What are the deep-seated problems restricting the development of family farms?

Through research in four typical locations - Songjiang in Shanghai, Ningbo in Zhejiang, Wuhan in Hubei, and Langxi in Anhui - and through extensive contact and discussion with farm owners and grassroots officials, the research team noted that while family farms are flourishing, they also face many problems, such as difficulties in land transfer, difficulties in obtaining loans, excessively high labor costs, low quality of farm owners, an excessively low proportion of grain production, a lack of successors for farm operations, and farm operation risk issues, among others. Some of these problems are merely surface phenomena and cannot be simply analyzed on their own terms; instead, one must go deep behind the problems to explore their essence. The following is an attempt to discuss the relevant issues:

I. Analysis of the deep-seated problems constraining the development of family farms and their causes

(1) Unclear ownership among the three "rights holders" of rural land constrains the development of family farms

Because family farm land involves three "rights holders" - the village collective (ownership rights), villagers (contractual rights), and operators (management rights) - these three "rights holders" constitute the main aspects of the interest relationships in family farms. Therefore, for family farms to develop healthily, the relationships among the three must be properly ordered, and on the basis of the "separation of the three rights," a balance of interests among the three rights must be achieved. Only then can obstacles to family farm development be cleared away. At present, the main ways in which the unclear entanglement of the "three rights" of rural land affects family farms are as follows:

First, the absence or overreach of rural collective land ownership affects the development of family farms. In some places today, rural collective land ownership is not clearly manifested, and the resulting problem is that the collective cannot play a positive role. For example, during our research in Langxi, many family farm owners reported that when transferring land they had to negotiate with farming households one by one, which was time-consuming and laborious, and sometimes, due to the lack of unified standards, also gave rise to many conflicts. Due to the lack of collective organization, no one takes the lead in infrastructure construction such as irrigation facilities and road building. Some collective organizations fail to act in safeguarding the rights and interests of land owners, leading to phenomena that harm the rights and interests of land owners occurring from time to time, such as arbitrarily digging fish ponds on basic farmland or arbitrarily building structures on land. As for vigorously developing the collective economy, organizing farmers to develop modern agriculture, and actively opening up markets, that goes without saying. These are all manifestations of the absence of collective land ownership. There is also the problem of overreach. For example, in some suburban areas, because differential land rent is relatively high, some village collectives feel there is profit to be made, and they overemphasize land ownership while neglecting farmers' land contractual rights, resulting in infringements on farmers' lawful rights and interests.

Second, the lack of reliable expectations regarding farmers' land contractual rights affects farmers' enthusiasm for long-term land transfer. In our research across various places, family farm owners generally worried that transferring farming households might take back the land upon expiration of the contract or in breach of contract. They had often already made large investments in the land, and if the farming households took the land back upon expiration, they would suffer huge losses. If the farming households wanted to break the contract and take back the land, there was nothing they could do about it. There are many reasons why farmers are unwilling to sign long-term contracts. First, long-term expectations regarding land are unclear, and they worry that if policy reasons lead to greater returns, they will lose out by having signed a long-term contract. Second, the rural social security system is still incomplete, and land has a social security function. Third, some farmers who have gone out to work lack confidence in whether they can integrate into cities, which makes them unwilling to transfer land for the long term and cut off their retreat.

Third, farm owners' insufficient expectations regarding land management rights encourage short-term behavior. Because they worry that farming households may take back the land, some farm owners do not dare to invest too much in the land - for example, they do not dare to buy large agricultural machinery, do not dare to invest too much in greenhouses and fixed facilities, and are unwilling to have their children follow them into farm operation, and so on.

In short, the relationships among land ownership rights, contractual rights, and management rights constitute the principal contradiction in the operation of family farms, and the key to maintaining a balanced relationship among the three lies in balancing the interests among the three. If the long-term immutability of land contractual rights is overemphasized, or if the privatization of agricultural land is further agitated for, rural collective economy will inevitably exist in name only, village collectives will be unable to effectively adjust and utilize land, the problems of abandoned land and difficult transfer will be hard to solve, and the development of family farms will also be constrained by the lack of a leading force. Although collective ownership of land is emphasized, if farmers' wishes are not respected, farmers' interests are not safeguarded, and farmers are forced off the land, conflicts will inevitably proliferate and family farm development will also face numerous difficulties. Likewise, if the management rights of family farms cannot be effectively safeguarded, this will inevitably be detrimental to stabilizing operators' expectations, and their enthusiasm for long-term investment and operation will also be affected.

(2) How to properly handle the relationship between government and market has become a difficult problem in policy-making across various places

Among the four places we researched, each had its own characteristics, and their differences were mainly manifested in the different roles played by government and market in family farm development. Among the four places, the one with the deepest government involvement was undoubtedly Songjiang in Shanghai; the one with the most vibrant market was Ningbo. Although Langxi in Anhui had limited government strength, its degree of attention and the results of its guidance were very prominent. Wuhan in Hubei, by contrast, was relatively neutral in terms of both market and government roles. The following takes Ningbo and Songjiang as examples to discuss the roles and problems of government and market in family farm development.

Songjiang on the whole is a government-led model, and its advantages are reflected in actively guiding farmers to engage in grain production through the government's top-level design and fiscal investment, which achieved very good results. But there are also some problems:

First, huge fiscal subsidies are difficult to sustain and replicate. In the income of family farms in Songjiang District, government fiscal subsidies account for 3/5 of it. Without government subsidies, family farms would find it difficult to maintain normal operations relying solely on their own profitability. The government's powerful financial input is like injecting a stimulant, sustaining the vitality of family farms. Such measures are necessary in the initial stage of family farm development, but local finance finds it difficult to carry out sustained, enormous-scale investment. Therefore, one problem facing family farms in Songjiang District is how to achieve profitability on their own rather than relying on government fiscal subsidies for the long term.

Second, insufficient development vitality. This is mainly reflected in the low quality of operators and severe aging. Young people still lack enthusiasm for engaging in grain production, and the absence of a continuous injection of new blood into family farms will be a huge problem.

The Ningbo model has a very clear market orientation. Farm operators all have a strong market awareness and are always able to carry out various businesses and develop family farms around the market, resulting in relatively high farm efficiency and abundant vitality.

However, the Ningbo model also has very prominent problems, mainly manifested in the fact that the market's profit-seeking preference has constrained Ningbo's staple grain production. The market pursues profit, and especially for a developed coastal region like Ningbo, family farm owners generally have relatively high expectations for profit targets. They are generally willing to engage in the production of agricultural products with higher added value, and have little interest in producing staple grains with lower economic returns. Along the route of our research, in a historically renowned land of fish and rice like Ningbo, it was actually very difficult to find any rice paddies; what we saw was either factories or flowers and trees, nursery stock, fruit, and other cash crops.

(3) Overemphasizing family farms and other new types of operating entities may harm the interests of small farmers

Nowadays, all places attach great importance to scaled operations. Some large operators have been held up as models by local governments and given priority consideration in policy; some agricultural companies, after entering rural areas, are honored as guests of distinction by local authorities. However, traditional smallholder farming is regarded as a backward thing and is further marginalized. In this research, we noted the following problems:

First, individual farming households are squeezed by family farm owners, leading to the emergence of new phenomena of rural inequality. In many areas, with the development of family farms and other new types of agricultural operating entities, traditional farming households, lacking the advantage of scale, have poor returns and ultimately simply transfer their land to large operators and give up agricultural operation. Many farmers, after transferring out their land, enter family farms to become hired laborers. Some farmers simply transfer their land to large operators, take a little rent and subsidies, do not engage in labor, and play mahjong all day. Giving up labor and having nothing to do is, for farmers who have engaged in agricultural production their whole lives, nothing if not a kind of sorrow. The change in the social status of rural villagers is also hard to call a good thing for the social development and stability of rural areas.