Viewing Three Rural Issues Reform from the Perspective of Industry Carrying Capacity: How Can 450 Million Rest and Recuperate

The reform of the three rural issues currently faces two major problems. First, in agriculture, who will guarantee food security, and who will farm the land? Second, how can farmers increase their economic income? With agricultural progress, the small plot of land can no longer support so much labor, and a large number of farmers have gone to cities to work. Between these two lies the rural problem, mainly how to protect the ecological environment.

The carrying capacity of an industry is like a person carrying a load: one can only carry one hundred jin, and the employment population it can accommodate has an upper limit. 20 mu of farmland requires only one laborer; one more is wasteful. The demand for labor is like this, and so are input-output ratios in other respects. After saturation, the more input, the worse the efficiency. Therefore, while accelerating urbanization, agricultural mechanization, and farmer professionalization, policies must be considered and designed from the perspective of the upper limit of agricultural industry carrying capacity.

So how many people can our country actually allow to make a living in the agricultural industry? Although there is no unified calculation path and calculation method, estimates, layout, and implementation can be based on the 1.8 billion mu of farmland red line, or on the land-labor carrying capacity, that is, the labor force needed for staple grains, livestock, vegetables, aquatic products, and so on.

450 million is the limit for the three rural issues to “rest and recuperate”

China's agricultural industry mainly consists of crop farming and livestock breeding, plus part of agricultural product processing and rural tourism.

In crop farming, if measured by the 1.8 billion mu of farmland red line, the area one laborer can currently cultivate has reached 200 mu in plains and dam areas, more than 20 mu in hilly areas, and more than 10 mu in mountainous areas. From this it can be inferred that the planting of the three major staple grains (rice, wheat, corn) requires less than 100 million laborers; if calculated on the basis of farmers going to cities to work for an annual income of 30,000 yuan, to obtain the same income, one agricultural laborer needs to cultivate about 20 mu. On this basis, the most suitable labor force for the agricultural industry is also about 100 million.

In livestock husbandry, in 2011 the national pastoral areas had more than 6 million employed people, and semi-pastoral areas had more than 11 million employed people, totaling more than 17 million. In recent years, the employed population in livestock husbandry has basically remained at this scale.

In aquaculture, in 2014 the national aquaculture area was more than 120 million mu, and the fishery labor force was more than 20.3 million. In vegetables, fruits, and flowers, in 2014 the national vegetable planting area reached more than 300 million mu, and the number of people employed in the flower industry was more than 5.25 million.

Because the labor force involved in crop farming and livestock breeding overlaps greatly, according to the latest statistical data from agricultural departments, preliminary estimates put the total labor force actually needed by the agricultural industry at about 150 million. Adding the “old farmers” who have lost their labor power and the “small farmers” preparing to take over, the population that can be accommodated in rural areas is about 450 million.

The Unbearable Disorder of Agricultural Industrialization

China's industrialized operation of agriculture, as a new mode of production and operation different from traditional agriculture, has been practiced for more than 20 years. However, China's industrialized operation of agriculture still has many problems. There is not only the phenomenon of “cheap grain hurts farmers,” but in many cases expensive grain also hurts farmers. The key reason is that the carrying capacity of agricultural industrialization has not been fully considered, and deviations have appeared in many policy designs and policy support processes.

First, support policies are unstable. For a period, many professionals believed that “farmers plant whatever makes money and raise whatever makes money” was caused by a lack of scientific planning and accurate market information. Now it seems that more of the cause may be attributed to improper action to a certain extent by the “visible hand.”

Take pig farming as an example. “Subsidies are like stimulants”: when subsidies are given, pig inventory surges and pork prices fall sharply; when subsidies stop, pig inventory drops sharply and pork prices soar…… Now, the “pig cycle” has even shortened from one or two years in the past to about half a year. The problem appears to be caused by “small” and “scattered” operations, but in fact it stems from improper pig subsidy policy.

In the market, the main factor affecting pork prices is not smallholders, but newly added large-scale operators. Policy subsidies are available at one time and stop at another, and only large-scale operators can promptly follow the trend and enter or exit. It can be seen that only by stabilizing the pig subsidy policy can the “roller coaster” problem of pork prices be solved. The reason is simple: if the subsidy policy is stable, profits will not be large, experienced pig farmers will persist for the long term, and inexperienced ones will naturally not rashly join. This is true not only of pig farming, but also of dairy cattle farming, including the planting of many fruits, vegetables, and cash crops, and mostly so as well.

Another case is farmers' cooperatives. According to statistics, from the official implementation of the Law on Farmers' Professional Cooperatives in July 2007 to the end of October 2015, the number of farmers' cooperatives nationwide had grown to 1.479 million. Based on the author's many years of grassroots research, among these there are very many blind followers, and even quite a few fake cooperatives that came for policy subsidies. The reason still relates to unstable subsidy and support policies.

Second, support projects are biased. In recent years, in order to increase farmers' income, relevant ministries and commissions have formulated a batch of preferential policies every year to develop livestock or cash crops. However, because support projects are single, policy goals are single, and preferential conditions are rigid, support projects become “good to look at but not good to eat.” For example, policy-based agricultural insurance has not yet been carried out for cattle, sheep, and poultry farming; live livestock and poultry cannot be mortgaged for loans, leading to weak risk resistance; investment in livestock and poultry manure treatment is large, and farmers themselves find it hard to bear it, and so on. These problems greatly reduce the effect of the policies.

Especially in some grassroots counties, cities, and townships, cases of seeking grandness and completeness in agricultural industrialization out of the pursuit of political achievements can be found everywhere: planting cooperatives, at least a thousand mu, at most ten thousand mu, or hundreds of thousands of mu; breeding cooperatives, at least a thousand head or ten thousand tail, at most ten thousand head or a hundred million tail…… When administrative orders cannot push things forward, economic means are used, implementing various awards and subsidies under many names. In the end, the policy goals of agricultural industrialization often go “beyond the proper limit.”

For example, a certain county in the west was once nationally famous as the “hometown of honey oranges.” In recent years, because the quality of honey oranges declined, the local government department believed that the tea market had good development prospects and issued a policy: with administrative villages as units, those planting more than 10 mu and less than 50 mu within the year were to receive a subsidy of 100 yuan per mu based on actual planted area; those planting more than 50 mu were to receive a subsidy of 150 yuan per mu based on actual planted area. The resulting blind development led to falling tea prices, no sales channels, and various aftereffects of “hurting farmers.”

⟦NL> Third, there are many missing items in support links. Developing agricultural product processing and strengthening county economies are the main contents of several No. 1 central documents. However, in the process of specific design and deployment by various departments, most support intensity has been dispersed, forming a policy result similar to “sprinkling pepper powder.”

For example, in 2012 the central finance launched a subsidy project for primary processing at agricultural product origins, arranging 500 million yuan each year (increased to 600 million yuan in 2014) in special funds, and adopting the form of awards instead of subsidies to support farmers and cooperatives in building storage cellars, cold storage warehouses, drying rooms, and other primary processing facilities. However, when this subsidy policy reached grassroots farmers and cooperatives in counties and cities, either not a cent was seen or it was too little to help…… This has also become the fundamental reason why many grassroots counties and cities are keen on industrial development and let the agricultural industry “take its natural course.”

Use Carrying Capacity Thinking to Rationally Arrange the Three Rural Issues

For the economic development of a region and a place, industry needs to be planned according to local conditions, and modern agriculture likewise needs to be planned according to local conditions; urban development needs to consider carrying capacity, and rural development also needs to consider carrying capacity. Using the thinking of dynamically changing carrying capacity to arrange agriculture and farmers not only allows such difficult issues as land ownership, contract rights, management rights, and income rights in agricultural industrialization development to be resolved, but even policy dilemmas related to rural development, such as the household registration issue, urban issues, and “who will farm the land,” will be readily solved.

Specifically on the issue of agricultural industrialization, there is an urgent need to plan and arrange rationally using the thinking of agricultural carrying capacity.

First, the whole-industry-chain approach. The industrialized operation of agriculture involves more than half of government departments. Therefore, government departments need to follow the special requirements of the agricultural industry, eliminate obstacles of the old system, weaken departmental barriers and management duties, break industry boundaries and block segmentation, and gradually move toward integrated management. The most effective policies should be placed on the “three ends”:

The first is the planting and breeding end. Coordinate comprehensive agricultural development funds, fiscal agricultural development funds, poverty alleviation and development funds, and so on, and concentrate them in main production areas rather than inefficient “sprinkling pepper powder” subsidies. The second is the processing end. At present, project subsidies are mainly for storage, preservation, and drying, with the focus on main potato production areas, while also taking into account advantageous fruit and vegetable production areas. On the contrary, staple grain and livestock projects not only have no subsidies, but are also taxed. In this regard, coordinated policy solutions based on long-term and stable policy should be formulated. The third is the ecological environment end. Centering on maintaining the balance of the agricultural ecosystem, fully use the favorable opportunity of “new socialist countryside construction” and “whole-village advancement” to accelerate unified planning, comprehensive deployment, and integration of funds to do a good job in the planning and layout of rural industrialization and organize its implementation.

Second, the direct production-and-sales supply approach. Based on the author's many years of grassroots research and observation, “community-supported agriculture,” or family farms called “new smallholders,” are becoming a new model for modern agricultural development. This model has been established for three reasons. First, as urbanization accelerates, people are getting farther and farther from the land, and “community-supported agriculture” provides consumers with convenient conditions to get close to the land. Second, with the rise of the middle-income class, a considerable number of people have completed the upgrade from “eating enough” to “eating well,” and “community-supported agriculture” has a huge potential consumer group. Third, because food safety incidents occur from time to time, consumers pay more and more attention to their own health, and “community-supported agriculture” exactly caters to this need.

At present, this model conforms to the general trend of China's integrated urban-rural development, links agriculture, rural areas, and farmers together, and links the personalized and diversified needs of urban residents with agriculture, rural areas, and farmers. While enabling agriculture to escape natural and man-made disasters, rural areas to escape environmental pollution, and farmers to escape the shackles of the land, it has formed a pluralistic and harmonious new form of agricultural industrialization that deserves key attention from relevant policy departments.