The healthy development of cooperatives must be tested against farmers' interests
Farmers' interests are the touchstone for the healthy development of cooperatives
(Agricultural Wealth Network) Since the "Law on Farmers' Professional Cooperatives" was promulgated and implemented on July 1, 2007, farmers' professional cooperatives across the country have been mushrooming. According to statistics, there are currently more than 178,000 registered farmers' professional cooperatives nationwide, with a total membership of 25 million. As a "newborn" that has only obtained legal status less than three years ago, what characteristics does the development of farmers' professional cooperatives present? What difficulties have they encountered in practice? And what will their future trajectory be? These are all focal points of attention from all sectors of society.
Zhang Xiaoshan, director of the Rural Development Institute of the Chinese Academy of Social Sciences, believes that diversified and mixed models of agricultural modernization and business forms will exist in rural China for a long time, and farmers' professional cooperatives, as an important vehicle for these, will also long exhibit characteristics of heterogeneity and diversity. Cooperatives led by large households have become the main form of cooperatives in some areas; the original "company + farmer" model in agricultural industrialization either has been internalized within cooperatives, or companies increasingly use cooperatives as intermediaries to conduct transactions with farmers; farmers' professional cooperatives and rural community organizations will increasingly collide, intersect and merge together. In the future development of cooperatives, whether specialized farmers engaged in agricultural production or marketing can become the interest-bearing entities of professional cooperatives is the touchstone for the healthy and sound development of farmers' professional cooperatives in the future.
Cooperatives led by large households have become the main form in some areas
Zhang Xiaoshan said that among the cooperatives that have been registered, those led by large households often become the main form. He gave an example to explain this phenomenon: Liu Ruozheng, the initiator and chairman of the Zhengrong Farm Planting Professional Cooperative in Yongxing Town, Jingshan County, Hubei, is a junior college graduate in the planting specialty from Henan Agricultural University. He came to Hubei in 2003 to contract farmland, later established a cooperative, and registered it with the industry and commerce department on April 3, 2008. It currently has 212 member households, distributed across 18 villages in 4 townships. They have contracted a total of 13,487 mu of farmland, and 27 directors were elected based on the composition of cooperative members by region. Members do not pay share capital or membership fees; the cooperative's main business is group purchasing of production materials. Members first pay the cooperative at market price, and the cooperative finally rebates the difference based on transaction volume. From the perspectives of decision-making mechanisms, surplus distribution, and financial management, this is a relatively standardized cooperative. One of the characteristics of this cooperative is that large households hold a dominant position. At the initial founding, there were 5 members. Liu Ruozheng was the largest household, contracting 1,290 mu of farmland. One member was an agricultural technician, and the other 3 members together contracted 900 mu of farmland.
According to statistics, among the 136 registered professional cooperatives in Wuhu City, Anhui, 125 were established by rural capable individuals (large households), 4 were led by agriculture-related departments, 5 were driven by leading enterprises, and 2 were led by village-level organizations. From the perspective of cooperative initiators, some were led by families, some by large specialized households in planting, breeding or marketing, and some were initiated by several people in partnership.
Zhang Xiaoshan believes that without the participation of specialized large households and without cooperatives run by entrepreneurs, it is impossible to have successful cooperatives. At present, well-developed professional cooperatives are often dominated by large households, set thresholds, and exclude small farmers. He believes that in the future, rural households in China will long maintain a compositional pattern of a small number of specialized planting, breeding and marketing households coexisting with a large number of small-scale part-time farming households. While encouraging and supporting rural specialized large households and skilled technicians to organize and establish cooperatives, establishing a reasonable interest-linking mechanism within cooperatives between large-household members and ordinary small-farmer members, and letting these large households spread their skills, knowledge, management and market channels to other people, is the key to whether cooperatives can develop healthily and adhere to their basic principles and values.
In economic life, cooperatives have become transaction intermediaries linking companies and farmers
Why would companies be motivated to join or lead cooperatives? He believes that when a policy is introduced, it is often inseparable from the fact that powerful groups related to that policy are the first to seize the high ground and make full use of policy preferences. This is no exception in the matter of cooperatives, such as processing plants becoming wheat cooperatives and meat processing plants becoming meat processing cooperatives. Leading enterprises joining or leading cooperatives is driven by their own interests and has its economic rationality, but farmers' interests should be fully taken into account.
Article 50 of the "Law on Farmers' Professional Cooperatives" states: "The central and local governments shall respectively arrange funds to support farmers' professional cooperatives in carrying out services such as information, training, agricultural product quality standards and certification, agricultural production infrastructure construction, marketing and technology promotion." Article 52 states: "Farmers' professional cooperatives enjoy the tax preferences stipulated by the state corresponding to agricultural production, processing, circulation, services and other agriculture-related economic activities." These preferential policies are often the interest driver for leading enterprises to join or lead cooperatives. The participation or leadership of large households can create linkages between farmers and the market, giving farmers in a small-scale peasant economy the ability to resist market risks. In real economic life, cooperatives become transaction intermediaries. As long as farmers' interests are ensured in the transaction process, this mode of intervention is still worth advocating.
Hubei Xingnong Grain Industry Development Co., Ltd. is 95% controlled by the Jingmen Direct Warehouse of the Central Grain Reserve and is a comprehensive grain industrialization enterprise integrating grain storage, processing, trade, testing and logistics. In 2008, the company took the lead in establishing 14 high-quality rice industry associations in 14 major grain-producing townships in Jingmen City, Hubei. Each association, in turn, used villages as units to select some villages with a good mass foundation and a high degree of contiguous planting to establish high-quality rice production cooperatives. More than 30 farmers' professional cooperatives were established in total, ensuring the source of its high-quality rice through an industrial network of "company + association + cooperative + farmer." Due to the involvement of large households, contract farming ensured smooth sales channels for farmers.
This is a typical example of a company being internalized within a cooperative. He believes that an important principle of cooperatives is that they are rooted in the local community and take promoting the development of the local community as their purpose. Some enterprises established by local farmers lead cooperatives or professional technical associations. While benefiting themselves, they also drive other farmers to increase income, enhance their ability to resist market risks, and ultimately promote the economic and social development of the local community, becoming transaction intermediaries linking companies and farmers. As long as farmers' interests can be ensured in market transactions, this economic phenomenon has its rationality for existence and development.
Shanxi Jincheng Tongkang Food Co., Ltd. is such an example. The company established more than 18,000 mu of green agricultural planting bases in the form of "company + cooperative + base + farmer," planting pollution-free agricultural products, and then processing and selling them. The company chose the Zefzhou County Jinfengyuan Planting Professional Cooperative in Daxing Village, Gaodu Town, Zezhou County as a partner. The cooperative was registered with the county industry and commerce bureau in March 2008, with 5 initiating member households. It now has more than 200 member households (out of 230 households in the whole village). The head of the cooperative is the village party branch secretary, with 4 board members and 2 supervisory board members. The company provides seeds and technical guidance to the cooperative and purchases qualified agricultural products submitted by the cooperative at a guaranteed price. The cooperative purchases qualified agricultural products provided by members at a guaranteed price and also acts as the company's agent to sign purchase contracts with farmers in other surrounding administrative villages.
Without the support of cooperative finance, China's farmers' professional cooperatives will also find it difficult to develop and grow
Zhang Xiaoshan pointed out that the more functions a cooperative has and the more policy preferences it enjoys, the more motivated various stakeholders are to establish, utilize and develop the cooperative platform. But at the same time, various non-standard problems have also been exposed in the development of cooperatives. The problems exposed in rural reform and development are likewise reflected in the development of cooperatives. The practice of establishing and developing farmers' professional cooperatives will inevitably enrich policies concerning cooperatives and promote the improvement of relevant laws.
He said that in the future development and reform of China's agriculture and rural areas, many issues are closely related to the development of cooperatives. Rural development cannot be separated from financial support. One of the difficulties in China's rural financial reform is that formal farmers' cooperative financial organizations owned by farmers and providing financial services to farmers are very difficult to develop. Without the support of cooperative finance, China's farmers' professional cooperatives will also find it difficult to develop and grow. The "Decision" of the Third Plenary Session of the Seventeenth Central Committee proposed: "Allow qualified farmers' professional cooperatives to carry out credit cooperation."
It is understood that credit cooperation in rural areas has not developed satisfactorily. So far, only 11 rural mutual fund cooperatives have been successfully registered with the China Banking Regulatory Commission nationwide. Within five years, the China Banking Regulatory Commission plans to approve 150, while various types of farmers' professional cooperative organizations nationwide have grown to more than 178,000. There is a huge gap between the two.
He believes that appropriately developing credit cooperation, letting cooperatives establish a certain "blood-making" mechanism themselves, developing and strengthening farmers' professional cooperatives, and giving play to the market-regulating function of cooperatives are practical difficulties that urgently need to be solved. It is suggested that decision-making departments join with relevant business departments to formulate related policies, make up for omissions in existing policies, and defuse the market risks of credit cooperation.
Zhang Xiaoshan, director of the Rural Development Institute of the Chinese Academy of Social Sciences, believes that diversified and mixed models of agricultural modernization and business forms will exist in rural China for a long time, and farmers' professional cooperatives, as an important vehicle for these, will also long exhibit characteristics of heterogeneity and diversity. Cooperatives led by large households have become the main form of cooperatives in some areas; the original "company + farmer" model in agricultural industrialization either has been internalized within cooperatives, or companies increasingly use cooperatives as intermediaries to conduct transactions with farmers; farmers' professional cooperatives and rural community organizations will increasingly collide, intersect and merge together. In the future development of cooperatives, whether specialized farmers engaged in agricultural production or marketing can become the interest-bearing entities of professional cooperatives is the touchstone for the healthy and sound development of farmers' professional cooperatives in the future.
Cooperatives led by large households have become the main form in some areas
Zhang Xiaoshan said that among the cooperatives that have been registered, those led by large households often become the main form. He gave an example to explain this phenomenon: Liu Ruozheng, the initiator and chairman of the Zhengrong Farm Planting Professional Cooperative in Yongxing Town, Jingshan County, Hubei, is a junior college graduate in the planting specialty from Henan Agricultural University. He came to Hubei in 2003 to contract farmland, later established a cooperative, and registered it with the industry and commerce department on April 3, 2008. It currently has 212 member households, distributed across 18 villages in 4 townships. They have contracted a total of 13,487 mu of farmland, and 27 directors were elected based on the composition of cooperative members by region. Members do not pay share capital or membership fees; the cooperative's main business is group purchasing of production materials. Members first pay the cooperative at market price, and the cooperative finally rebates the difference based on transaction volume. From the perspectives of decision-making mechanisms, surplus distribution, and financial management, this is a relatively standardized cooperative. One of the characteristics of this cooperative is that large households hold a dominant position. At the initial founding, there were 5 members. Liu Ruozheng was the largest household, contracting 1,290 mu of farmland. One member was an agricultural technician, and the other 3 members together contracted 900 mu of farmland.
According to statistics, among the 136 registered professional cooperatives in Wuhu City, Anhui, 125 were established by rural capable individuals (large households), 4 were led by agriculture-related departments, 5 were driven by leading enterprises, and 2 were led by village-level organizations. From the perspective of cooperative initiators, some were led by families, some by large specialized households in planting, breeding or marketing, and some were initiated by several people in partnership.
Zhang Xiaoshan believes that without the participation of specialized large households and without cooperatives run by entrepreneurs, it is impossible to have successful cooperatives. At present, well-developed professional cooperatives are often dominated by large households, set thresholds, and exclude small farmers. He believes that in the future, rural households in China will long maintain a compositional pattern of a small number of specialized planting, breeding and marketing households coexisting with a large number of small-scale part-time farming households. While encouraging and supporting rural specialized large households and skilled technicians to organize and establish cooperatives, establishing a reasonable interest-linking mechanism within cooperatives between large-household members and ordinary small-farmer members, and letting these large households spread their skills, knowledge, management and market channels to other people, is the key to whether cooperatives can develop healthily and adhere to their basic principles and values.
In economic life, cooperatives have become transaction intermediaries linking companies and farmers
Why would companies be motivated to join or lead cooperatives? He believes that when a policy is introduced, it is often inseparable from the fact that powerful groups related to that policy are the first to seize the high ground and make full use of policy preferences. This is no exception in the matter of cooperatives, such as processing plants becoming wheat cooperatives and meat processing plants becoming meat processing cooperatives. Leading enterprises joining or leading cooperatives is driven by their own interests and has its economic rationality, but farmers' interests should be fully taken into account.
Article 50 of the "Law on Farmers' Professional Cooperatives" states: "The central and local governments shall respectively arrange funds to support farmers' professional cooperatives in carrying out services such as information, training, agricultural product quality standards and certification, agricultural production infrastructure construction, marketing and technology promotion." Article 52 states: "Farmers' professional cooperatives enjoy the tax preferences stipulated by the state corresponding to agricultural production, processing, circulation, services and other agriculture-related economic activities." These preferential policies are often the interest driver for leading enterprises to join or lead cooperatives. The participation or leadership of large households can create linkages between farmers and the market, giving farmers in a small-scale peasant economy the ability to resist market risks. In real economic life, cooperatives become transaction intermediaries. As long as farmers' interests are ensured in the transaction process, this mode of intervention is still worth advocating.
Hubei Xingnong Grain Industry Development Co., Ltd. is 95% controlled by the Jingmen Direct Warehouse of the Central Grain Reserve and is a comprehensive grain industrialization enterprise integrating grain storage, processing, trade, testing and logistics. In 2008, the company took the lead in establishing 14 high-quality rice industry associations in 14 major grain-producing townships in Jingmen City, Hubei. Each association, in turn, used villages as units to select some villages with a good mass foundation and a high degree of contiguous planting to establish high-quality rice production cooperatives. More than 30 farmers' professional cooperatives were established in total, ensuring the source of its high-quality rice through an industrial network of "company + association + cooperative + farmer." Due to the involvement of large households, contract farming ensured smooth sales channels for farmers.
This is a typical example of a company being internalized within a cooperative. He believes that an important principle of cooperatives is that they are rooted in the local community and take promoting the development of the local community as their purpose. Some enterprises established by local farmers lead cooperatives or professional technical associations. While benefiting themselves, they also drive other farmers to increase income, enhance their ability to resist market risks, and ultimately promote the economic and social development of the local community, becoming transaction intermediaries linking companies and farmers. As long as farmers' interests can be ensured in market transactions, this economic phenomenon has its rationality for existence and development.
Shanxi Jincheng Tongkang Food Co., Ltd. is such an example. The company established more than 18,000 mu of green agricultural planting bases in the form of "company + cooperative + base + farmer," planting pollution-free agricultural products, and then processing and selling them. The company chose the Zefzhou County Jinfengyuan Planting Professional Cooperative in Daxing Village, Gaodu Town, Zezhou County as a partner. The cooperative was registered with the county industry and commerce bureau in March 2008, with 5 initiating member households. It now has more than 200 member households (out of 230 households in the whole village). The head of the cooperative is the village party branch secretary, with 4 board members and 2 supervisory board members. The company provides seeds and technical guidance to the cooperative and purchases qualified agricultural products submitted by the cooperative at a guaranteed price. The cooperative purchases qualified agricultural products provided by members at a guaranteed price and also acts as the company's agent to sign purchase contracts with farmers in other surrounding administrative villages.
Without the support of cooperative finance, China's farmers' professional cooperatives will also find it difficult to develop and grow
Zhang Xiaoshan pointed out that the more functions a cooperative has and the more policy preferences it enjoys, the more motivated various stakeholders are to establish, utilize and develop the cooperative platform. But at the same time, various non-standard problems have also been exposed in the development of cooperatives. The problems exposed in rural reform and development are likewise reflected in the development of cooperatives. The practice of establishing and developing farmers' professional cooperatives will inevitably enrich policies concerning cooperatives and promote the improvement of relevant laws.
He said that in the future development and reform of China's agriculture and rural areas, many issues are closely related to the development of cooperatives. Rural development cannot be separated from financial support. One of the difficulties in China's rural financial reform is that formal farmers' cooperative financial organizations owned by farmers and providing financial services to farmers are very difficult to develop. Without the support of cooperative finance, China's farmers' professional cooperatives will also find it difficult to develop and grow. The "Decision" of the Third Plenary Session of the Seventeenth Central Committee proposed: "Allow qualified farmers' professional cooperatives to carry out credit cooperation."
It is understood that credit cooperation in rural areas has not developed satisfactorily. So far, only 11 rural mutual fund cooperatives have been successfully registered with the China Banking Regulatory Commission nationwide. Within five years, the China Banking Regulatory Commission plans to approve 150, while various types of farmers' professional cooperative organizations nationwide have grown to more than 178,000. There is a huge gap between the two.
He believes that appropriately developing credit cooperation, letting cooperatives establish a certain "blood-making" mechanism themselves, developing and strengthening farmers' professional cooperatives, and giving play to the market-regulating function of cooperatives are practical difficulties that urgently need to be solved. It is suggested that decision-making departments join with relevant business departments to formulate related policies, make up for omissions in existing policies, and defuse the market risks of credit cooperation.