The curtain rises on agricultural reclamation reform, central ministries and commissions conduct intensive research

Since July of this year, a “research group on major issues in agricultural reclamation reform and development” composed of central institutions such as the Research Office of the State Council, the Ministry of Agriculture, and the Ministry of Finance has traveled to reclamation areas across the country to conduct research, accumulating materials and paving the way for the next step of agricultural reclamation system reform.

“This research was carried out according to the requirements of the leadership of the State Council, led by the Research Office of the State Council and the Ministry of Agriculture, with the participation of relevant ministries and commissions such as the Office of the Central Leading Group for Rural Affairs. A total of 8 research groups were formed,” a government department source told the Shanghai Securities News reporter yesterday. “They went directly to each reclamation area, and the task was to conduct research on major issues in national agricultural reclamation reform and development and to advance the drafting of relevant documents.”

According to a Shanghai Securities News report, the reporter checked public information from agricultural reclamation departments in many places and found that both the breadth and intensity of this research were rare in recent years: from July 7 to 9, the National Agricultural Reclamation Reform Comprehensive Research Group went to the Yunnan reclamation area to conduct research; from July 13 to 16, the research group entered reclamation areas in Changde, Yueyang, and other places in Hunan for special research; from July 17 to 19, the research group conducted research in the Guangdong reclamation area; on July 20, the research group appeared in Jiaozuo, Henan, to conduct research on issues such as the basic situation of state farms, the agricultural reclamation management system, and the farm internal social management system; from July 21 to 23, the research group moved on to the Hubei reclamation area to carry out special research on human resources and social security.

“Judging from the broad range of areas covered by this research, this is a systematic study,” an employee of a local agricultural reclamation group told the Shanghai Securities News reporter. “The goal is to improve the operating efficiency of state farms.”

As a product of a specific historical period, China's agricultural reclamation system maintained planned-economy characteristics for quite a long time and was even called “the last fortress of the planned economy.” “The agricultural reclamation system is a very special system in China,” said Ye Qing, deputy director of the Hubei Provincial Bureau of Statistics. “Hubei alone has quite a few state farms, such as Longganhu Farm and Wusan Farm. Some major reclamation areas have even more agricultural reclamation enterprises.”

It is understood that after the founding of New China in 1949, based on political, military, and economic considerations, state farms began to be established in border areas and in various provinces, thus forming a management system combining operational functions with social functions.

“The formation of this group of agricultural reclamation units was due to many historical factors,” Zhang Xiliang, a researcher at the Research Center of the State-owned Assets Supervision and Administration Commission of the State Council, told the reporter. “A considerable portion were military personnel transferred to civilian work, and educated youth sent to the countryside also strengthened this workforce. Agricultural reclamation areas undertook different key tasks in different historical periods.”

After reform and opening up, the agricultural reclamation system also changed, and the vast majority of agricultural reclamation enterprises were transferred to local state-owned asset supervision and administration commissions for management. Entering the 1990s, the direction of agricultural reclamation system reform was the “separation of operational functions and social functions,” which also gave rise to many operating entities, including some planting-related listed companies in today's A-share market. For example, 16 of the 113 farms under Heilongjiang Agricultural Reclamation separated their operating assets and integrated them to form the listed company Beidahuang.

“Although reform has been carried out for so many years, it should be said that the overall operating efficiency of most state-owned agricultural reclamation enterprises is not good,” a securities analyst told the reporter. “They still follow the old planned-economy management approach.”

An analysis report by Qilu Securities held that some listed planting enterprises “have still continued the traditional operating approach of the agricultural reclamation system for many years after listing, with generally low operating efficiency, and have not brought into play the advantages and characteristics that resource-based enterprises should have.” The report specifically noted that over the past 10 years, neither Beidahuang nor the listed companies under the Xinjiang Production and Construction Corps have demonstrated the operating advantages of resource-based enterprises, and that “the management level and market-oriented mechanisms are still in the era of the agricultural reclamation planned economy.”

“Although operational functions and social functions are supposed to be separated, the current situation shows that at the grassroots level they are still difficult to fully separate,” the analyst told the reporter. “This is also an important reason for low operating efficiency.”

Data from a securities firm show that at present there are more than 2,000 farms in agricultural reclamation enterprises nationwide, with a land area of 6 million hectares. The agricultural reclamation system uses 3.98% of the country's crop sowing area and contributes 6.61% of the country's total agricultural output value.

If corporate governance can be improved, greater potential will be released.

Regarding the direction of the next step of reform, Guosen Securities predicted that land transfer will gradually be taken over by specialized production cooperatives and large agricultural production groups. “At the current stage, China's large agricultural production groups (agricultural reclamation and corps systems, etc.) mainly have the problem of poor management, and the state-owned enterprise reform plan will stimulate improvements in their management,” the report said. “It can be said that large agricultural production groups will benefit on the one hand from the scale effects brought by land transfer, and on the other hand from the improvement in management levels brought by state-owned enterprise reform.”