Investigation and Reflections on Comprehensive Farmers' Cooperatives

In 2013, the No. 1 Central Document once again took the “three rural issues” as its theme and made new arrangements for the work related to “agriculture, rural areas and farmers.” The document pointed to a new trend in the development of farmers' specialized cooperatives: granting cooperatives more diversified functions——it elaborated on the development of farmers' specialized cooperatives in many aspects, from undertaking newly added agricultural subsidies, matching production with sales, establishing rural mutual fund cooperatives, running their own agricultural product processing enterprises, and establishing Party organizations, reflecting the central government's comprehensive development thinking of encouraging farmers' specialized cooperatives to base themselves on specialization while appropriately moving toward comprehensiveness. This is a strategic arrangement for balancing urban and rural development, and also an inevitable trend in deepening rural reform.

I. Connotation and Classification of Farmers' Economic Cooperative Organizations

Farmers' economic cooperative organizations are an innovation in the production and operation system for developing the rural economy under new circumstances, and they play an important role in increasing farmers' income and advancing industrialized agricultural operation. At present, judged by their degree of development, farmers' economic cooperative organizations can generally be divided into two major categories, namely specialized cooperatives and comprehensive cooperatives.

Farmers' specialized cooperatives are mutual-aid economic organizations voluntarily jointly established and democratically managed by producers and operators of the same type of agricultural products, or by providers and users of services for the same type of agricultural production and operation, such as dairy cow cooperatives, wheat cooperatives or agricultural machinery cooperatives. Farmers' specialized cooperatives take their members as the main service targets and provide services such as the purchase of agricultural production materials; the sale, processing, transportation and storage of agricultural products; and technology and information related to agricultural production and operation. At present, this type of cooperative organization is more common in EU countries such as France and the Netherlands.

Comprehensive farmers' cooperatives refer to farmers' cooperative economic organizations whose business scope covers many fields such as production, processing, circulation, finance, insurance and cultural development. Their greatest advantage lies in saving transaction costs through diversified business——there is cooperation in the fields of production and sales, cooperation in the fields of finance and insurance, and also cooperation in various fields such as culture and social services. Comprehensive farmers' specialized cooperatives can even absorb urban consumers as members, forming a mechanism for direct connection between producers and consumers, thoroughly reducing the circulation cost of agricultural products, and achieving multiple goals of increasing farmers' income, ensuring quality and safety, and increasing consumer welfare. This type of cooperative organization appears relatively often in developed countries in Asia, and Japan's agricultural cooperatives are a fairly typical example.

II. The Current Development of Farmers' Economic Cooperative Organizations Is Still at an Initial Stage

In recent years, China has vigorously supported the development of various types of farmers' economic cooperative organizations, but in terms of scale, most farmers' economic cooperative organizations are still at a small-scale stage of development, and in terms of their operating systems, most are specialized farmers' cooperatives. Compared with the relatively mature specialized cooperatives in developed countries, there are still obvious problems and deficiencies. They have not truly organized farmers in a real sense, nor have they played a leading and promoting role in the development of the rural economy.

(1) Non-standard organizational forms

In quite a few specialized cooperative organizations, non-standard organizational forms generally exist to varying degrees: first, member identity does not conform to legal provisions; second, establishment procedures do not conform to legal requirements; third, the formulation of bylaws does not conform to legal requirements; fourth, methods of power distribution and restraint do not conform to legal requirements; fifth, institutional setup and system building do not conform to legal requirements. Some relatively large cooperatives have not reasonably separated the decision-making body, executive body and supervisory body, and thus cannot play a role in checks and balances of power.

(2) Low degree of organization

The organizational scale is generally too small, and the ability to drive farming households and resist market risks is relatively weak: rural cooperative economic organizations as a whole remain in a state of being “small, scattered and weak.” Their driving capacity is weak, their stability is poor, and their performance of service functions remains at a low level. In addition, internal management systems and bylaws are merely formalities. Many farmers' specialized cooperatives rely on the personal abilities of village leaders and major specialized households to operate, and members merely sell the products they produce themselves, without forming de facto cooperation.

(3) Low level of operation and management

This is currently the biggest restrictive factor in the standardized development of farmers' specialized cooperatives. The initial founders of cooperatives are often large growers or large transporters and sellers. Their union brings market and technical advantages to the cooperative, but what the cooperative most urgently needs is people who can lead members into the market. Along with the lack of cooperative leaders who can grasp and discern the market, there are also very few members capable of handling basic work such as financial management.

(4) Lack of management talent

A shortage of talent generally exists in the development of farmers' specialized cooperatives. There are relatively few outstanding leaders who understand technology, are good at business and can manage; relatively few guidance personnel in industry guidance departments who understand the law, know policy and can supervise; and relatively few teaching and research personnel with deep theoretical grounding who are good at integrating advanced international experience with China's national conditions and at linking theory with practice. In particular, leading talent capable of organizing modern agricultural production and operation is severely lacking, making it difficult for the ranks of farmers' specialized cooperatives to grow and improve.

(5) The concept of cooperation has not yet taken root in people's hearts

Farmers themselves also have relatively weak market awareness, scientific and technological awareness, and collaborative awareness, and members lack the awareness and ability to invest continuously. The long-standing petty-farmer mentality and the currently implemented household contract responsibility system have led farmers to develop the habit of operating in a dispersed manner, and they are uneasy about and inactive toward cooperation. In some so-called cooperatives, the members do not care what is produced, how it is produced, or how it is sold after production. Their relationship with members is a buying-and-selling relationship, not a cooperative relationship.

(6) Lack of effective union among specialized cooperatives

At present, there are quite a few farmers' specialized cooperatives of various kinds, but most fight alone and lack union, causing unnecessary low-level competition. Some even have several or more similar cooperatives established within the area of a single township, and cannot obtain economies of scale. To some extent, this wastes policy resources and increases organizational and human resource costs.

(7) Non-democratic operation and management

In the operation and management of quite a few cooperatives, important democratic forms such as everyone consulting on matters, voting on major issues, meeting regularly to communicate, and following rules in deliberations are mostly not effectively implemented. Instead, matters are basically decided or dominated by cooperative leaders, ordinary members rarely have a voice, and different opinions are not respected. Because of non-democracy in management, the cooperative's spirit of unity is directly harmed, the cooperative falls into a crisis of trust, and in serious cases this may endanger the cooperative's survival.