How should family farms develop in China?

Family farms are a new type of operating entity that has emerged in China's agricultural production and operation in recent years. They take the farmer household as the basic production unit, increase inputs of technology, capital and other factors, carry out specialized agricultural production and scaled operation, raise agricultural output rates and the commercialization rate of agricultural products, and raise the level of agricultural mechanization and intensive agricultural operation.

The 2013 No. 1 Central Document proposed encouraging and supporting the transfer of contracted land to specialized large households, family farms and farmers' cooperatives. This became one of the highlights of agricultural development in recent years and, for a time, one of the hot terms attracting media attention.

1. Family farms are a major way to promote agricultural development

Abroad, especially in some European and American countries, it is very common for families to engage in agricultural production and operation as a unit. This has developed over more than a hundred years, and family farms have become one of the main ways to promote agricultural development. Family farms there generally have vast tracts of land, and the supporting production and operation management models have also gradually matured, showing characteristics such as a high degree of mechanization, scaled operation and intensive operation.

In terms of their forms of existence, family farms are divided into large, medium and small family farms. Those in the United States and Canada are large family farms, those in European countries such as France are medium-sized family farms, and those in Japan and the Taiwan region of China are small family farms.

In the United States, large farms accounting for 25% of the total number of farms produce 85% of the country's total agricultural output, and this proportion is still gradually rising. Across Germany, family farms are the common form of agriculture and constitute the substantive foundation of German agriculture. "Large" family farms, with an operating land scale of more than 100 hectares, number 29,300 nationwide, accounting for 8.29% of the total number of German agricultural enterprises; "medium-sized" family farms, with an operating land scale of 30-100 hectares, number 104,000 nationwide, accounting for 29.44% of the total; and "small" family farms, with an operating land scale of 2-30 hectares, number 218,500 nationwide, accounting for 61.94% of the total.

Looking across the development of these foreign family farms, the following lessons can be drawn: the establishment of a land lease system and the relative concentration of land, the separation of farmland ownership and use rights, scaled operation and diversified organizational forms, specialization of production and operation, high technology and mechanization in agricultural production, and strong government support for agriculture, among others.

Some of these lessons are the same as China's policies, while in others, such as high technology, mechanization and specialization, there are still some gaps, and further efforts are needed to strengthen development in the next step.

While seeing these lessons, it is also necessary to see the fundamental gap, which is the difference in national conditions. Foreign family farms have particular regional and demographic characteristics: rural areas and farms often have few people and much arable land, especially after long-term urbanization, which has sharply reduced the population and resulted in a relatively high degree of land concentration. In addition, a considerable portion of farm arable land has been passed down from ancestors and does not require land transfer. This differs from China's actual situation of a large population and little land, especially since family farm land needs to be transferred from other farmer households, making its operation similar to an upgraded version of large-scale planting households.

2. Behind the phenomenon of farmers refusing land transfer

So how should family farms be developed in China?

We believe that to develop family farms well under market-based conditions, it is necessary to respect the enthusiasm of two subjects: the farm owners and the farmer households. Let us first look at the typical rational practices of farmer households. With farmers going out to work and the widespread use of agricultural inputs today, farmers' cultivation methods have changed greatly, and farmers in various places have used their own intelligence to create cultivation methods suited to their own households.

My hometown is in the eastern Henan plain, where the land yields three crops in two years. The main crops are winter wheat and autumn corn, soybeans and other crops.

In November of the previous year, winter wheat is sown in the fields and basically requires no management until the Spring Festival. After the Spring Festival, taking advantage of rain, fertilizer is spread once, and then the male and female laborers in the household all go out to work.

In spring, the wheat grows vigorously. After passing through solar terms such as Qingming and Guyu, when the wheat is flowering, pests and diseases are most likely to occur. At this time, they have already paid in advance a certain pesticide fee and labor fee to households that do not go out to work. In rural areas, honesty is valued; once someone has taken the money, they generally still apply the pesticide properly, so pests do not become a major problem.

Around "June 1", when the wheat matures and is harvested, they return home from other places to harvest the wheat and plant corn and soybeans. This takes more than twenty days in total, and they can also look after the elderly and children at home while also getting some rest.

After planting corn or soybeans, they immediately apply herbicide once. By the time the corn emerges, there is not a single weed, so there is no need to go into the fields to weed.

Next, farm work is handled in two ways. One is for the whole family to go out and give the money for fertilizer and pesticide labor to people in the village to do the work. The other is for the male laborer to go out to work while the women work at home, mainly applying fertilizer and spraying pesticides. Around National Day, during the autumn harvest, the male laborer returns home, they harvest together, and then plow the land and plant winter wheat.

In this way, over a year, one mu of land can bring in more than 1,000 yuan, and in a good year 2,000 yuan. As for the travel expenses back and forth, these can be counted as the cost of visiting family. As for the time, it can be counted as rest. Farming and working are both taken care of, which can be regarded as migrant work in the manner of a migratory bird.

In many reports, one often sees that no one is willing to transfer land and that work must be done household by household. In fact, this also reflects the rational side of farmer households, who believe that cultivating the land themselves is still more worthwhile.

3. Maximizing arable land returns is the key

The Guiding Opinions of the Ministry of Agriculture on Promoting the Development of Family Farms (Nong Jing Fa [2014] No. 1) points out that "family farms, as a new type of agricultural operating entity, take farmer household members as the main labor force, take agricultural operating income as the main [income source], use household contracted land or transferred land, and engage in scaled, intensive and commercialized agricultural production." From the above cases, it can be seen that most farmers regard land as "life-saving land" and "employment insurance land", so they would rather engage in extensive cultivation or leave land idle than transfer it out. At the same time, it should be noted that transfers now require long-term contracts, and the expected rise in land rent is also a practical aspect they consider. If land is transferred to a farm for around 1,000 yuan per mu, or even less, it is still not as worthwhile as cultivating it oneself, so most farmer households are unwilling to rent it out.

Income source, the document also believes that family farms fit the stage of economic and social development, are an upgraded version of household contract operation, and have become an effective force leading moderate-scale operation and developing modern agriculture.

At present, compared with traditional small farmer households, family farms in China have the characteristics of "two highs and two lows" and possess the development rationality of standardization and moderate land scaling. "Two highs" means the average educational level of farm owners is relatively high, and the average asset level of farms is relatively high. "Two lows" means the average age of farm owners is relatively low, and the proportion of long-term hired workers participating in production and operation is relatively low, with the main form being a husband and wife plus short-term hired workers.

At the same time, the ideal average land scale for family farms is about 600 mu. 25% of farm owners believe the reason for not expanding land scale is that "the land scale is already large enough." These two results show that in long-term production practice, family farm owners have a relatively rational understanding and grasp of the appropriateness of operating scale. In addition, as many as 95.38% of farms have signed formal land transfer contracts, reflecting the characteristics of standardized development of family farms.

In our view, the formation of scale and the existence and development of family farms in rural areas must produce a win-win outcome; otherwise, neither farmer households nor farm owners will allow family farms to exist for long. Theoretically, scaled agricultural operation is a feasible choice for escaping this dilemma, but this involves the distribution of land rights and interests, a master gate that affects the whole situation. In this sense, maximizing arable land returns becomes the key to family farms.

According to the March 20, 2013, People's Daily article "Can Family Farms Ease the Contradiction in Farming?", Li Jun, a 36-year-old from Hexi Village in Langxi County, had transferred nearly 700 mu of land since establishing a family farm in 2007. "Net income per mu reaches about 400 yuan, earning nearly 300,000 yuan a year." After deducting transfer fees, production costs and so on, the net return per mu is only 400 yuan. If the scale is not large, the profit margin is pitifully small.

Feng Jianqiang, director of the Agriculture Committee of Songjiang District, Shanghai, told reporters that with a general operating scale of 100-200 mu of rice fields, plus agricultural subsidies and so on, a family farm can earn at least nearly 100,000 yuan, almost double the income of ordinary migrant work. Their conclusion is that "farming earns more than migrant work."

However, one should not look only at these attractive results, but also at how much capital the farm owner has put in and what the ratio of returns to costs is. Does migrant work require the input of so much capital? How many farmer households can afford such capital? These are all practical issues. Another issue is the distribution of profits and benefits. Transferring land out should not bring in more income than cultivating and operating it oneself; otherwise, family farm owners would not do a loss-making business.

4. Engaging in agricultural production is the "red line" for family farms

Family farms can be said to be the largest policy adjustment to the rural interest structure since "household contracting to each household." The household contract responsibility system separated rural land ownership and contracting rights, unleashing agricultural productivity, while the scaled operation model represented by family farms once again separates contracting rights and operating rights. Can this, in the post-agricultural tax era, stimulate agriculture and rural areas to regain vitality?

To this end, we believe the following aspects need to be achieved:

In developing family farms, engaging in agricultural production is the "red line." A large population and little land are the basic national conditions facing China's agricultural development, and food security is also the fundamental guarantee of national security. The state has always stressed the need to hold the red line of 1.8 billion mu of arable land, so encroachment on arable land becomes a major matter harming national security. It must not be allowed to use family farm operations to change arable land use in disguised form, and it should be mandatory that family farms mainly grow grain.

For example, in publicly reported cases, the "grain planting plus pig raising" combined family farm model launched in Songjiang District, Shanghai, allows qualifying and willing family farm owners to apply to raise Songlin pigs on a contract basis, with pig sheds built by Songlin Company according to unified standards. Although this increases farmers' income, whether the construction of pig sheds changes arable land use still needs to be examined. If it does, it needs to be banned and stopped, and this string must always be kept taut.

In developing family farms, farmers' autonomy and voluntariness are the "bottom line." China's pro-farmer policies can easily evolve at the grassroots level into a legal weapon used by township governments to harm farmers, and this must be guarded against at all times. Even as industrialization and urbanization continue to advance and large numbers of rural laborers successfully move to cities, there will still be hundreds of millions of farmers remaining in rural areas, relying on land for their livelihood over the long term. Therefore, it must be fully recognized that the development of family farms is a gradual process and must rely on farmers' independent choices. It is necessary to prevent tendencies to divorce from local realities, violate farmers' wishes, and one-sidedly pursue overly large-scale operations, or to artificially gather land together and build up large households. At no time may farmers be forced to transfer land against their will. Land transfer must adhere to the principles of legality, compensation and voluntariness, and it is absolutely not permitted to infringe on farmers' lawful land rights and interests through coercion, disguised coercion, pressure or other means.

In developing family farms, operation by professional farmers is the "boundary line." The ultimate purpose of family farm development is to raise farmers' incomes and help farmers become prosperous. At the same time, in order to ensure that urban residents do not use family farms to concentrate land in disguised form, this boundary must be firmly upheld, telling "short-sighted" farmers that they must not transfer land in a way that kills the goose that lays the golden eggs or drains the pond to catch the fish.

Some enterprises change their appearance and become agricultural enterprises, yet after obtaining relevant subsidies they do not use them for agricultural production. Worse still, enterprises borrow the "shell" of a family farm to obtain relevant fiscal support, while not a single cent of these funds is invested in the family farm. For this reason, the owners of family farms should be professional farmers. In that case, the scale of family farms should not be too large, and direct involvement by outside industrial and commercial capital should not be encouraged. Farm owners cannot act as "middlemen," and this should not evolve into a transfer of benefits to a small number of people.

In developing family farms, moderate-scale operation and development are the "main line." The development of family farms is directly proportional to the speed of land concentration, and the speed of land concentration is directly proportional to the development of urbanization. If land is concentrated but the farmers attached to the land are not properly relocated, this will directly affect the whole society's

At present, China's agricultural and rural development has entered a new stage. It is necessary to respond to part-time farming, rural hollowing-out and farmer aging. How to build family farms is still at the exploratory stage. In some places, when conditions are not yet fully in place, they launch a "mass campaign," "compare by quantity," "judge heroes by scale," blindly advance scaled land operation, and even force farmers to transfer land. This approach of seeking quick success and craving more and faster results will inevitably have an adverse impact on agricultural development and increases in farmers' incomes.

The government must take a comprehensive view, guide farmers toward moderate development, and at the same time draw on the practices of foreign family farms to properly divide agricultural production regions so that products become distinctive, scaled and concentrated, such as each region mainly producing 1 to 2 kinds of agricultural products, thereby promoting the growth and strengthening of agriculture.

In developing family farms, the ecological development direction is the "yellow line." At present, China as a whole is at the stage of fully building a moderately prosperous society. Urban people who live comfortably all want to improve their quality of life, and improving food quality is undoubtedly the first priority. Food safety issues have made many people hope to have a small farm of their own.

At present, some family farms, such as the Little Donkey Citizen Farm in the suburbs of Beijing, contain organic vegetables, fresh fruit, organic chickens, ducks, geese, fish and pigs, among others. Their exploration is conducive to the development of ecological agriculture. Although these agricultural products promote various green and environmental concepts and are priced several times higher than ordinary agricultural products, they are only consumed by a niche group. The general public is quite calm about accepting the relatively high prices of high-quality agricultural products, but this will certainly in turn stimulate room for the upgrading and development of agricultural products and affect the current cultivation model of most agricultural products.

The proposal of the concept of family farms is actually just like the proposal of the concept of urbanization. The opportunities unfolding around family farms are the key to thinking about it.

In developing family farms, government support is the "support line." There are still many problems in the development of family farms. It can be said that at any stage, agriculture, as a weak industry, should receive support. Even in the development of farms in Western countries, without government subsidies, survival is very difficult. Especially when facing major natural disasters and epidemics, it is very hard to overcome difficulties without a helping hand from the government.

At present, family farms generally have weak risk resistance, and agricultural infrastructure is still incomplete. Once a major natural disaster occurs, the consequences are devastating. The government can issue measures for family farm credit assessment and loan management, promote comprehensive insurance for agricultural machinery and tools, accident insurance for workers, insurance for melons and fruits inside greenhouses, and other insurance types urgently needed and targeted by farm owners; establish and improve the agricultural socialized service system and coordinate solutions to problems before, during and after production. While improving public-interest service organizations, support and strengthen cooperative service organizations, and promote a socialized service system covering the whole process, including mechanized production and harvesting, labor training and output, and grain drying and transportation.

Therefore, overall, family farms are like the Long March. At present, we have only taken a very small step.