers' “attachment to land”, so that the agricultural land rent rate falls to below 10% of agricultural net income. If the basic pension of farmers who settle in cities is significantly higher than the net income from land of smallholders in densely populated areas (for grain-producing farmers it mostly does not exceed 4000 yuan), and can cover the necessary expenses of urban life, farmers' attachment to land will lose its economic motive. If this condition is met, the high land rent rate caused by attachment to land will also decline, and rented-land farms will have relatively large profit space.

Finally, further adjust national agricultural land policy. China's rural land transfer market has an obvious defect, namely that when smallholders transfer out land, local government administrative intervention often plays a role, which inevitably makes farmers worry about “losing their land”. Farmers trust the market more. If farmers could conveniently “buy back” from the market the land they had transferred out, they would feel more at ease transferring land management rights and even contract rights. The central government's land system reform should firmly advance in the direction of marketization, while local governments should reduce direct intervention in the land market.