The Future Opportunity for Supply and Marketing Cooperatives Lies in Agricultural Socialized Services

As an important force in rural economic and social development, supply and marketing cooperatives have played an important role for 60 years. However, having emerged from the planned economy, supply and marketing cooperatives have been greatly impacted by the market economy. The supply and marketing cooperatives that formerly had “many outlets, broad coverage and long reach” have in some places even fallen into a state of “broken networks, severed lines and scattered personnel.”

In 2014, at the conference marking the 60th anniversary of the supply and marketing cooperatives, China's decision-makers issued instructions requiring them to reposition themselves and give play to their unique advantages and important role. How to transform has become the question of the times facing supply and marketing cooperatives.

This year's Central Document No. 1 and the Government Work Report made this an important reform task. In April, the State Council approved the All China Federation of Supply and Marketing Cooperatives to carry out pilots in 4 provinces, Hebei, Zhejiang, Shandong and Guangdong, and Shandong was the first choice.

⟦NL> After being designated a pilot province, Shandong held a launch ceremony on June 4. Shandong designated 6 cities and 18 counties as pilot areas for the comprehensive reform of supply and marketing cooperatives.

Recently, a China Business News reporter interviewed Sun Guowei, deputy director of the Shandong Provincial Supply and Marketing Cooperative, during research in Shandong. He believes that supply and marketing cooperatives are best positioned to become the main channel for agricultural socialized services, and this is where the greatest future opportunity and development direction for supply and marketing cooperatives lie.

China Business News: As one of the 4 pilot provinces nationwide, Shandong officially launched a new round of pilot reform for supply and marketing cooperatives in April this year. Why was Shandong chosen as a pilot?

Sun Guowei: The reason Shandong was designated a pilot lies mainly in three aspects. First, the grassroots organizational system of Shandong's supply and marketing cooperatives is relatively complete, and its operating network is relatively sound, providing a good foundation for carrying out services for agriculture; second, the Shandong Provincial Supply and Marketing Cooperative uses land trusteeship as an entry point to advance the scaling-up of agricultural services, which drew the attention of the central government and the All China Federation; third, the Shandong provincial government gave strong policy support.

China Business News: In the field of deepening reform, what explorations are the Shandong Provincial Supply and Marketing Cooperative currently undertaking? How do you evaluate such explorations?

Sun Guowei: After being designated a comprehensive reform pilot province this year, the provincial cooperative has selected 6 cities and 18 counties as pilot units, among which 10 counties and county-level districts were selected to carry out special pilots for a new type of rural cooperative finance. This pilot focuses on seeking breakthroughs in four areas: institutional and mechanism reform, scaling-up of services, modernization of circulation, and rural cooperative finance.

Functionally speaking, supply and marketing cooperatives are simply a new type of cooperative economic organizational system. This requires supply and marketing cooperatives to vigorously develop and lead farmers' cooperatives and their federations, and to expand grassroots organizational coverage in villages through various means.

The focus of this deepening of reform is the scaling-up of services for agriculture, turning supply and marketing cooperatives into the main channel for agricultural socialized services. Agricultural socialized services include “nanny-style” full trusteeship and “menu-style” partial trusteeship. Which one to choose is up to the farmers themselves. This kind of trusteeship mainly revolves around key links such as the supply of agricultural materials, agricultural machinery operations, unified prevention and control, and the processing and circulation of agricultural products.

In terms of the work promotion mechanism, the provincial cooperative makes every effort to advance the “four-in-one” approach, actively guiding farmers' cooperatives and credit mutual-aid organizations to cooperate closely with village “two committees,” so as to provide a joint force for agricultural and rural development and concentrate on solving current difficulties in agriculture-related development in areas such as services, organization, operations and funding guarantees.

Of course, supply and marketing cooperatives are rooted in rural areas and have the advantage of “many outlets, broad coverage and long reach.” This time it is necessary to raise the modernization level of the circulation network of supply and marketing cooperatives and build a province-wide e-commerce network platform. Large modern circulation enterprises with core competitiveness should be cultivated and developed.

Considering the difficulty farmers face in obtaining loans, one of the highlights of this deepening of reform is the development of cooperative finance. On the basis of further standardizing the internal credit mutual-aid business of farmers' cooperatives, farmers' cooperatives with democratic management, standardized operations and strong driving capacity are selected to apply to establish farmers' credit mutual-aid societies.

China Business News: Shandong is a major agricultural province. In the new historical period, facing new challenges in the fields of “agriculture, rural areas and farmers,” where do the future opportunities for supply and marketing cooperatives lie? How should they position themselves well?

Sun Guowei: Many people and little land is China's national condition. This national condition will continue to exist for a long time. The agricultural production link can only implement appropriate scale management. This requires improving the agricultural socialized service system, using the scaling-up of services to make up for the insufficient scale of the production link.

Generally speaking, there are currently many entities providing socialized services to farmers, but these entities are generally rather dispersed, small in scale and relatively weak in service functions. Because of the advantages of the supply and marketing cooperative system, with a sound organizational system and deep mass foundations, and combining both commercial and public-interest nature, supply and marketing cooperatives are best positioned to become the main channel for agricultural socialized services. This is where the greatest future opportunity and development direction for supply and marketing cooperatives lie.

As for positioning, in May this year the central government already made it clear, namely that supply and marketing cooperatives are an important front led by governments at all levels and using the form of cooperative economic organization to advance work related to “agriculture, rural areas and farmers.” Carrying out comprehensive reform pilots for supply and marketing cooperatives is precisely about becoming, through comprehensively deepening reform, a new force and comprehensive platform for serving farmers' production and daily life.