A Complete Guide to New-Type Agricultural Modernization with Chinese Characteristics
Interview Guest: Zheng Fengtian, Professor at the School of Agricultural Economics and Rural Development, Renmin University of China
Interview Host: Zhang Liying
Editor's Note: Premier Li Keqiang published an article titled "Taking Reform and Innovation as the Driving Force to Accelerate Agricultural Modernization" in the 4th issue of Qiushi in 2015. This year's central “No. 1 Document” also takes agricultural modernization as an important theme. In view of this, Qiushi Online specially invited Professor Zheng Fengtian from the School of Agricultural Economics and Rural Development, Renmin University of China, to interpret issues related to agricultural modernization.
Key Views:
■ From an international perspective, the grain issue has never been merely an economic issue. A former U.S. Secretary of State said that grain is a weapon. Once China imports grain on a large scale from the international market, it will not just be a matter of grain prices. If political disputes arise between countries, it can easily give rise to enormous political risks.
■ “New-type” means that agricultural modernization pursues the unity of quantity, quality, and efficiency of agricultural products, and, by advancing agricultural structural adjustment and accelerating the development of agricultural industrialization, pursues a sustainable and eco-friendly model of agricultural development.
■ China's agriculture actually has several functions: first, engaging in grain production to satisfy the food needs of 1.3 billion people. The second function is that farmers' land provides farmers with a kind of social security function. Most of China's farmers do not have pension insurance, and land can provide part of the social security function for farmers. The third function is ecological multifunctionality, providing a beautiful environment.
■ The reason it is said that collective ownership of land ownership, with farmers having contract rights and management rights, is the best arrangement is that, on the one hand, it solves the low efficiency brought by complete collective ownership. Farmers' contract rights are a kind of property right, and the collective cannot arbitrarily take them back. Land left in farmers' hands is certainly the most efficient, because when farmers work their own land, there is no need for external supervision costs. Such an institutional arrangement solves the efficiency problem of Western private land ownership. On the other hand, through the transfer of management rights, operational efficiency is released again.
Interview Transcript:
Qiushi Online: Hello, Professor Zheng. The Central Rural Work Conference at the end of 2014 and the 2015 “Central No. 1 Document” both took agricultural modernization with Chinese characteristics as an important theme. Please briefly introduce the basic connotation of new-type agricultural modernization with Chinese characteristics.
Zheng Fengtian: The term agricultural modernization has been put forward for many years. From the initial emphasis on water conservancy to mechanization, and then to informatization, the connotation of agricultural modernization has been evolving. Premier Li Keqiang proposed building new-type agricultural modernization with Chinese characteristics at the Central Rural Work Conference. Compared with the past, its connotation has three changes:
The first is that the overall goal has changed. The goal of agricultural modernization as a whole has shifted from the single pursuit of quantity to the unity of quantity, quality, and efficiency of agricultural products.
The second is that the methods adopted have changed. The methods of realizing agricultural modernization have gradually shifted from relying purely on material means in the past to advancing agricultural structural adjustment, accelerating the transformation of the agricultural development model, and pursuing sustainable eco-friendly agriculture.
The third is that the evaluation indicators have changed. The evaluation indicators for realizing agricultural modernization have shifted from purely material equipment in the past, such as output indicators and agricultural machinery indicators, to modern agriculture featuring simultaneous quantity, quality, and efficiency, an environmentally friendly development environment, sustainable development, and industrialized development.
In his speech at the Central Rural Work Conference, Premier Li Keqiang mentioned “new-type agricultural modernization with Chinese characteristics” and pointed out that “Chinese characteristics” and “new-type” are the two basic requirements of agricultural modernization. In my understanding, “new-type” means that agricultural modernization pursues the unity of quantity, quality, and efficiency of agricultural products, and, by advancing agricultural structural adjustment and accelerating the development of agricultural industrialization, pursues a sustainable and eco-friendly model of agricultural development. “Chinese characteristics” means that China's agricultural modernization is different from that of countries such as Europe and the United States. The reason for the difference is simple: the countries with the most developed agriculture in the world are basically large-farm types, while our country has less than ten mu of land per household on average and is an East Asian smallholder type. China's agriculture actually has several functions: first, engaging in grain production to satisfy the food needs of 1.3 billion people. The second function is that farmers' land provides farmers with a kind of social security function. Most of China's farmers do not have pension insurance, and land can provide part of the social security function for farmers. The third function is ecological multifunctionality, providing a beautiful environment. These can be said to be the basic connotations of new-type agricultural modernization with Chinese characteristics.
Qiushi Online: In his speech at the Central Rural Work Conference, Premier Li Keqiang pointed out that, on the basis of stabilizing grain production, we should actively advance agricultural structural adjustment and accelerate the development of agricultural industrialization. In your view, under the current situation of China's agriculture, how should we develop agricultural industrialization and promote the integration of the primary, secondary, and tertiary industries?
Zheng Fengtian: The development of agricultural industrialization was initially intended to solve the problem of “small production and large market” in China's agriculture. “Small production” refers to farmers operating as individual households, while “large market” means that the market is relatively far from farmers and is also relatively large in scale.
China's agriculture is a typical case of “small production and large market.” The amount of land owned by each farmer household is limited, making it difficult to achieve scale, so they can only connect with the large market through methods such as company plus farmer. Take milk production as an example. Farmers raise dairy cows household by household and provide fresh milk, which is then purchased and processed by dairy companies, and then transported to cities for sale. This model includes four entities: farmer households——companies——logistics——supermarkets. Such an industrialization model played a certain role during the subsistence stage, but from the moderately prosperous stage onward, many problems and drawbacks have been found. For example, contract breaches between companies and farmers are serious. Once there is a surplus of milk on the market, companies stop purchasing farmers' milk, and farmers face major problems in selling it. The recent dumping of milk and slaughtering of dairy cows by dairy farmers is a reflection of this. When there is a milk shortage, farmers arbitrarily raise prices. In addition, especially because the industrial chain is fragmented, speculative phenomena appear. For example, in the melamine incident, small farmers added water to milk and then added melamine, causing a severe food safety incident. Another example is that when farmers raise dairy cows, once the milk is collected by the company, they no longer care; processing it into milk powder and selling milk powder is the company's business. The chain between them is one-sided and broken. The best way to solve this situation is the integration of the primary, secondary, and tertiary industries.
Japan probably began developing the integration of the primary, secondary, and tertiary industries around 1996, and South Korea has also been doing it in recent years. They call it sixth industrialization. Why is it called the sixth industry? The primary industry is agriculture, the planting industry. The secondary industry is processing, and the tertiary industry is circulation services. One plus two plus three is exactly six, and one times two times three is also six, so it is called sixth industrialization. The integration of the primary, secondary, and tertiary industries means that farmers should not only produce, but also process, and preferably also sell and build brands. In this way, by extending the industrial chain, that is the integration of the primary, secondary, and tertiary industries, one farmer household becomes an agricultural enterprise. For farmers, from the original planting industry to processing and services, the profits are all in farmers' hands, which can both increase farmers' income and ensure food safety.
In light of China's situation, the integration of the primary, secondary, and tertiary industries can take multiple forms, such as innovating circulation methods and advancing various forms of agricultural marketing linkage, including direct sales, letting farmers establish cooperatives, and directly connecting with communities, consumers, and supermarkets. It can also include developing grain processing and deep processing of agricultural products in major grain-producing areas to increase added value, and so on.
Qiushi Online: In his speech at the Central Rural Work Conference, Premier Li Keqiang mentioned that to advance agricultural modernization, we must closely focus on the core task of safeguarding national food security. What is the current state of China's food security?
Zheng Fengtian: On the whole, China's food security should be no problem. Apart from soybean imports, food supply mainly relies on independent production, and independent production accounts for more than 90% of food supply. There are mainly two aspects to the problems in China's food security. First, from the perspective of food production, China's resource and environmental conditions for food production are deteriorating, and water and soil resources are seriously polluted; in addition, the cost of food production is also rising, with increased inputs of manpower and material resources. Second, from the perspective of food demand, the proportion of demand for staple grains is declining, while demand for feed grain and industrial grain is increasing, which will add new pressure to China's food production; due to the influence of feed grain and industrial grain, demand for varieties such as corn and soybeans is increasing, and domestic production is gradually unable to meet demand. Therefore, we must vigorously advance agricultural modernization, which is also an urgent requirement for safeguarding national food security.
Premier Li Keqiang also said in his speech that, regarding the grain issue, we must first calculate the security account, that is, food security must first be guaranteed, but we must also consider the economic account. It is not that the more the better; there must be a limit. China has achieved “eleven consecutive increases,” but has also paid a huge resource and environmental price. The increase in chemical fertilizers and pesticides has been much faster than the increase in grain output.
Regarding food security, there is another issue that needs attention. From an international perspective, the grain issue has never been merely an economic issue. A former U.S. Secretary of State said that grain is a weapon. Once China imports grain on a large scale from the international market, it will not just be a matter of grain prices. If political disputes arise between countries, it can easily give rise to enormous political risks. Therefore, China insists on defining food security as national security and must maintain a certain degree of food self-sufficiency.
Qiushi Online: Some netizens believe that land transfer changes production relations and leads to a large number of farmers being transformed into agricultural workers who cannot feed themselves. How can we steadily advance agricultural modernization while comprehensively safeguarding farmers' rights and interests?
Zheng Fengtian: I think this is a misunderstanding. This year's central “No. 1 Document” particularly emphasized regulations on land transfer, namely to whom it is transferred and what it is used for after transfer. If grain can continue to be grown after land transfer, then although the people farming the land have changed, grain is still being grown, and there is no problem. If land is transferred into the hands of enterprises and various non-agricultural industries begin to be pursued, then there may be a problem. So the key to this issue lies in whether grain continues to be planted after the land is transferred out.
Netizens say that land transfer changes production relations, but that is actually because they are unclear about national policy. In our country, ownership of rural land belongs to the collective, and farmers have contract rights and management rights. Land transfer refers to farmer households with land contract and management rights transferring land management rights to other farmer households or economic organizations, that is, retaining contract rights and transferring management rights. Ownership has not changed, which means production relations have not changed. Rather, on the basis of adhering to and ensuring ownership, contract rights are stabilized and use rights are invigorated.
From a global perspective, China's proposal of the separation of the three rights of land is a very good institutional arrangement under the current background. China has little land and many people, and land cannot be occupied by a small number of people, so collective ownership is a relatively good arrangement. Insisting on changing China's land to private ownership is wrong. The reason it is said that collective ownership of land ownership, with farmers having contract rights and management rights, is the best arrangement is that, on the one hand, it solves the low efficiency brought by complete collective ownership. Farmers' contract rights are a kind of property right, and the collective cannot arbitrarily take them back. Land left in farmers' hands is certainly the most efficient, because when farmers work their own land, there is no need for external supervision costs. Such an institutional arrangement solves the efficiency problem of Western private land ownership. On the other hand, through the transfer of management rights, operational efficiency is released again. Therefore, the system of separating the three rights of rural land in China is more suitable for China's current national conditions and more practical than simply implementing Western private land ownership. This is something with Chinese characteristics.
If private land ownership were implemented in rural China, it would create major problems. Because once land becomes private, it can be sold at any time, so it cannot be guaranteed that cultivated land will continue to grow grain, which would have a major impact on national food security. On the other hand, selling off land is also not conducive to rural development and stability.
Qiushi Online: You have long been engaged in research on issues concerning agriculture, rural areas, and farmers, and are an expert in this field. In light of China's national conditions, please talk about the practices of foreign countries in advancing agricultural modernization. What can we learn from them?
Zheng Fengtian: First, the United States has many practices worth learning from. For example, the United States improves yields through high-tech development of good varieties. China is also promoting agricultural science and technology, but the actual input of manpower and material resources is still not enough; the degree of modernization still needs further improvement, and the contribution rate of science and technology also needs progress. In addition, the United States implements a “conservation reserve program” for cultivated land. China's total cultivated land area is not small, but per capita it is not much. Excessive reclamation of land and indiscriminate application of pesticides have led to a decline in land productivity, and per-unit output cannot rise, so moderate fallowing is needed to restore land fertility. However, China should also avoid the bad aspects of the United States, such as the use of large amounts of hormones in the livestock industry. Long-term consumption of agricultural products treated with hormones is extremely dangerous; this also includes genetically modified foods, about which Europeans are very cautious. In short, using technology to promote production is something China can learn, but abusing technology should be rejected.
Second, Japan and South Korea use cooperatives to develop modern agriculture. Through the integration of the primary, secondary, and tertiary industries, they extend the agricultural industrial chain. This is worth learning from. One important characteristic of Japanese agriculture is that it adopts a land-saving model of cooperatives, with agricultural cooperative organizations uniting scattered farmer households to form labor-intensive operations. The role of its agricultural cooperatives is world-famous. With the financial and material support of the Japanese government, agricultural cooperatives, through their nationwide institutions and extensive business activities, have established various forms of economic ties with farmer households, playing a role in connecting small farmer households with the large market in the pre-production, mid-production, and post-production stages. They have played a pivotal role in effectively preventing commercial capital from exploiting farmers and protecting farmers' interests. Japan's agricultural cooperatives are not a purely economic organization. In addition to fulfilling economic functions, they also have the dual responsibility of helping the government implement agricultural policy and representing farmers in exerting pressure on the government. They played an important role in the process of Japan's agricultural modernization.
Third, Brazil attaches importance to the power of agricultural science and technology. In the past ten years, Brazil's agricultural production capacity increased by 70%, while the planted area in the same period increased only from 37.8 million hectares to 39.7 million hectares. These advances could only be achieved through science and technology. Article 1, Paragraph 1 of Decree No. 10.332 promulgated by Brazil on December 19, 2001 clearly stipulates that the state must use 17.5% of the year's total tax revenue each year for agricultural and animal husbandry science and technology projects. Brazil's main agricultural research institution, the Brazilian Agricultural Research Corporation, has 8,421 employees and has 40 research centers nationwide. It introduces and attracts foreign technology and then uses it for its own purposes, making many contributions to Brazil's agricultural development. The Brazilian government also provides farmers with sufficient financial services so that farmers can obtain sufficient capital for agricultural production. For example, it stipulates that farmers can receive loans equivalent to 100%—55% of production funds according to the previous year's output value and their planted area, with differences according to scale. The law stipulates that commercial banks must issue a certain proportion of agricultural credit to farmers.