Large-scale agriculture should follow a Chinese-style development path

In reviewing the statements of domestic scholars and local officials, whenever they discuss the modernization of farmers and agriculture, they all say in a very firm tone that the way out is large-scale operation, industrialization or capitalization. However, as time goes on, when faced with a series of problems that run counter to our expectations, we have to rethink the development approach of agricultural industrialization. From 2010 to 2013, China's three major grain crops - corn, rice and wheat - all shifted to net imports. High-priced rice has long appeared on supermarket grain shelves. All of this has come too fast for every Chinese person. The author always feels that when we talk about agricultural modernization, we seem to ignore differences in land endowments and the non-replicability of the comparative advantages that nature and climate confer on agricultural production. If we do not adjust our thinking and carry out strategic restructuring and arrangements, the result will be very dangerous.

Theoretically speaking, according to the requirements of the law governing changes in the quantitative combination of productivity factors, one should consciously choose and control the scale of production, increase output, reduce costs and achieve the best economic benefits. Economies of scale, or the economic efficiency of productivity scale, is also a question of determining the optimal scale of production. However, the problems accumulated over these years are already warning us that if grain production becomes excessively large-scale, the deeper consequences will be farmer unemployment, the demise of rural communities and the destruction of ecological diversity. The two possible impacts brought about by this are both fatal: high-priced commercial grain breeds various social and economic difficulties, and the cost of social management rises sharply while risks expand. Therefore, we need to correctly handle agricultural industrialization and capitalization, and guard against falling into the trap of monopoly capital operation behind industrialization.

In China, the rapid rise in seasonal agricultural wages in different regions shows that the era of rural labor shortage is approaching. During field research, the author found that the land investment density of agricultural industrialization is far higher than that of traditional smallholder agriculture; since 2000, agricultural subsidies have created a path dependence, rising along with the tide. Because grain production has extremely high requirements for climate, environment and soil structure, it is very difficult to escape the basic requirement of "depending on the weather"; against the background of relatively low grain prices, smallholders give up grain cultivation; moreover, national grain cultivation subsidies have helped shift the main body of grain cultivation to capital owners. Especially in recent years, rural land transfer and concentration have staged a great drama of "land rights turmoil."

Large-scale operation is the result of the division of labor across society and the allocation of other factors, and is an endogenous process. Agriculture, especially grain production, is constrained by the boundary of land productivity, and there are also limits to raising yields per unit area through technological advances such as chemical fertilizers and seed improvement. To this day, we have not seen large-scale grain production (corn, rice and wheat) in greenhouses, only vegetables, melons and fruits, or other high-value flowers and the like. An important factor is that the productive value of land is determined by the type of agricultural product, and which type of agricultural product is planted is in turn determined by price and the amount of initial capital investment. As for who the main body operating the farmland is, in what way it is realized, and how the value added is distributed, all of these are closely related to the goal-setting of the main body investing the capital. In recent years, during field research in different regions of the east, central and western areas, the author obtained concrete evidence, such as watermelon cultivation, blueberry and strawberry cultivation, high-priced flower cultivation, and cultivation of the Chinese medicinal herb Panax notoginseng; driven by economic interests, agricultural large-scale operation and de-grainization go hand in hand.

In response to the judgment that smallholder production is inefficient, the author used 5 years of follow-up survey data on smallholder rice cultivation in Hejiang County, Sichuan, to estimate the production function, so as to reveal the attainability of the production possibility frontier. The results found that the proportion of inefficiency controllable by human action was 72.3%, and the proportion of random inefficiency was 27.7%; the relatively high price expectations of socialized smallholders directly affect their willingness to plant, and once the market price is lower than expected, the probability of reducing the planted area is as high as 13%. When smallholders withdraw from farmland operation, transfer and concentration are only the result, and the decisive factors include the grain market (purchase) price, the wage level of the non-agricultural sector, and farmland rent. Regarding farmland sublease rent, the rent for grain cultivation differs relatively little across regions, usually around 300 to 500 yuan per mu; the rent for non-grain cultivation differs greatly, depending on the crop type, with land rent ranging between 1,200 and 25,000 yuan per mu. Here, land rent, as an economic variable explaining land concentration, is also the benchmark for bargaining between smallholders and capital owners, and the platform for competing with the people for profit is the farmland and agricultural product market; with the rapid advancement of rural land transfer and concentration in various places, the active or passive withdrawal of smallholders from the land has become a normalized phenomenon in rural areas. In view of this, it is necessary to treat agriculture and rural development prudently, pay attention to building a system of internal balance between society and the economy, form a price mechanism conducive to stabilizing smallholder grain production, and reconstruct the understanding of development behind "low grain prices hurt farmers and also hurt the people."

⟦NL> When the level of urbanization reaches a certain point, if we limit the discussion to land operation methods, adapt to local conditions, and guide and retain farmers who work the land according to circumstances, perhaps only then can agriculture and food security be guaranteed. At different stages of development, with different human-land relationships and in different regions, there can be different modes of agricultural development. In this regard, it is extremely necessary to reunderstand production efficiency and the dual social and economic functions of farmland operation. In the era of urbanization and industrialization, the strategic security of grain production is always higher than yield security. Based on China's actual conditions and the special difficulties of grain production, only when the external conditions cultivated by the market and the government are fully prepared can the smallholder mode of production be supplemented or replaced by new types of operation.

Judging from the development experience of the United States, Japan and European countries, the fate of farmers has always been in the hands of the government; agricultural production and farmland operation are always accompanied by a process of interest redistribution and bargaining. Grain output and agricultural production methods are determined by government subsidies, rather than production efficiency playing a decisive role. At present, China has reached a crossroads in farmland operation and agricultural development. The main variable determining the mode of grain production is "subsidies," the main variable determining grain output should be "price," and the force determining the form of farmland operation should not come from government intervention, nor should it be the market, but should be adjustments endogenous to the human-land relationship. China's grain production, which faces tremendous population pressure, does not allow and cannot take the American-style commercialized development path, and even less can it be the Japanese-style path of intensive cultivation under power-based operation. China should have its own path choice.