A Detailed Explanation of the Approach to Farmland Transfer: Teaching You How to Do Rural Land Transfer Well

After the Third Plenary Session of the 18th Central Committee, in the area of “agriculture, rural areas and farmers”, the approach of seeking development through reform has been clearly established. Building a new type of agricultural operation system is a reform matter of equal importance to collective property rights reform and one that bears on the future fate of agriculture and rural areas. Especially in recent years, as stated at the Central Rural Work Conference held not long ago, with changes in domestic and international environmental conditions and the gradual emergence of deep-seated contradictions accumulated through long-term extensive operation, the challenges facing sustained and stable agricultural development are unprecedented. It is extremely urgent to release dividends through reform and innovation and promote the transformation of agricultural production methods.

The 2013 Central “No. 1 Document” for the first time centered on “who will farm the land” and “how the land will be farmed”, systematically proposing to promote appropriately scaled land operation, cultivate new types of operating entities, and build a new type of agricultural operation system, clarifying a path for China's agricultural modernization. Among these, the construction and transfer of farmland property rights are undoubtedly a key link.

After more than two years of exploration and summary, marked by the “Opinions on Guiding the Orderly Transfer of Rural Land Operation Rights and Developing Appropriately Scaled Agricultural Operation” issued in November 2014 by the General Office of the CPC Central Committee and the State Council, the central government's thinking on this issue has matured and a complete framework system has basically taken shape.

⟦NL> Zhang Hongyu, Director of the Department of Rural Economic System and Operation Management of the Ministry of Agriculture, began research on rural land issues in the 1990s. He once conducted an in-depth analysis of the ownership relationships related to farmland ownership rights, contracting rights, and operation rights, and clearly proposed the suggestion of the “separation of the three rights”, which was adopted by decision-makers. In 2014, he again led a team to conduct extensive research on issues such as the scale of land transfer, industrial and commercial capital engaging in agriculture, land shareholding, and the standardization of transfers. The research results formed provided important support for decision-making.

On the eve of the introduction of the 2015 “No. 1 Document”, a Caixin reporter interviewed Zhang Hongyu. He gave a detailed interpretation of the farmland transfer issue and shared his own thinking.

Caixin reporter: The 2013 Central “No. 1 Document” proposed promoting land transfer and cultivating new types of operating entities. It has now been two years. How do you evaluate the current situation of land transfer and policy progress?

Zhang Hongyu: It should be said that land transfer is generally standardized and orderly. As of the end of June 2014, the national rural contracted cultivated land transfer rate was 28.8%, 7.3 percentage points higher than at the end of 2012. As of the end of November, there were 877,000 family farms nationwide with an average planting scale of 200 mu, 3.17 million large farming households with an average planting scale of 50 mu, 1.267 million farmers' cooperatives, and more than 120,000 leading enterprises. These diversified new types of operating entities have played an important role that cannot be ignored in promoting the development of modern agriculture, filling the space left after the large-scale transfer of rural labor, and effectively solving the problem of “who will farm the land”.

In farmland system reform, a key arrangement is the separation of the three rights of farmland ownership rights, contracting rights, and operation rights. We must grasp the three stabilities well, namely collective ownership, the foundational status of household operation, and the long-term unchanged nature of existing land contracting relationships. On this basis, the central government emphasizes invigorating operation rights and improving the efficiency of land resource allocation. The property rights arrangement of the separation of the three rights well resolves the relationship between “stability” and “vitality”.

Under the guidance of this principle, in November 2014, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Opinions on Guiding the Orderly Transfer of Rural Land Operation Rights and Developing Appropriately Scaled Agricultural Operation” (hereinafter referred to as the “Opinions”). This is a programmatic document aimed at deepening rural land system reform and promoting modern agricultural development. The central government's approach to farmland transfer is becoming increasingly clear.

However, there are some issues that need attention, for example, avoiding coercion, blind direction, and great leaps forward in local areas. Some places one-sidedly emphasize that the faster the land transfer speed the better, the larger the scale formed the better, and the higher the transfer ratio the better. This phenomenon requires great attention. In addition, issues such as non-grainization, de-agriculturalization, damage to agricultural production capacity, and the production environment must also be more strongly regulated and supervised.

Next, I believe we should mainly start from four aspects: first, in accordance with the “Opinions” and General Secretary Xi Jinping's requirements, further clarify the theoretical essence of the separation of the three rights and improve property rights construction; second, work hard on orderly standardization; third, the scale of land transfer must be appropriate; fourth, strengthen supervision over industrial and commercial capital renting land.

Caixin reporter: You mentioned the issue that the scale of transfer must be appropriate. Many scholars have pointed out that with regard to land productivity, it is not that the larger the scale the better. Beyond a certain scale, diminishing marginal efficiency will appear. Does the “Opinions” emphasis on appropriate scale reflect consideration in this regard?

Zhang Hongyu: Yes. At present, China's promotion of appropriately scaled land operation is of great significance for solving the problem of “who will grow grain”, ensuring the supply of agricultural products, connecting with modern agricultural production factors, and increasing the income of agricultural producers. But the basic national conditions and agricultural conditions of having many people and little land determine that China's scaled operation must handle the issue of “appropriateness” well.

Appropriately scaled land operation involves both a quantitative issue and a need to reflect improvement in quality. Therefore, the goal of China's scaled operation should pursue not only labor productivity but also, even more, the improvement of land output rate, and the country's policy orientation should emphasize and encourage improving land output rate even more.

Moreover, China still has 266 million farming households. The development of appropriately scaled agricultural operation must adapt to the process of rural labor transfer and citizenization, and to the improvement and perfection of the rural social security system. It cannot surpass or lag behind the stage of development. In addition, the scale of agricultural operation must also adapt to the degree of progress in agricultural science and technology and improvements in production methods, and to the improvement of the level of agricultural socialized services. Therefore, appropriately scaled land operation is not simply “piling everything together”, and the larger the operation scale the better.