The Functional Positioning of Family Farms in Agricultural Commodification

The 2013 No. 1 Central Document proposed encouraging and supporting the transfer of contracted land to specialized large-scale farmers, family farms, and farmers' cooperatives, among which the new formulation of “family farm” attracted attention. Immediately afterward, at the Third Plenary Session of the 18th Central Committee of the Communist Party of China, the central government more explicitly proposed five types of new agricultural operating entities, including specialized large-scale farmers, family farms, farmers' cooperatives, and agricultural enterprises. Afterward, family farms sprang up like bamboo shoots after a spring rain across the country. According to statistics from the Ministry of Agriculture, by the end of 2012, there were 877,000 family farms nationwide that met the statistical standards, with an operating cultivated land area of 176 million mu and an average operating scale of 200.2 mu; among them, family farms engaged in planting and breeding reached 861,000, accounting for 98.2% of the total number of family farms [1].

However, from the perspective of practice, confusion has appeared in the process of developing family farms in some places. Some so-called family farms exist in name only and lack the substance of a family farm, and some have even been transformed from existing cooperatives or agricultural enterprises merely by changing their appearance. Moreover, in theoretical terms, the academic community still lacks systematic argumentation and explanation regarding a series of questions: why family farms should be developed, what significance family farms have for China's current agricultural development and transformation, and what essential differences exist between family farms and other new agricultural operating entities. As a new thing, the development and cultivation methods of family farms certainly need to be explored in practice, but the basic understanding and functional positioning of family farms must first be clarified. In response to the deficiencies in current understanding and research on family farms, this article repositions the family against the background of agricultural transformation, argues in detail for its unique functions, and puts forward several suggestions for developing family farms.

I. Family Farms in the Context of Agricultural Commodification

1. The concept of family farms

As a brand-new agricultural operating entity, research on family farms is still at a relatively preliminary stage. Related research generally revolves around the definition and characteristics of family farms, and still lacks understanding and functional positioning of them from the height of China's agricultural development and social transformation. It is generally believed that a family farm is a new type of agricultural operating entity that uses family members as the main labor force, engages in large-scale, intensive, and commercialized agricultural production and operation, and relies on agricultural income as the family's main source of income (Gao Fan, Zhang Wenjing, 2013). From the definition, a family farm has at least four basic characteristics: first, the family is the operating unit; second, the labor force is mainly family members, with no or very little hiring of labor outside the family; third, the farmland operated has long-term stability and reaches a certain scale; fourth, agricultural operating income is the family's entire and main source of income (Guo Xibao, 2013; Liu Wenyong, Zhang Yue, 2014; Gao Xiang, Liu Tongshan, Kong Xiangzhi, 2013). This article agrees with the related research on the conceptual definition and characteristic description of family farms, but it more hopes to answer why China's current agricultural policy should encourage and develop this new type of operating entity.

2. Agricultural commodification and family farms

Since the reform and opening up, with the improvement and acceleration of China's urbanization level, a large agricultural population has moved to cities, and the proportion of the non-agricultural population has increased greatly. Moreover, with economic development and the improvement of people's living standards, the entire society has not only undergone changes in the consumption structure of agricultural and sideline products, but has also put forward higher requirements for improving their quality. There is no doubt that today's Chinese agriculture stands at the intersection of historical change. Against this background, the author believes that the emergence of family farms is precisely meant to conform to the trend of social and agricultural transformation and further promote the commodification of Chinese agriculture.

First, family farms should promote the transformation of agricultural operators from small farmers to “middle farmers” or “large farmers” in status, and solve the problem of “part-time farming” in Chinese agriculture. Whether the purpose of agricultural production is to solve one's own family's food and survival problems or to face the market is completely different for different operating entities. For small farmers, especially under the basic national condition of many people and little land, their land cultivation first serves to satisfy their own family's consumption needs [2], and only the surplus grain is handed over to the market and the state. In China, since rural land was divided and contracted to individual households, because the small-peasant production pattern of one household per unit was restored, the state could only satisfy the urban population's consumption needs for commercial grain by collecting taxes and fees from farmers and setting grain procurement tasks. In contrast, for middle farmers or large farmers, their land area is larger, and agricultural production is mainly oriented toward the market. Therefore, from the height of national food security, having a group of production entities that devote themselves to agricultural production and whose production is mainly oriented toward market transactions is a major issue related to whether grain production is stable. Because family farms are mainly composed of middle farmers and large farmers, promoting family farms is precisely promoting the development of middle farmers and large farmers.

Moreover, since the beginning of the new century, with the emergence and expansion of non-agricultural employment opportunities for rural labor, the problem of the relatively low comparative benefit of agricultural output value has gradually emerged. In many places, if local non-agricultural employment opportunities exist, people are more willing to invest their main labor in the secondary and tertiary industries while farming only as a sideline. For small farmers, they no longer value the significance of land output for family income; as long as the family's basic consumption needs can be guaranteed, they will not take pains to improve land yields and the market competitiveness of agricultural products, and the problem of part-time farming in agriculture is becoming increasingly serious. Family farms with an appropriate scale are different: because agricultural income is the main source of family income, improving agricultural output and the degree of commodification has a direct effect and significance for increasing income, and they are willing to study market demand and willing to improve labor efficiency and land output rates. At the same time, because they engage in agricultural production year after year, they also have rich experience in agricultural production and scientific and technological management. Therefore, with the emergence of family farms, a new group of professional farmers will appear, thereby promoting the development of the agricultural industry and the degree of commodification of agricultural products.

Second, family farms should improve the quality of agricultural and sideline products and meet society's need for an elevated level of consumption of agricultural and sideline products. Apart from the problem of part-time farming in agriculture, in the vast inland rural areas there is also a widespread mode of agricultural cultivation based on intergenerational division of labor. In the vast central and western rural areas where there are no large numbers of local non-agricultural employment opportunities, many farmers go out to work, and the contracted land can only be cultivated by the elderly left behind at home. On the one hand, the children rely on going out to work to obtain the family's main income; on the other hand, the elderly left behind at home fully use their idle labor and invest it in agricultural production, relying on the limited output of the land to reduce the family's consumption expenditure. Because the elderly lack alternative employment choices, on the premise that they still have a certain labor capacity, they can devote themselves wholeheartedly to agricultural production and ensure the stability of agricultural output. Therefore, for small-farmer households, this mode of division of labor and combination can maximize family welfare.

However, this agriculturally sociological model of “half farming, half farming” faces more and more challenges. On the one hand, elderly agriculture still faces the question of who will farm in the future. If the degree of intensification and commodification of agriculture cannot be raised, agriculture itself will lack attractiveness. On the other hand, more importantly, although elderly agriculture can ensure the maximization of land output, because planting is mainly oriented toward one's own family consumption, it lacks the ability and motivation to invest in agricultural science and technology and improve the market competitiveness of products. Especially in the production of cash crops, modern society is no longer satisfied with merely an adequate supply in quantity, but has also generated new requirements such as improved taste, healthy consumption, and more green and environmentally friendly cultivation methods. None of these new requirements can be achieved by traditional small farmers with the advantage of “intensive and meticulous cultivation”; they must rely on investment in agricultural science and technology and modern agricultural management methods. Therefore, from the perspective of the development trend of agriculture, Chinese agriculture needs a group of agricultural operators who can actively cater to market demand and arrange their own production according to the market, and family farms emerge precisely against this background.

In short, under the era background of social transformation and agricultural commodification, traditional agriculture with the small-peasant economy as its main body needs to be transformed, and the emergence of family farms is precisely meant to solve the problem of “who will farm and how to farm well” in the agricultural planting link.

II. Comparison of the Functions of Different New Agricultural Operating Entities

The question is that before the central government proposed the concept of family farms, China already had new agricultural operating entities such as agricultural enterprises, cooperatives, and large grain-growing households. As important forces that likewise promote agricultural commodification, what characteristics and unique advantages do family farms have compared with these entities. Only through comparison can we understand the significance of the existence and development of family farms.

1. Family farms VS agricultural enterprises

For a long time, as a modern form of organization, agricultural enterprises have been entrusted with the important hope of developing agriculture and driving farmers to prosperity. From 2000 to 2006, the Ministry of Agriculture and other central ministries and commissions successively recognized more than 580 national key leading enterprises, and each province (autonomous region, municipality directly under the central government) also successively recognized more than 4,800 provincial-level key leading enterprises (Rural Economic Research Center of the Ministry of Agriculture, 2008: 9). Due to the internal organizational management system of enterprises and generally huge operating areas, corporate legal persons cannot engage in agricultural labor, and in production they must inevitably solve agricultural production management problems by hiring laborers. Precisely because of the separation of capital and labor, Marx discovered that the capitalization of agriculture would lead to two class relations, agricultural capitalists and agricultural proletarians, and that the development of the commodity economy would ultimately lead to the formation of the bourgeoisie possessing the means of production and the opposing proletariat, that is, the formation of capitalist production relations (Marx, 2004).

However, because it does not have the characteristics of industrial labor such as standardization, proceduralization, and ease of supervision, under the mode of relying on hired workers for agricultural production, how to measure and evaluate laborers' labor and thereby mobilize laborers' production enthusiasm is a problem that troubles agricultural production management. On the one hand, spatially, the workplaces of agricultural labor are highly dispersed, and managers cannot achieve on-site supervision and management of laborers; on the other hand, temporally, there is a relatively long cycle from agricultural labor to the maturity of agricultural products, and managers cannot evaluate agricultural laborers' labor according to the quality of the final product. This means that under the employment relationship, the temporal and spatial characteristics of agricultural production make it very difficult for managers to establish an effective reward and punishment mechanism. For frontline agricultural laborers, under conditions where the mechanism for measuring and evaluating their own labor is ineffective, they will inevitably face the awkward situation of “doing more or doing less makes no difference.” Under this relational model, they have even less initiative to deal with various contingent problems in agricultural production caused by the biological characteristics of agriculture, and intensive and meticulous cultivation in agricultural production becomes impossible.

In addition, under China's current social and institutional conditions, agricultural capital going to the countryside to engage in agricultural production must also bear costs in two aspects. First, due to the reality that China's land is contracted to households, agricultural enterprises must pay farmers corresponding land transfer fees. Second, due to the increase in non-agricultural employment caused by economic development, the price of rural labor has already formed, and agricultural enterprises hiring agricultural workers must pay labor costs. At present, rural labor costs are rising day by day, becoming an important factor restricting the development of agricultural enterprises. Precisely for these reasons, once they enter the planting sector, agricultural enterprises, especially those with large-scale cultivated land, generally face difficult situations such as declining per-unit yield and operating losses (Guo Liang, 2011; Sun Xinhua, 2012). The drawbacks and disadvantages of enterprises entering the front line of agricultural planting have already manifested in practice.