Building a New Win-Win Mechanism Between Industrial and Commercial Capital and Farmers' Cooperatives

The "Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform" (hereinafter referred to as the "Decision") adopted at the Third Plenary Session of the 18th Central Committee of the Communist Party of China clearly stated: "Adhere to the foundational position of household management in agriculture, and advance innovation in agricultural management methods through the common development of household management, collective management, cooperative management, and enterprise management...... Encourage and guide industrial and commercial capital to go to rural areas to develop modern breeding and cultivation industries suitable for enterprise-based operation, and inject modern production factors and management models into agriculture." The "Decision" not only points out the direction for accelerating the construction of a new agricultural management system, but also highlights the important position and role of enterprises in modern agricultural management. From local practices, modern agricultural management includes models in which four types of entities develop independently, as well as models of integrated development among the four types of entities. In particular, the enterprise + farmers' cooperative model explored and promoted in recent years has achieved mutual integration, complementarity, joint collaboration, and common development between the two types of entities and has been recognized by all parties, and is gradually becoming an important force and main path in China's new agricultural management system.

Industrial and commercial capital is one of the main driving forces for innovating agricultural management entities. As the main form through which industrial and commercial capital enters agriculture, enterprises, in order to achieve direct and effective connection with the small-scale production of millions of households, mostly choose a development model combining with farmers' cooperatives. This model not only solves the problems of enterprises such as lack of raw materials, unstable supply, high raw material prices due to many procurement links, unsustainable production, poor operational stability, and especially unfamiliarity with agricultural production, but also injects into the development of farmers' cooperatives the needed capital, science and technology, management talent, and other modern production factors and modern management concepts, solves the problem that farmers only know agricultural production but do not understand marketing, rapidly improves the production and operation level and market competitiveness of farmers' cooperatives, and achieves multi-party win-win outcomes of increased agricultural production, increased farmers' income, and improved enterprise efficiency. In order to better promote the enterprise + farmers' cooperative model, in development practice it is necessary to pay attention to handling the relationship between the two types of management entities well. While ensuring that enterprises make profits, it is even more necessary to protect farmers' vital rights and interests, build a new mechanism for the common healthy and sustainable development of both, and achieve a win-win outcome for enterprises and farmers' cooperatives.

First, it is necessary to establish a close and reasonable interest linkage mechanism. The nature of capital is to pursue profit to the maximum extent. The essence of industrial and commercial capital entering agriculture is to obtain greater profits from agricultural production, especially from agricultural added value. It is necessary to establish a reasonable interest-sharing mechanism between enterprises and farmers' cooperatives, ensuring that farmers can not only profit from land transfer and agricultural product production, but also fully enjoy the value-added profits of enterprises in links such as deep processing and product sales. On the basis of developing "order" agriculture well, explore various forms of interest distribution mechanisms such as farmers' cooperatives contributing land management rights as shares, so that farmers' cooperatives truly participate in enterprise operations, build the two into a closely linked community of interests, and let farmers truly enjoy the development results of industrial and commercial capital entering agriculture.

Second, it is necessary to establish a strict and detailed access review mechanism. It is necessary to establish a more detailed, strict, and feasible access system, and do a good job at the "access gate." For enterprises entering the field of agricultural development, strict qualification reviews should be conducted in terms of enterprise scale, business projects, operating capacity, financial strength, service scope, enterprise reputation, and ability to honor contracts. In particular, in accordance with the requirements of the "Opinions on Guiding the Orderly Transfer of Rural Land Management Rights and Developing Moderate-Scale Agricultural Operations" (hereinafter referred to as the "Opinions") recently issued by the General Office of the CPC Central Committee and the General Office of the State Council, regarding the requirements for industrial and commercial enterprises leasing land, the time limits and upper limits of specific areas for enterprise land transfer should be clearly defined to prevent industrial and commercial capital from leasing large areas of land for long periods and harming farmers' interests.

Third, it is necessary to establish a full-process tracking risk control mechanism. It is necessary to establish a mechanism for enterprises and farmers' cooperatives to share risks, so that the rights and interests of disadvantaged farmers can be effectively protected. In accordance with the requirements of the "Opinions," establish a land transfer risk fund guarantee mechanism led by enterprises, to avoid losses to farmers caused by enterprises failing to honor contracts normally. It is necessary to establish a full-process tracking and supervision mechanism for all government departments. Conduct multi-department joint tracking and supervision over enterprises' investment in agricultural projects, payment of land rent, strict implementation of interest settlement, and especially the use of transferred land. It is necessary to strictly investigate the "four prohibitions" issues raised in the "Opinions" concerning land transfer. For those enterprises that without approval arbitrarily change land use, deliberately enclose and occupy land, and engage in "non-agricultural" operations, resolute correction must be made; for enterprises that truly do not correct, they must be resolutely removed in accordance with laws and regulations and announced to the public. Strictly prevent and investigate the occurrence of fraudulently obtaining government policy subsidies.

Fourth, it is necessary to establish a moderately scaled, efficient, and precise support mechanism. Agricultural investment risks are high, and industrial and commercial capital still has many concerns and blindness about entering agriculture. In accordance with the requirements of the "Decision" and the Opinions, do a good job in encouraging and guiding. Governments and departments at all levels should adapt to local conditions, proceed from the actual conditions of their region and department, formulate corresponding support policies, increase support in areas such as land transfer, financial loans, agricultural insurance, infrastructure construction, and tax preferences, provide enterprises with necessary services in policy consultation, technological innovation, talent attraction, and information support, and improve the precision of policy support. Guide enterprises to develop toward modern breeding and cultivation industries suitable for enterprise-based operation, such as improved seed and seedling breeding, high-standard facility agriculture, and large-scale farming, help enterprises scientifically plan agricultural investment projects, sincerely plan development blueprints for landed enterprises, avoid blindness in enterprise investment, fully protect the legitimate rights and interests of enterprises, and enable industrial and commercial capital to truly settle into agricultural development with peace of mind.