Capital Going to the Countryside to Rent Land Becomes a Common Phenomenon, Central No. 1 Document Tightens Related Policies
At the start of 2013, will the Central No. 1 Document focus on the "three rural issues" for the tenth consecutive year? This possibility is gradually becoming a consensus.
Since 2003, the documents discussed and approved at the Central Rural Work Conference have all become the Central No. 1 Document of the following year. Information recently obtained by Caijing reporters from various sources indicates that the 2013 Central No. 1 Document is most likely to focus for the first time on reform of agricultural production relations, involving deep-seated reform issues related to the relevant management system.
At present, on the one hand China's grain output has achieved "nine consecutive increases"; on the other hand, its dependence on foreign sources has increased year by year. At the same time, the problem of "hollowing out" in China's rural areas is prominent, and concerns about "who will farm the land" are growing.
For this reason, many agricultural experts have suggested that issues related to reform of the agricultural production and management system should be placed on the central agenda as soon as possible and should become the core topic of the 2013 Central No. 1 Document. It is reported that these suggestions have now basically become a decision-making consensus.
An expert involved in research for the Central No. 1 Document said that the reason everyone hopes the 2013 No. 1 Document will focus on reform of rural production relations is mainly to adapt to the current new situation of rapid industrialization and urbanization. At the same time, through reform of the agricultural management mechanism, the "tight balance" in grain supply can be improved, farmers' incomes can be raised, and agricultural modernization can be achieved.
In fact, signals related to reform of the agricultural management system have recently been mentioned frequently at high-level meetings. The State Council executive meeting held on November 28, 2012 proposed that reform of the rural management system should suit local conditions and that effective measures should be taken so that some young people are willing to stay in rural areas to engage in agriculture.
The meeting held by the Political Bureau of the CPC Central Committee on December 4 went further in explicitly stating that new types of agricultural production and management models should be encouraged. Such intensive discussion of the agricultural management system is rare in recent years.
Caijing reporters interviewed several people involved in drafting the document, all of whom believe that the new Central No. 1 Document can continue and refine the relevant formulation in the report of the 18th National Congress of the CPC: "Adhere to and improve the basic rural management system, and build a new type of agricultural management system that combines intensification, specialization, organization and socialized services."
In terms of the specific direction of reform, three aspects have also gradually attracted the attention of agricultural experts: regulating and refining "capital going to the countryside," with the model in which companies carry out large-scale land transfers and rehire farmers to be strictly restricted; clearly proposing the development of the "family farm" as an agricultural management mechanism; and establishing a socialized agricultural service system, encouraging enterprises to participate in socialized agricultural services.
"Who will farm the land in China in the future? How will it be farmed? Should it be large-scale management by companies and enterprises, with capital-led hired-labor farms, or should farmers' cooperatives be developed on the basis of household farming by farmers? My view is to let farmers farm their own land and harvest their own grain, improve organized behavior, and become stronger; they will certainly be able to farm well." A recent speech by Chen Xiwen, director of the Office of the Central Rural Work Leading Group, was regarded by outsiders as an annotation of the main spirit of the 2013 No. 1 Document.
It is reported that starting in July 2012, 18 ministries and commissions including the Central Rural Work Office, the National Development and Reform Commission, and the Ministry of Agriculture jointly conducted research on issues such as the agricultural management system. The research team successively went to agricultural provinces such as Henan, Shandong, Anhui and Sichuan to learn about the operations of agricultural cooperatives and large grain-growing households. After the National Day holiday in 2012, the new Central No. 1 Document entered the drafting stage.
Capital Land Rental May Be Restricted
⟦NL> In recent years, capital going to the countryside to rent land has become a common phenomenon, and the "company + farmer" model is its main form. Agriculture-related companies transfer large-scale farmers' cultivated land management rights. After leveling the cultivated land, they rehire some farmers to cultivate it through "reverse leasing and subcontracting."
This practice has previously aroused controversy from many sides: on the one hand, industrial and commercial capital can inject capital factors into the transformation of traditional agriculture, reduce demand for agricultural labor, and improve agricultural management levels and market competitiveness; on the other hand, there has also been a phenomenon in which farmers are reduced to hired workers and cannot reasonably share in the returns from land management.
What is more, some companies carry out "non-grain" and "non-agricultural" production after transferring cultivated land, and even use it in disguised form for real estate development.
It is understood that a survey conducted by the National Development and Reform Commission in 2012 showed that in some western provinces, after industrial and commercial enterprises transferred cultivated land, the degree of non-grain production had reached about 90%. Local governments, in order to attract investment, often do not intervene in this.
When Caijing reporters investigated in some agricultural areas, they found that companies going to the countryside to rent land often use farmers leaving to work elsewhere and cultivated land being abandoned as a pretext, and most hope to promote land transfer for an entire village or even several villages as a whole. In this process, farming households still cultivating the land often come into conflict with them.
At present, China still has 200 million farming households and more than 600 million people living in rural areas. Once cultivated land is transferred and they cannot find employment, the livelihood of landless farmers will become a problem.
Chen Xiwen has repeatedly expressed his concerns about this. "How China's agriculture becomes modernized is not only a technical issue. Technically, we are fully capable of learning from American farms. The problem is, for that, how many farming households would be enough for our 1.8 billion mu of cultivated land? Where would the rest go? What would they do?" Chen Xiwen said.
In response to the chaos of "capital going to the countryside," the decision-making level will refine specific measures to make adjustments. Minister of Agriculture Han Changfu recently said: the state encourages industrial and commercial enterprises to invest in agriculture and promotes agricultural industrialization and large-scale operation, but it does not advocate that industrial and commercial enterprises directly rent and cultivate farmers' cultivated land on a large scale and for a long time. "Enterprises should drive farmers' development rather than replace farmers' production, and should leave the planting and breeding stages to farmers."
Experts involved in discussion of the document also confirmed to reporters that many people paid close attention to this issue during the drafting of the 2013 No. 1 Document. The practice of developing agriculture with an industrial mindset and replacing farming households with corporate management methods will be restricted to a certain extent. The Ministry of Agriculture will also accelerate the construction of a management and service system for the transfer of rural land contractual management rights, and explore the establishment of a strict market access system for industrial and commercial enterprises leasing farmers' contracted cultivated land.
Reporters learned that during the drafting stage of the No. 1 Document, the Ministry of Agriculture held an expert consultation meeting on how far the relevant provisions should be "tightened." At the meeting, experts put forward multiple opinions on the specific provisions.
Kong Xiangzhi, a member of the drafting group of the Law on Farmers' Professional Cooperatives and vice dean of the School of Agricultural Economics and Rural Development at Renmin University of China, who participated in the meeting, believes that as long as the "three must-nots" proposed for cultivated land at the Third Plenary Session of the 17th Central Committee are met - the land ownership relationship must not be changed, the agricultural use of the land must not be changed, and farmers' interests must not be harmed - then who contracts the land should not be restricted.
"Policy should reflect fairness and should not target only a certain type of enterprise or a certain type of person," Kong Xiangzhi said.
Some suggested referring to Japan's experience. Japan also once restricted industrial and commercial capital from entering agriculture and implemented "agricultural land for agricultural use," but later began allowing industrial and commercial capital to operate agriculture and implemented "agricultural land for agricultural use by all." The related drawbacks "can be resolved by improving institutions and strengthening supervision." Zhang Hongyu, director of the Department of Policies and Regulations of the Ministry of Agriculture, recently wrote in Caijing magazine.
Zhang Hongyu proposed several specific principles: adhere to the household contract system and fully respect farmers' land contractual management rights; adhere to the voluntary principle of land transfer and do not allow any organization to force transfer; adhere to establishing and improving a mechanism linking the interests of enterprises and farmers, forming a community of interests with farmers, and reasonably returning land management returns to farmers; and adhere to operating according to law and regulations without changing the agricultural use of the land.
Because they cannot solve problems similar to farmers "showing up for work but not putting in effort" during the people's commune period, excessively high production costs and excessively low production efficiency have caused large agricultural companies including Bunge and Cargill to develop the intention of gradually withdrawing from leased cultivated land.
"Farmers farm for the boss: they hoe weeds without removing the roots. On the first day, you see no weeds in the field; on the second day, they grow back again." A scholar involved in the research described it this way.
Vigorously Promoting the Family Farm Model
Starting in 2007, in order to respond to the large-scale shift of agricultural labor to non-agricultural sectors and the worsening trend of aging, Songjiang District, located in the southwest of Shanghai and in the upper reaches of the Huangpu River, began practicing a family farm model on a scale of about 100 mu.
By the end of June 2012, the family farms in Songjiang District, with a total area of 604 square kilometers, had grown to 1,173 households, and their operating area accounted for 77.3% of the district's grain field area, with an average operating area of 114.1 mu per household and an average annual income of 101,000 yuan per household.
The "Songjiang model" is promoted by the local district government and adopts the method of farming households entrusting village committees with land transfer, transferring cultivated land in farmers' hands to the village collective. By the end of 2011, the area of transferred cultivated land in the district had accounted for 99.4% of the district's cultivated land area, with almost all transfers carried out by farming households entrusting village committees.
After cultivated land is transferred to the village committee, the district government takes the lead in consolidating the cultivated land into high-standard basic farmland. Then the village collective takes the lead in contracting the cultivated land to lessees. Nearly half of the cultivated land flows to family farms.
Family farm production has a series of strict rules: the farm owner must be a member of the village organization; the farm's cultivated land must be used for grain production and may not be subcontracted in any form; after comprehensively considering factors such as absorbing local labor and income, the local government sets the basic scale of each farm at 80 mu to 150 mu.
To ensure efficient operation of family farms, the Songjiang District government specially established an agricultural machinery professional cooperative to provide them with full-process mechanized order-based operation services.
In addition, Songjiang District has also established a series of socialized service systems covering pre-production, mid-production and post-production, including four major categories: agricultural input supply, agricultural machinery, seed breeding bases, and drying facilities.
Because the socialized service system is completely outsourced, family farms rely only on the labor of a husband and wife, hiring at most one laborer during busy farming periods, and with some small agricultural machinery, they can obtain relatively high harvests.
Xu Xiaoqing, director of the Rural Economy Research Department of the Development Research Center of the State Council, who once conducted field investigations there, said: at the current operating level, one family farm can be operated by a husband and wife, and their annual income level can reach about 100,000 yuan.
According to what Caijing reporters learned, as the family farm system has continuously improved, the area began establishing "combined planting and breeding" family farms: each couple also raises more than 1,000 pigs a year. Piglets, technology, feed, sales and so on are all uniformly provided by leading enterprises, and farmers can get a 50 yuan contract-raising fee for each pig raised. In this way, each household's annual income can increase by about another 50,000 yuan.
"In the first year, no one paid much attention. Now more and more people are bidding for family farms. Working hard elsewhere is not as good as going home to contract a farm," Xu Xiaoqing said.
According to data provided by Sheng Yafei, head of Songjiang District, due to the establishment of the family farm system, the agricultural productivity of the entire Songjiang District has increased substantially: previously, more than 200,000 mu of cultivated land in the district relied on tens of thousands of people to cultivate it; now, with a labor force of about 2,000 people on family farms, 170,000 mu of rice can be cultivated in a year and nearly 300,000 pigs can be raised for slaughter.
It is understood that the Songjiang family farm model is expected to be promoted. The new No. 1 Document will focus on explaining new types of operating entities, rather than emphasizing the extremely dispersed small farming households of the early period of the household contract responsibility system. "By gradually transferring land to expand scale, adopting intensive methods for production, improving in aspects such as technology application and capital concentration, and slowly growing, that is a family farm," Kong Xiangzhi said.
Family farms will be a fresh concept proposed in next year's No. 1 Document. According to the thinking of the relevant drafters, agricultural production units such as family farms will become the main body for achieving China's agricultural modernization, the main units for producing commercial agricultural products (5.70, 0.00, 0.00%), and the recipients of a series of agricultural support policies.
According to statistics from the Ministry of Agriculture, China currently has 8.874 million large planting households with an operating area of 30 mu or more.
Taking grain cultivation as an example, one family operating 100 mu in the north and one family operating 50 mu in the south are relatively consistent with economies of scale and can also adapt to the employment needs of the rural labor force.
Caijing reporters' interviews in Guangxi also confirmed the advantages of this practice: Tan Chengjun, a large grower in Luanshan Tun, Baxhan Village, Qiaoxun Township, Xingbin District, Laibin City, contracted about 400 mu of land from about 20 households in the whole village and cultivated it himself. While sugarcane yields are generally 4 tons to 6 tons, his family's sugarcane yield has reached more than 10 tons. In addition, because the transfer is between acquaintances, there is no need for the government to intervene; Tan Chengjun himself can persuade the villagers.
Adopting this family-farm-like model for land transfer can both increase sugarcane yields and avoid conflict, and the land returns are still obtained by local farmers.
According to what Caijing reporters learned: the family farm experiment promoted by the Ministry of Agriculture began early last year and involves multiple provinces and municipalities including Jilin and Hunan. Local governments' own family farm practices began even earlier; Songjiang District in Shanghai began practicing the concept of family farms in 2007.
Whether the family farm system can be promoted on a large scale still faces a series of institutional shortcomings. For example, family farms currently cannot register with the Administration for Industry and Commerce, and pilot areas all rely on local governments' "handling special cases specially." In addition, whether this new organization can enjoy a series of supports such as tax exemptions, subsidies, and broader types of loan collateral. It is reported that piloting may still continue in 2013.
Multiple Paths for Socialized Services
Whether family farms can grow rapidly is also related to whether they can obtain sufficient support from socialized services.
Many experts suggest that this issue should be clearly reflected in this year's No. 1 Document, but how exactly to phrase it remains uncertain. Although household operation is China's basic agricultural management system, it does not mean that millions of farming households must complete the entire process from planting to harvesting. In fact, a large number of production and circulation links can be completed through socialized services.
Some experts interviewed by Caijing reporters believe that, judging from the laws of world agricultural development, socialized services are the fundamental means of addressing the aging of the agricultural labor force and are also an important way to promote the application of agricultural science and technology. "Household operation + socialized services" is an important form of agricultural production.
China's past agricultural system has always had the drawback of emphasizing agricultural technology research and development while neglecting the socialized service system.
It is reported that China's future policy adjustment direction will also be, while mainly relying on government-led public-interest services, to mobilize the enthusiasm of cooperatives and agricultural enterprises, encourage them to establish new types of agricultural socialized service institutions under multiple forms of ownership, and include them within the scope of state policy support.
According to Chen Xiwen, leading agricultural enterprises and other agriculture-related enterprises should focus on playing a role in areas such as research and development of improved varieties, innovation of advanced technology, construction of storage and transportation facilities, marketing and processing, and agricultural employment.
Kong Xiangzhi believes that at present the function of cooperatives in providing socialized agricultural production services should be strengthened, rather than single-mindedly pursuing land transfer led by cooperatives.
Since the Law on Farmers' Professional Cooperatives was promulgated and implemented in 2007, it has become a trend for various production cooperatives to lead the transfer of cultivated land for operation. As of now, the area of cultivated land transferred by cooperatives has reached 44.88 million mu, accounting for 16.4% of the total area of cultivated land transfer nationwide.
In response to cooperatives' current situation of emphasizing transfer and neglecting services, some in academic circles hold the view that the main purpose of establishing cooperatives should be to provide services rather than to transfer land, and in particular farmers should not be allowed to contribute land as shares to cooperatives.
One reason is that China's existing agricultural production and management system is a two-tier management system combining unified and separate operations, that is, farming households contract collective land to directly engage in agricultural product production and operation, and the village collective provides unified management services to farming households.
After the Third Plenary Session of the 17th Central Committee, cooperatives were also included in the "unified" sphere alongside village collectives. If land is transferred in the name of a cooperative for production, it means the "separate" level is swallowed up.
Second, if farmers contribute land as shares and the cooperative goes bankrupt, the land at that time has already become an asset and must be used to repay debts, creating a risk that farmers will lose their land.
In response to the above situation, Sun Zhonghua, director of the Department of Rural Economic System and Management of the Ministry of Agriculture, recently said that relevant departments will gradually expand the scale of fiscal support funds for farmers' professional cooperatives, focusing on supporting cooperatives in carrying out construction in socialized service fields such as processing and storage, cold-chain transportation, direct sales and direct supply, and production and operation informatization.
A further consensus in the agricultural research field is that the new Central No. 1 Document should also clearly emphasize continuing to increase the construction of agricultural and rural infrastructure and place the development focus of national infrastructure construction on rural areas and agriculture; reforming the land expropriation system and increasing the proportion of farmers' distribution in land value-added returns; increasing direct grain subsidies and promoting farmers' income growth, among other things.
Data
Central Agriculture-Related "No. 1 Documents" Over the Years
Since 1982, in order to rapidly advance rural reform, the CPC Central Committee issued five consecutive agriculture-related No. 1 Documents:
1982: "Summary of the National Rural Work Conference"
1983: "Several Issues Concerning Current Rural Economic Policy"
1984: "Notice on Rural Work in 1984"
1985: "Ten Policies on Further Invigorating the Rural Economy"
1986: "Deployment of Rural Work in 1986"
Starting in 2004, in response to the slow growth of farmers' per capita net income for consecutive years in recent years, and in order to better resolve the "three rural issues," the CPC Central Committee once again issued multiple consecutive agriculture-related No. 1 Documents:
2004: "Opinions of the CPC Central Committee and the State Council on Several Policies to Promote Farmers' Income Growth"
2005: "Opinions of the CPC Central Committee and the State Council on Several Policies to Further Strengthen Rural Work and Improve Comprehensive Agricultural Production Capacity"
2006: "Several Opinions of the CPC Central Committee and the State Council on Promoting the Building of a New Socialist Countryside"
2007: "Several Opinions of the CPC Central Committee and the State Council on Actively Developing Modern Agriculture and Solidly Promoting the Building of a New Socialist Countryside"
2008: "Several Opinions of the CPC Central Committee and the State Council on Effectively Strengthening Agricultural Infrastructure and Further Promoting Agricultural Development and Farmers' Income Growth"
2009: "Several Opinions of the CPC Central Committee and the State Council on Promoting Stable Agricultural Development and Sustained Farmers' Income Growth in 2009"
2010: "Several Opinions of the CPC Central Committee and the State Council on Increasing the Intensity of Coordinating Urban and Rural Development and Further Consolidating the Foundation for Agricultural and Rural Development"
2011: "Decision of the CPC Central Committee and the State Council on Accelerating Reform and Development of Water Conservancy"
2012: "Several Opinions of the CPC Central Committee and the State Council on Accelerating the Advancement of Agricultural Science and Technology Innovation and Continuously Enhancing the Capacity to Ensure the Supply of Agricultural Products"