A Public Perspective on Farmers' Property Rights over Cultivated Land

To grant farmers more property rights, land is the core. At present, some views hold that cultivated land can become property that generates income and can become an important means of increasing property income. In reality, many places are keen to promote land transfer, on the one hand creating conditions for agricultural scale operations and modernization, and on the other hand consciously or unconsciously driving up land prices during transfer, with some places even setting minimum protective prices for land transfer. However, under relatively high land transfer prices, pure grain operations are difficult to sustain, thus planting hidden dangers for non-agriculturalization and non-grainization. This prompts us to reflect on such questions: What exactly are the functions of agricultural land? Where do property rights over cultivated land come from? What exactly is the relationship between farmers and cultivated land?

Under the feudal land system, cultivated land was the most important property of farmers, and buying houses and land was the most important manifestation of farmers' wealth. Land not only provided owners with basic subsistence security, but could also be rented out to others to obtain land rent. The earliest view regarded land rent as “the surplus remaining after deducting costs from the harvest of the land cultivator” (William Petty), and later land rent was regarded as “the result of a rise in the price of agricultural products” (Ricardo). In today's view, however, when explaining land rent in an economic sense, it seems that many phenomena are difficult to explain. Is land rent a surplus? Is land rent created by labor? In reality, the fact that part of land rent has already seriously exceeded the output value of cultivated land requires us to reunderstand the concept of land rent, as well as the farmers' property rights attached to cultivated land and the issue of national agricultural security.

To accurately understand the contemporary issue of cultivated land rent, two issues need to be recognized. First, the nature and functions of cultivated land; second, the relationship between farmers and cultivated land. In today's society, cultivated land is not only a means for farmers to increase income, but also a guarantee for the state to achieve agricultural security. As the foundation of human survival, agriculture is essentially manifested as a public good within a country. Our country implements the strictest cultivated land protection system, has designated basic farmland, and implements a system of agricultural land use control. Therefore, cultivated land is not a commodity in the general sense, and agricultural products are also not entirely subject to arbitrary market regulation. There is an international definition of agricultural security: within a country, anyone at any time can afford and can obtain enough agricultural products. This "anyone" of course includes the poor, and first of all means the poor can afford them. This limits the characteristics of agricultural products as commodity production; in essence, it does not follow the commodity exchange principle that “things are precious when they are scarce.” Therefore, the huge grain demand of 1.3 billion people is at all times the most important part of the national strategy. Therefore, although relatively high returns can be obtained through agriculture, from the perspective of political security in safeguarding grain demand, under the premise that the space for increasing yield per unit area is limited, a certain area of grain production must be guaranteed, which to a certain extent compresses the degree and space for obtaining excessive profits through agriculture. No country will allow the prices of major agricultural products to be completely free; this is the most essential difference between agriculture and other industries.

Land has two layers of meaning for farmers: first, the meaning of cultivated land to farmers. The meaning of cultivated land to farmers does not lie in its property significance, but in the security it provides for farmers' lives. This is a more important and stable security than any property, and it is the most basic security. It can also be said to provide farmers with a stable source of livelihood, or be understood as a stable employment channel. With a piece of land, farmers have a basic source of livelihood, can have no worries about food and clothing, have something to do, have spiritual sustenance, and can have something to do and enjoy in old age. This is difficult to measure by property value. When farmers lose land, they also lose their source of livelihood and the material and spiritual life relying on land, yet losing land does not come with a corresponding market price compensation standard. If compensation is to be given to land-lost farmers, it is not to obtain so-called property income similar to land rent, but to provide stable employment, old-age support, and livelihood security.

Second, farmers' obligations and responsibilities toward cultivated land. That is, farmers have the obligation and responsibility to use and protect cultivated land well and to produce agricultural products that meet national needs; therefore, they are not allowed to leave land idle, are not allowed to change the use of land, must not reduce soil fertility, and must not damage cultivated land. To compensate farmers for the costs or losses incurred in fulfilling their obligations and responsibilities, the common measure in various countries is to give farmers subsidies. Under the public-good nature of agriculture (which can of course also be extended to the public-interest nature of agricultural land), without government subsidies, it is difficult for farmers to obtain the average social income.

However, in theory and in reality, there are often certain deviations in the understanding of the relationship between farmers and cultivated land. Some excessively advocate property rights over cultivated land, while others excessively emphasize the state-owned attribute of cultivated land. Excessive advocacy of property rights over cultivated land, combined with the joint promotion of administrative power and industrial and commercial capital, causes transfer rents to rise continuously, which not only makes agricultural operations difficult to sustain, but may also harm the sustainable development of agriculture and the enthusiasm of agricultural operators. To maintain agricultural production under high rent conditions, the government may also have to pay costs such as land transfer subsidies and agricultural production subsidies. On the other hand, in a few places, under the name of developing modern agriculture, cultivated land transfer is forcibly promoted, and apart from land rent, farmers are provided with little other security. The emergence of these two unsatisfactory states is not unrelated to an erroneous understanding of the agricultural land relationship. Either state is unfavorable to agriculture and farmers and should be avoided as much as possible.

Based on the above analysis, from the perspective of agriculture as a public good and from the angle of property rights over cultivated land, the current land transfer needs to properly handle the following issues.

First, individual rights and public obligations attached to cultivated land must be handled flexibly and prudently. For contractors, cultivated land is the unity of rights and obligations; one cannot emphasize only rights while ignoring obligations. The separation of land contracting rights and management rights is not the separation of rights and obligations. The obligation to protect the quantity and quality of cultivated land cannot be lost because of the separation of contracting rights and management rights. Therefore, it is necessary to pave the way for promoting land appreciation and improving agricultural efficiency through a sound social security system and land exit mechanism. This should ensure that farmers have stable property rights and social security without affecting the security of cultivated land. Agricultural operators should not pay fees exceeding the normal market price for transferred land; only in this way can competitive and sustainable agricultural development be promoted. Given the reality that farmers are a vulnerable group, it is especially necessary to emphasize that they must not be forced to transfer out land for any reason.

Second, farmers' land property rights are mainly reflected in the process of land use conversion and appreciation, not in the process of transfer. Therefore, after land use conversion and appreciation, farmers should obtain sufficient protection of property rights. This kind of property right and interest is essentially compensation for the employment, livelihood, old-age support, medical care, and other security of land-lost farmers. The No. 1 Central Document of 2014 clearly pointed out that farmers should be granted more property rights, including farmers' rights to possess, benefit from, mortgage, guarantee, and inherit shares in collective assets, as well as farmers' usufructuary rights over homestead land. In the process of reform and development, it is necessary to continuously increase the added value of agriculture and the weight of farmers in the distribution of returns from collective construction land, so that farmers can increase property income through diverse institutional designs.

Third, family farms formed through spontaneous transfer help the sustainable development of agriculture. Investigations have found that among the many forms of land transfer, transferring to one's own relatives, friends, neighbors, and so on has the lowest cost and relatively strong stability. This kind of transfer occurs naturally, forms spontaneously, and is voluntary, and is more conducive to social stability and also more conducive to land protection. Therefore, market mechanisms should be used to guide farmers to transfer land spontaneously. Transferring land to farmers and thereby forming family farms is conducive to the sustainable development of agriculture. Family farms retain the advantages of family management while partially overcoming the drawbacks of smallholder farmers. The scale of family farms is moderate-scale operation, which helps stimulate family farms' demand for science and technology, organization, finance, and agricultural machinery, and facilitates the construction of an institutional guarantee for sustainable agriculture. At the same time, family farms are also the organizational form with the lowest operating costs and the most effective contribution to agriculture. Government support and guidance for land transfer to family farms should become the future direction of agricultural development.

Farmers who transfer out land should receive appropriate compensation. However, such income is not only income of the nature of land rent. Transferred cultivated land not only provides the transferee of land transfer with a channel to increase income, but the entity obligated to fulfill cultivated land protection must also be clearly defined.