How can the healthy development of farmer cooperative unions be guided?
It has been 9 years since the Law of the People's Republic of China on Specialized Farmer Cooperatives was promulgated. During this period, the number of farmer cooperatives in China has grown steadily, and the establishment and development of farmer cooperative unions have gradually gained a membership base, making the move toward union an inevitable trend in the development of specialized farmer cooperatives. It is understood that more than 10,000 farmer cooperative unions have been spontaneously established at the grassroots level, playing an important role in building a new type of agricultural management system, enhancing the market competitiveness of agricultural products, and advancing the development of modern agriculture. However, the Law on Specialized Farmer Cooperatives does not address issues related to unions. The author suggests that incorporating issues related to unions into the content of the legal amendment be placed on the agenda. During the amendment process, particular attention should be paid to the following aspects.
1. On member admission, the principles of self-reliance and self-governance of unions must be upheld
Regarding the membership issue of farmer cooperative unions, different opinions have emerged during the legal amendment process. The debate has focused mainly on whether all members of a union must be specialized farmer cooperatives, or whether other entities may join, and in particular whether enterprises can qualify as members of a union. Expert views are mainly divided into two camps: one view holds that enterprises should not join unions as independent entities, and experts holding this view constitute the vast majority. The main reason is that after an enterprise joins a union, it is not conducive to the democratic management of the union and easily leads to internal control, which can easily create the risk of the union "changing in nature"; the other view holds that enterprises and other business entities should be allowed to join unions, while limiting their number or proportion. The reason is that in existing unions, enterprises joining as members has already become an established fact, and the union registration and management measures issued in some places also allow the participation of enterprises and other non-cooperative entities, and enterprise participation can make up for the insufficient resource elements of unions while also creating a certain driving effect.
The author believes that in discussing the membership qualification issue of farmer cooperative unions at the legal level, two basic principles should be made clear: first, the farmer-serving attribute of farmer cooperative unions should be maintained; second, it should be ensured that within farmer cooperative unions, farmers can achieve democratic control of their own organization. These two principles complement each other and reinforce each other. Simply put, this means achieving the self-reliance and self-governance of farmer cooperative unions. This is the classic cooperative principle that the International Cooperative Alliance has upheld after more than 170 years of trials and hardships, and it is also one of the core principles that distinguishes cooperatives from other economic organizations. Therefore, when amending the law, the principles of self-reliance and self-governance of unions must be made clear on the issue of member admission.
2. The decision-making mechanism should embody "democratic control"
From the founding of the International Cooperative Alliance (1895) to the present, more than 120 years of world cooperative movement history tell us that the "democratic principle," as the core guiding principle of the International Cooperative Alliance, has run through the entire cooperative movement and has undergone an evolution from "one person, one vote" (1895), to "equal voting" (1921), and then to "democratic control" (1937, 1966, 1995). The above three formulations reflect the characteristics of democratic management under different eras. "One person, one vote" was proposed in accordance with the 1895 "Rochdale Principles." At that time, cooperatives were mainly consumer cooperatives, and those participating in consumer cooperatives were all from the working class at the bottom of society. Capital was a scarce factor, members were relatively equal, and "one person, one vote" could best embody this equal relationship; with the diversified development of cooperative types, factors such as differences in the proportion of shares contributed among members and differences in contributions to the cooperative were introduced, which changed the meaning of democracy. "One person, one vote" appeared too rigid, so the principle developed into "equal voting" to adapt to the evolution of member relations within cooperatives; and as the internal resource elements of cooperatives became increasingly abundant, and production factors such as capital, technology, and land also became important components of cooperative development and standards for measuring cooperatives' residual claim rights, the term "equal voting" could no longer encompass all of its connotations, and ultimately "democratic control" continued as the most appropriate term.
The provisions on the democratic principle in China's cooperative law emphasize "one person, one vote." From a legal perspective, these provisions on "one person, one vote" strictly embody the democratic principle of cooperatives. However, 9 years of cooperative development practice have shown that a gap exists between principles and reality. Influenced by China's special national and agricultural conditions, rural elites and disadvantaged small farmers coexist within cooperatives (academia calls this "the heterogeneity of cooperatives"), and a typical "center-periphery" structure has emerged within cooperatives, so the "one person, one vote" system stipulated by law often cannot be effectively implemented. Therefore, during the amendment process for farmer cooperative unions, it is suggested that "democratic control" be written into the newly revised law as the core principle of unions. In this way, it will not only remain consistent with the principles of the International Cooperative Alliance, but also fit better with China's cooperative development practice, and it can also avoid controversy and doubts from all sectors of society.
3. Conditionally allow mutual fund cooperation business within unions
In recent years, the central government has attached great importance to the financing problem of farmer cooperatives. In 2008, the Third Plenary Session of the 17th Central Committee of the Party decided to "allow qualified specialized farmer cooperatives to carry out credit cooperation." This was the first time China allowed qualified cooperatives to carry out credit cooperation business in the form of a central document. Subsequently, the No. 1 central documents in successive years all put forward clear requirements for cooperatives to carry out credit cooperation. The Outline of the 13th Five-Year Plan for National Economic and Social Development, released on March 17, 2016, also proposed to "steadily carry out pilot projects for mutual fund cooperation within farmer cooperatives."
Many farmer cooperative unions in China have spontaneously carried out mutual fund cooperation business internally. Because the scale of funds formed when unions carry out mutual fund cooperation business internally is relatively large, the law must clearly ensure that two gates are strictly controlled: first, the gate of risk prevention and control, which must require unions to strictly follow the principles of "internal only, not external; absorb shares, not deposits; distribute dividends, not interest," and encourage unions to design risk prevention and control mechanisms according to their own characteristics; second, the gate of supervision and regulation, which must implement the guiding body and supervisory body for unions to carry out this business, and clarify the corresponding guiding responsibilities and regulatory responsibilities. It is suggested that agricultural departments serve as the guiding body and local financial departments serve as the regulatory body.
4. Encourage unions to actively play their social functions
According to surveys, China's farmer cooperative unions currently include various types such as production-oriented unions, sales-oriented unions, industrial chain unions, and comprehensive unions. Among them, comprehensive unions are a kind of regional union realized through resource integration, using socialized services for production and daily life as the bond, with the goals of strengthening ties among community members and enhancing regional economic vitality. At present, some rural communities have established similar comprehensive unions. The government entrusts social functions such as elderly care, medical care, and culture to unions in the form of purchased services. With the purpose of developing rural communities and the goal of promoting the coordinated economic, social, and cultural development of rural communities, unions have played a positive role in invigorating the rural economy, promoting rural harmony, and enriching rural culture.
The direction of the legal amendment will have an important impact on the future of China's agriculture and rural areas. The Law on Specialized Farmer Cooperatives implemented in 2007 is a market entity law. The law highlights the economic functions of specialized farmer cooperatives. Under the guidance of the law, China's rural economy has undergone tremendous changes, and the broad masses of farmers have also achieved increased income through the driving role of cooperatives. However, rural China needs not only economic development, but also mutual assistance among farmers, and even more, the construction of value norms in rural communities. It needs some core forces outside formal state institutions to undertake part of the governance functions of public affairs.
Therefore, when amending the cooperative law, unions should be encouraged to actively play their social functions and realize social value. Unions mainly focused on economic functions should be encouraged to take on more social responsibility; unions mainly focused on social functions should be encouraged, on the basis of achieving sustainable development, to give full play to the important role of unions in promoting rural social development.
5. Strengthen the policy orientation that gives equal weight to incentives and supervision
The promulgation of the cooperative law has provided a very favorable policy environment for China's specialized farmer cooperatives. However, although stimulus policies consisting of government subsidies, project support, tax reductions and exemptions can take effect in the short term, such as a large number of cooperatives being established in a short period, because the law does not clearly stipulate supervision and exit mechanisms for cooperatives, various non-standard cooperatives have also emerged in large numbers.
Judging from local guiding policies for farmer cooperative unions, local government departments have mostly continued the support policies for specialized farmer cooperatives, giving support in policy, projects, and funds for unions to carry out business. If the degree to which policies benefit farmers is considered, the difference between unions and cooperatives is that the constituent members of unions are market organizations such as cooperatives, rather than individual farmers. Support for unions must be transmitted through cooperatives before it can reach the farmers who have joined the cooperatives. From the characteristics of a market legal person, unions are closer to enterprises, and capital factors often have more say within unions. Under such circumstances, it is suggested that when amending the cooperative law, the policy orientation of giving equal weight to incentives and supervision should be strengthened. While improving the government policy support system, farmer cooperative unions should be regarded as independent market entities, a third-party supervision mechanism for unions should be established, the audit spot-check system should be improved, the punishment system should be improved, and a market exit mechanism for unions should be established, so as to reduce and even eliminate the occurrence of the above-mentioned negative policy effects, and realize promoting development through incentives and promoting standardization through supervision.