Giving Farmers More Property Rights Through Land Rights Reform

Farmers' property rights refer to their rights over land and the rights derived from these, mainly including farmers' land contractual management rights, the right to use residential land, and the right to share in the distribution of collective asset income. Farmers' land property rights are closely related to most issues in the current reform of land policy, innovation in agricultural operation methods, and sustainable economic and social development. Clearly defining and granting farmers reasonable property rights can fundamentally safeguard the interests of the broad masses of farmers and raise farmers' incomes.

I. Giving farmers more property rights is of great significance

(1) An effective way to increase farmers' incomes

Increasing farmers' incomes is the key to solving the “three rural issues.” From 1980 to 2012, the relative gap between the per capita disposable income of urban residents and the per capita net income of farmers (with farmers' per capita net income as 1) widened from 2.5:1 to 3.1:1, and the absolute difference expanded from 286.3 yuan to 16,648.4 yuan, an increase of nearly 60 times. Farmers' low income level and slow growth, and the large income gap between urban and rural residents, are not only detrimental to agricultural and rural development and the improvement of farmers' living standards, but also constrain the expansion of domestic demand, especially consumer demand, and sustained and steady economic growth. Therefore, increasing farmers' incomes is of great significance to solving the “three rural issues” and even to the overall economic and social development.

From the composition of farmers' income, among the four parts of household business income, wage income, transfer income and property income, property income accounts for a relatively low proportion and is where the greatest potential lies for increasing farmers' incomes. Giving farmers more property rights can effectively increase farmers' property income, become a new growth point for raising farmers' incomes, and gradually narrow the income gap between urban and rural residents.

(2) An inevitable requirement for farmers to enjoy the fruits of modernization

Urban-rural inequality is the greatest obstacle affecting our country's modernization process and the building of a moderately prosperous society in all respects. One deep-seated cause of urban-rural inequality is that the property rights enjoyed by farmers and urban residents are unequal. Houses legally built by farmers on their own residential land do not have complete property rights.

This seriously constrains the cultivation, accumulation and expansion of farmers' wealth, and also prevents farmers' property from entering the social property appreciation system, credit system and circulation system, causing inequality between farmers and urban residents in economic rights and affecting the development of urban-rural integration. Giving farmers equal property rights, realizing their equal status as modern individuals, allowing the broad masses of farmers to participate equally in the modernization process and share in its fruits, and thereby achieving equality of rights between urban and rural residents, is a major issue facing our country's modernization.

(3) A necessary foundation for innovating the agricultural operation system

Innovating the agricultural operation system and developing appropriately scaled operations inevitably require reducing the number of farmers remaining on the land. At present, a considerable part of the rural population can only choose an amphibious lifestyle of moving between urban and rural areas. Rapidly having farmers withdraw completely from the land is also unrealistic, while relying on urbanization to reduce the number of farmers is a relatively long-term gradual process, requiring another approach, namely prompting some farmers to substantially withdraw from land operation and transfer out land management rights through means such as circulation.

The rural labor force in our country that has shifted to non-agricultural employment already exceeds 48%, yet the area of contracted land transferred by farming households accounts for only 21.2%. Many farming households worry about whether the transfer of land management rights and innovation in operation methods will cause them to lose their land. Only by clearly defining the land contractual management rights held by farming households and their powers can the collective ownership of rural land be upheld, and only by making farmers' powers over contracted land more complete and full can the relationship between farmers and land be further improved, the production and operation functions of agricultural land be expanded, and agricultural and rural development be promoted.

(4) A necessary precondition for farmers' urbanization

First, in the process of farmers' urbanization, farmers urgently need funds to solve problems such as buying homes and starting businesses in cities and towns. Giving farmers more property rights helps farmers obtain more property income. For example, whether farmers' houses can enter the social property appreciation system, credit system and circulation system under market economy conditions directly relates to whether farmers' property can be transformed into assets and then into capital, making it economically possible to settle in cities and towns.

Second, farmers have a relatively strong awareness of land rights. According to a 2013 survey and analysis by a relevant national research department based on 3,154 questionnaires from 30 cities nationwide, among the rural household registration sample (68.3%), only 5% of farmers were willing to give up contracted land with or without compensation after settling in cities (see Figure 1), and the proportion willing to give up residential land was also very low. Farmers entering cities believe that the focus of promoting the urbanization of migrant workers is to protect their rights and interests such as contracted land and residential land (see Table 1), and fear of losing land has become an important reason why some farmers are unwilling to transfer their household registration. Most farmers entering cities hope to retain land property rights and are also willing to carry out land transfer or paid exit in different forms. For this reason, it is necessary to clarify the property rights attributes, powers and realization methods of farmers' land rights, and on this basis carry out corresponding institutional design, so as to scientifically guide and advance the urbanization process.

II. Main manifestations of the current imperfections in farmers' property rights and the problems they cause

(1) The powers of agricultural land contractual management rights are incomplete, and the allocation efficiency of land resources is low

1. The structure of the powers of land contractual management rights is incomplete. Based on national conditions, our country has imposed certain restrictions in its institutional design on the disposal powers of land contractual management rights. For example, the right to mortgage contracted land is strictly limited, and land contractual management rights, as usufructuary rights, cannot be fully realized, hindering the marketization and capitalization of land factors, reducing the allocation efficiency of land resources, and harming farmers' right to obtain higher land rent.

2. Transactions in land contractual management rights are restricted. Rights transactions are the main form in which the exchange value of land contractual management rights is realized. Whether it is the Property Law or the Rural Land Contracting Law, there are restrictions in many aspects on the procedures and preconditions for rural land transfer and transactions in land contractual management rights, and the exchange value lacks mechanisms for equity conversion and capitalization. When rights transactions are restricted, the exchange value of land contractual management rights cannot be fully manifested, which not only limits land transfer and reduces the allocation efficiency of land resources, but also infringes on the freedom of property rights of the holders of land contractual management rights.

3. The paid exit mechanism for contracted land is seriously lagging. The current land system allows exit from land contractual management rights, but it does not reflect wealth utility. The Rural Land Contracting Law stipulates that only when the contractor has invested in the contracted land and improved the land's production capacity does it have the right to obtain corresponding compensation. Therefore, even if farmers settle in cities, they are unwilling to withdraw from contracted land, which increases social costs and also hinders the urbanization process.