What growth dilemmas do new agricultural business formats face? An in-depth analysis by Half-Month Talk
At present, various new agricultural business formats such as urban leisure agriculture are growing vigorously. But in the course of their growth, as they become increasingly tightly integrated with factors such as capital, labor and land, some policy dilemmas have also emerged: some urban agriculture projects cannot obtain land-use quotas, so they directly start playing land policy “edge-ball” games, or even use land illegally; some agricultural subsidy policies have poor “on-the-ground” results and provide insufficient support for the development of large-scale agriculture; some agricultural projects have accumulated a large amount of fixed assets on the land, yet these cannot become effective collateral and have become “dead assets” with no financing function. Under reform thinking, how should we respond to the “growth dilemmas” of new agricultural business formats?
Urban agriculture lacks land-use quotas, and “edge-ball” oddities appear frequently
In front of the mountain, green trees form shade; landscape corridors, pavilions, terraces and waterside pavilions are built around the lake, and the scenery is pleasant; at the foot of the mountain, a flower and plant area covering more than 1 mu presents a rural dwelling style, antique and elegant, equipped with a themed restaurant where visitors can dine and entertain themselves; on the mountain, more than 400 mu of forest land is planted with bayberry, cherry blossoms and so on, available for picking and viewing…… An agricultural sightseeing park in a district of Chongqing was built in 2012. The owner has invested more than 30 million yuan in total, taking characteristic high-benefit agriculture as the foundation and developing supporting leisure tourism.
After years of investment, the project has matured. But owner Zhang Tianxin (pseudonym) admits that he always feels uneasy, and the reason lies in the fact that the sightseeing park, under the name of temporary production buildings and agricultural ancillary facilities, has set up a themed restaurant and housing, playing an “edge-ball” game with land-use policy.
Zhang Tianxin told a Half-Month Talk reporter: “Before the transfer, most of the sightseeing park’s land was abandoned. Because the transfer rent was relatively high, the farmers tacitly accepted our building of houses, but land transfer has a time limit, and changing the use of agricultural land is also illegal. Once the contract expires, what should we do if the farmers demand the land back in its original state? What should we do if the land law enforcement department comes to investigate and handle the case and demands that the houses be demolished?”
Compared with directly building houses in the name of agricultural ancillary facilities, some projects use more “clever” methods. A Half-Month Talk reporter recently interviewed a farmhouse in Chongqing and saw more than 10 wooden “farmhouse lodges” built around a lake, with the buildings one or two meters above the ground and supported by steel frames. The person in charge of the farmhouse said: “The reason we build houses elevated above the ground is that policy stipulates that agricultural land cannot have its use and nature changed, while agricultural-tourism supporting facilities must include reception facilities. Weighing the policy boundary and real demand, building elevated wooden houses off the ground carries relatively less risk. If the government comes to investigate, our cost of demolishing the houses and restoring cultivation is also lower.”
The frequent “edge-ball” problem in land use for urban sightseeing agriculture projects is related both to irregular project investment and stepping on the land-use red line, and also to the fact that some reasonable construction land needs cannot be met, forcing many people to choose to “walk around policy.”
“To give play to agriculture’s leisure, sightseeing and tourism functions and extend the industrial chain, there is an objective demand for building supporting rooms and facilities. But agricultural construction land is strictly controlled, and touching the red line carries great risk.” Chongqing Liangjiang Yilong Industrial Development Company has transferred more than 2,000 mu of land to develop flowers, seedlings and organic agricultural products. General Manager Yin Shilin said: “The company once planned to rely on organic agricultural product cultivation to develop picking experiences and sightseeing tourism projects, which could greatly increase the added value of agricultural products. But because land-use quotas could not be secured and supporting facilities could not be built, it ultimately had to give up.”
Large-scale operator subsidy policies are hard to “land,” and fixed investment becomes “dead assets”
The growth of urban sightseeing agriculture requires land-use quotas, while large-scale grain production requires government subsidy support. In Chongqing, many farmers report that there are quite a few problems when large grain-growing household subsidies “land.”
In order to stabilize grain production and offset the adverse effects of rising costs on grain growing, Chongqing has implemented subsidies for large grain-growing households in recent years. For a scale of 50 mu to 100 mu, the subsidy is 160 yuan per mu; for more than 100 mu, the subsidy is 230 yuan per mu. At the grassroots level, however, large-household subsidies encounter the practical embarrassment of smallholders sharing the benefits: farmers who have transferred out their land, although they do not grow grain, still demand to share in the large-household subsidy funds by reference to the agricultural input subsidies and direct grain subsidies that other grain-growing farmers can enjoy.
“In recent years the state has introduced many subsidy policies, and grain-growing farmers welcome them from the bottom of their hearts. But the subsidies are based on contracted area and are given to the land contractors, not to us who actually cultivate the land.” Hu Yonggang, a large grain-growing household in Liangping County, said that when villagers in the village subcontract land to us, in addition to collecting rent, a portion of the subsidy money must also be returned to the farmers. Those who do not grow grain can get 150 yuan/mu, while those who grow grain get only 10 yuan/mu. This has somewhat dampened the enthusiasm of people like us who persist in farming.
“The effect of implementing benefit-to-farmers policies depends both on the intensity and scope of government funding and on the interest relationships among farmers and the rights relationships over agricultural land. For example, in land transfer, although land use and management rights are transferred to large households, smallholders still retain land contracting rights. In a context where rural contracts are not strongly binding, if large households cannot meet the interest demands of smallholders, the smallholders are very likely to take the land back.” Liu Baofan, deputy director of the Agricultural Committee of Dianjiang County, Chongqing, said that the government requires that “whoever grows grain gets the subsidy,” but this is very difficult to implement at the grassroots level. In the process of land transfer, there is in fact an interest game between the large households taking in land and the smallholders. For large households to rent land, they usually must make the return of part of the subsidy funds a precondition.
The reporter found in interviews that in addition to agriculture-related subsidies, some current rural financial policies are also unfavorable to the growth of new agricultural business formats. For example, as land transfers accelerate in various places, more and more ancillary facilities and production management buildings are being built in support of agricultural production. However, because there are no clearly defined property rights, these assets “settled” on the land have aroused widespread concern among large agricultural operators.
Since construction began in 2008, Chongqing Jiangjin Modern Agriculture Park has brought in more than 50 leading agricultural enterprises and formed characteristic industries such as high-quality grain and oil, late-maturing citrus, and flowers and seedlings. “On the one hand, agricultural development lacks funds; on the other hand, even if funds are invested, it is difficult to obtain guarantees, and financing circulation is impossible, so they become ‘dead assets.’” Speaking of the financing bottleneck of agricultural projects, Liu Yuzhong of the park management committee said that in order to solve this problem, the government has also thought of many “local methods,” for example, according to different investment projects such as rural roads, water conservancy facilities, forest trees and agricultural production supporting facilities, district-level agriculture-related departments can issue investment certificates to enterprises to lower the threshold for bank loans. Even with these measures, financial institutions still do not recognize fixed assets formed by agricultural investment as effective collateral, and financing remains difficult.
Implement classified policies and optimize the policy framework to break the embarrassing status quo
At the current stage, policies on rural land, finance and subsidies bear on the sustained and healthy development of modern agriculture, and policy adjustment and optimization “affect the whole body with a single pull.” In the view of industry insiders, to solve these policy dilemmas in the growth of new agricultural business formats, it is necessary to base solutions on the actual conditions of agricultural and rural development, implement classified policies, and prescribe the right medicine for the problem.
Taking rural land construction and use as an example, special policy documents should be issued. On the one hand, they should highlight the “standardizing and guiding” role of policy, adhere to red-line thinking, and set bottom lines such as farmland protection, industrial access, environmental protection and distribution of farmers’ interests. Agricultural project construction should follow the requirements of industrial development planning and clarify the direction of operations; on the other hand, a certain proportion of land-use quotas should be designated specifically to meet the development needs of modern agriculture.
At the same time, with the development of modern agriculture, investment in agricultural fixed assets will inevitably grow larger and larger, and the clarification of related property rights requires policymakers to consider the whole picture. It is understood that in order to promote clarity of ownership of rural fixed assets, government departments in places such as Chongqing and Shandong have begun pilot explorations to issue relevant property rights certificates to investing owners, determining property rights attributes such as the amount of asset investment, area and validity period. But these provisions were made against the background that relevant laws and policies at the national level have not been adjusted, and belong to spontaneous exploration by local governments; some are irregular and incomplete.
Industry insiders believe that the ongoing reform of the rural property rights system should clarify both the ownership relationship of the land itself and the ownership relationship of fixed assets attached to the land. Through institutional innovation and policy adjustment, it should further answer questions such as how to confirm rights for fixed assets such as agricultural ancillary facilities and production management buildings, how to conduct value assessment, and whether they can be used for mortgage financing, so as to truly stabilize agricultural production relations and promote the development of modern agriculture.