Recommendations on How Land Transfer Mechanisms Can Help Create a New Type of Agricultural Operating System

Building a new type of agricultural operating system composed of specialized large-scale farmers, family farms, farmers' cooperatives, and agricultural enterprises is another important reform of China's rural economic system, building on the household contract responsibility system. This particularly involves the key issue of both adhering to the long-term stability of land contracting relationships and promoting effective land transfer in achieving appropriately scaled operations. In this regard, by summarizing domestic and international experience and conducting field research in Changsha County, we put forward the following recommendations:

1. Conceptually, we must fully understand the economic nature of land. Land is both an important means of agricultural production and the most fundamental property of Chinese farmers. In the past, China mainly emphasized the nature of agricultural land as a means of production, while seriously neglecting the nature and rights of agricultural land as independently owned property of farmers. Contracted land of farming households existed in a state of “virtual property” that could not be measured through transactions, thereby affecting farmers' enthusiasm for managing land. Therefore, the institutional and policy arrangements for China's agricultural land must consider both its nature as an important means of production and its nature as the basic property right of farmers, clarify the property rights of the operating entities of agricultural land, and improve the efficiency of land resource allocation in China.

2. Implement household contracted management rights at the basic institutional level. This mainly means achieving seamless alignment among the Land Administration Law, the Property Law, and the Rural Land Contracting Law in protecting farmers' land rights and interests; clarifying farmers' long-term management rights over contracted land, and ensuring that such management rights can be transferred, mortgaged, and leased; comprehensively carrying out the registration and certification of rural land contracted management rights; and uniformly issuing legal land right certificates for contracted land to facilitate transfer and mortgage. For provisions on “special circumstances” regarding adjustments to contracted land, the specific items and content must be clearly and in detail stipulated, and expansion of scope must be strictly prohibited. For provisions on expropriating farmers' contracted land for “public interest,” the specific content of “public interest” must be clearly defined by way of enumeration, and the scope of public purposes must be strictly controlled.

3. Standardize the effective transfer of contracted land from the perspective of property rights transactions. The transfer of farmers' contracted land must respect farmers' contracted land rights and farmers' wishes, with legally valid land lease contracts signed, farmland rent paid at market prices, and farmers' land contracting rights realized through property rights market transactions. According to surveys, the main problem here is that in order to adapt to mechanized scaled production, the contracting party must break the original boundaries of farmers' contracted land and carry out scaled consolidation of the transferred land, which inevitably requires long-term leasing of the contracted land. Since rent is the basic source of living expenses for contracting farmers, and living expenses change with prices, farmers will inevitably demand rent increases after price rises, otherwise they may terminate the land lease contract. Therefore, contracted land transfer contracts are incomplete contracts, and procedures for rent adjustment as well as third-party enforcement mechanisms should be established in the contracts. Guidance should be provided to establish a land transfer distribution method of “base payment + dividends + labor income” so as to closely link the interests between agricultural operating organizations and contracting farmers and raise the level of mutual trust.

⟦NL> 4. Focus on promoting the new land transfer and operation model of “shares + cooperation.” Its basic approach is, on the premise of maintaining unchanged household contracting relationships, for the village collective to contribute the management rights of flexible land, farmers to contribute the management rights of their contracted land, and agricultural enterprises to contribute money, agricultural machinery, technology, or other factors converted into shares to form a cooperative, thereby achieving scaled agricultural operations and improving production and operating efficiency. In terms of organizational structure, modern corporate governance structures such as a shareholders' representative assembly, council, board of directors, and supervisory board should be established. In terms of benefit distribution, a model of “guaranteed base rent + surplus dividends” should be adopted. In large-scale promotion, attention must be paid to preventing risks. Local governments should exercise administrative power impartially, maintain market order, and act as fair referees. It is necessary both to adhere to the basic orientation of scaled agricultural operations and to strengthen supervision of land use, and to prohibit non-agricultural development and operation of agricultural land under the pretext of agricultural land transfer and industrial interaction. Cooperatives that accept transferred land should be subject to strict constraints and must not change land use. Throughout the entire process of establishment, operation, and termination of cooperatives, the government should play a supervisory role, maintain the stability and sustainable development of cooperatives, and ensure that agricultural land is not lost and that the rights and interests of farmer shareholders are protected.