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Path and Policy of China’sAgricultural Management Mode Reform Mr.Guan Ruijie Inspector & Research Fellow Rural Economic System & Operation Management Department, Ministry of Agriculture
In retrospect of China’s development history in the past 63 years, with the year 1979 asa watershed, the first 30 years witnessed prioritized efforts to build a highly centralizedplanned economic system, and in the next 33 years China’s has gradually shifted intothe socialist market economic system. In the meantime, China’s rural managementsystem has also experienced significant changes with the transition of the nationaleconomic system, and reflected the distinctive characteristics of different historicalperiods.
I. Evolution of China’s Agricultural Management Mode (I) 30 years prior to the reform and opening up China established a highly centralized planned economic management system. In rural China, private land ownership which had only existed for a short period after the Land Reform successively turned into mutual aid groups, elementary agricultural producers’ cooperatives, and advanced agricultural producers’ cooperatives. After the rapid socialist reform of the rural land ownership system, the people’s commune system was then established and the means of production, including the land, were owned by the collectivity under centralized management. The rigid management mechanism (“large in size & collective in nature, equalitarianism & indiscriminate transfer of resources) of people’s commune was plagued by its low efficiency and many other defects, though the system had indeed played an important role in deploying commodity grain and industrial raw materials to facilitate the establishment of an independent industrial system in China, to strengthen the rural irrigation and water conservancy infrastructure construction, and to advance the process of agricultural mechanization.
I. Evolution of China’s Agricultural Management Mode Land reform & mutual aid (1949 － 1958): The central government promulgated the Law on Land Reform in June 1950, kicking off an extensive land reform across the country. With the abolition of the feudal landlord land ownership, over 300 million Chinese farmers having no land or little land were granted 47 million hectares of land for free, realizing the dream of “land to the tiller”. The agricultural productive forces were emancipated to a great extent. By 1952 when the land reform was basically completed, the national grain output had increased by 42.8% compared with 1949.
I. Evolution of China’s Agricultural Management Mode
I. Evolution of China’s Agricultural Management Mode In order to achieve further economic prosperity and improve the living standard and the capacity of shielding against different natural risks, the farmers voluntarily called for mutual aid and cooperation. Hence, the CPC Central Committee actively guided and encouraged the farmers to form mutual aid groups, elementary cooperatives and advanced cooperatives. In the initial stage, the central government put forward the guideline of “realize stable advancement according to the needs and possible conditions of development” and “mutual aid better than going it along, and cooperation better than mutual aid”. The guideline enjoyed wide support, contributing to the stable and healthy development of the cooperatives. However, in the second half of 1955, the socialist agricultural reform gathered steam in China, while the problem of “excessively urgent demand, fast change, flawed work and simple form” was emerging. The reform, which was originally scheduled to be completed in 15 years, actually concluded in half a year.
I. Evolution of China’s Agricultural Management Mode
I. Evolution of China’s Agricultural Management Mode People’s commune & centralized management (1958 － 1978): The Movement of People’s Commune rapidly spread all over China. In September the same year, 26,000 people’s communes were established throughout the country, with 120 million participating farmer households, accounting for over 98% of the total. Each commune consisted of 4,614 households on average. The people’s communes adopted a “three-level and team-based” management system. The means of production were collectively owned by the production teams. The communes should practice independent accounting and assume sole responsibility for the profits and losses. Engaged in organized collective production according to the mandatory plans, the commune members should unconditionally obey the work plans. For each member, his or her work points were calculated on the basis of work done. Distribution was carried out in line with the “egalitarian” principles.
I. Evolution of China’s Agricultural Management Mode
I. Evolution of China’s Agricultural Management Mode In the age of people’s commune which lasted for over two decades from 1958 to 1982, given the scissors difference in the price of industrial and agricultural products, agriculture provided a net amount of more than 540 billion yuan for the national industrialization efforts, making a crucial contribution to completing the accumulation for industrialization in China. As a result, the output of grain increased by 75%. Major progress was also achieved in the construction of rural irrigation and water conservancy infrastructure and in agricultural mechanization, with the irrigated area increasing by 62%, total power of agricultural machinery 135.9 folds and machine-ploughed acreage 12.3 folds.
I. Evolution of China’s Agricultural Management Mode Nevertheless, during the “Cultural Revolution” and the campaign of “Learning from the Agricultural Practices of Dazhai”, the agricultural management system was further rigidified. In some places, the ownership by production teams shifted to that by the production brigades and by the people’s communes; in terms of the operation management and distribution, the effective norm management was abolished and replaced by “work point calculation” borrowed from Dazhai. The “communal pot”-style egalitarianism was getting so worse that it seriously dented the farmers’ enthusiasm. Consequently, the rural labor production rate saw no substantial growth, with only an incremental increase rate of 0.3% between 1957 and 1978, obviously lower than that of the middle- income countries (2.6%) in the same period. The net income of farmers, after being converted into the volume of grain, only increased from 1,055 jin (527.5 kg) from 1,255 jin (627.5 kg). In many places, farmers were trapped in an awkward situation of “having to rely on the loans for production and on the relief for subsistence”. The appeal for a reform was growing increasingly stronger in rural China.
I. Evolution of China’s Agricultural Management Mode (II) 33 years after the reform and opening up In 1979, the effort of reform and opening up started in rural China. In the rural reforms, the rural management system was the first to change. A two-tier management system based on the household contract management with the combination of centralization and decentralization was established to rule out the system of people’s commune; the rural basic management system was stabilized and improved through the innovation in the rural organizational system; by fully transforming the rural tax and fees system, advancing the comprehensive rural reform and building a policy system that supports and benefits the farmers, the government effectively stimulated the production enthusiasm of millions of farmers and protected their legitimate rights and interests. As a result, the national total output of grain increased from 304.77 million tons in 1978 to 571.21 million tons in 2011, and the per capital annual net income of farmers also increased from 134 yuan to 6,977 yuan (RMB), up by 87.4% and 51.1 folds.
I. Evolution of China’s Agricultural Management ModeTwo-tier management system: The household contractmanagement was practiced, and the community-based cooperative economicorganizations were set up. Across the country, people took bold strides toexplore the path of reforming the rural management system. From contract workquotas to group co-production and specialist contract, from laborer co-production to fixed farm output quotas to each household, a great variety ofagricultural production responsibility systems was popularized from onelocality to a whole area. By late 1983, 98% of the basic accounting units in Chinaadopted the household-based contract system. The area of land contracted toand managed by the collectivity accounted for about 97% of the total farmlandacreage. Upon the disintegration of people’s communes, production brigadesand production groups, the community-based cooperative economicorganizations at different levels were established in many places in China.
I. Evolution of China’s Agricultural Management Mode From 1979 to 1984, the growth rate of agricultural production and farmers’ income reached 6.6% and 15.1%, respectively. As the subsistence problem of farmers were rapidly resolved, the rural poverty-stricken population shrank by two thirds. In order to further stabilize the land contract relations, the central government made it clear in 1984 that the land contract period shall be 15 years. In 1993, the contract period was further extended for another 30 years. In 2008, the central government emphasized that the current land contract relations must be stable and permanent, providing the farmers with full and guaranteed land contract management rights. Overall, the household contract management system ensured the basic employment and income source for the farmers, and turned them into the market players with the autonomous rights in production and employment.
I. Evolution of China’s Agricultural Management ModeInnovation in rural management organizations: Theindustrialized agricultural management organizations and farmers’ specializedcooperative organizations saw vigorous development. In the early 1980s, Chinastarted the reform of the circulation system, gradually loosening the controlover the agro-product market and price. With the increase in the rural and urbanresidents’ income and the diversification of their needs, smallholderagriculture was barely able to meet the constantly changing needs of the bigmarket due to its disorder and blindness in production. People occasionallyfound it difficult to sell or purchase agro-products. Therefore, China is in urgentneed of innovation in the organizational system to address the challenge ofeffectively connecting production with the market. Leading industrializedagriculture enterprises, market intermediary service organizations andfarmers’ specialized cooperative organizations emerged at this historicmoment, which innovated and enriched the rural management system in linewith the national conditions while facilitating the development of productiveforces. These organizations kept growing in numbers, with the managementperformance and capacity for stimulation being constantly improved.
I. Evolution of China’s Agricultural Management ModeEvident results have been achieved in industrializedagriculture management.In 2011, there were more than 280,000 industrialized agriculture organizations of differenttypes in China, with about 110 million farmer households being affected and stimulated(accounting for over 40% of the total). The annual income of households engaged inindustrialized agriculture saw an increase of more than 2,400 yuan, and the practitioners inindustrialized agriculture exceeded 50 million people. The size of industrialized agriculturalproduction bases accounted for over 60% of the total size of agricultural production inChina; the number of livestock raised accounted for 70% of the national total, and the area ofwater surface for aquaculture accounted for over 80% of the national total. There werenearly 110,000 leading industrialized agriculture enterprises in the country, with the annualsales volume surpassing 5.7 trillion yuan. They provided more than 1/3 of the agro-productsand processed food supplied in the market, and accounted for over 2/3 of the productssupplied under the “non-staple food project” in major cities. Their annual export volumeaccounted for over 80% of the total exports of agricultural products in China.
I. Evolution of China’s Agricultural Management ModeFarmers’ specialized cooperatives witnessed stabledevelopment.As of the first quarter of 2012, a total of 552,300 farmers’ specialized cooperativeshave been registered at the industrial and commercial administrations acrossChina, up by 30,600 cooperatives compared with late 2011. They have about 43million member households, accounting for 17.2% of the total farmer households.Implement the “One Village One Product” (OVOP) project tohelp farmers achieve prosperity.By the end of 2010, there were 51,486 specialized villages in China, accounting for8.7% of the total number of administrative villages; and there were 3,479 specializedtownships, accounting for 10.2% of the total. Among these, the production bases invillages specialized in crop farming covered 6.076 million hectares of land in total;the livestock raised in villages specialized in animal breeding reached 44.808million; the area for aquaculture in specialized villages totaled 425,000 hectares;and the planting area in villages specialized in forestry reached 7.584 millionhectares. The per capita net income of farmers from these specialized villages was
Majiaqiao Modernized Agriculture Demonstration Park
II. Policies Stabilizing the Basic Management System Establish the preferential policy system for agriculture: Implement the rural tax reform, and gradually increase the preferential agricultural subsidies. In 2000, the central government launched the rural tax reform pilot projects with the aim of “alleviation, standardization and stabilization”. These projects were extended nationwide in 2003. In 2004, China lowered its agriculture tax rate, and started the agriculture tax exemption pilot programs in Heilongjiang and Jilin province. Meanwhile, China also canceled the tax on special agricultural products, except for tobacco. By reducing the agriculture tax rate incrementally, the country abolished the tax nationwide in 2006, finally ending the 2,600-odd-year history of levying agriculture tax by the government. At the same time, the government actively promoted the comprehensive rural reforms, with the township government administration system reform, rural compulsory education reform, as well as village and county financial management system reform as the three key reforms. Since 2004, the government has been granting direct subsidies to farmers in the major grain producing areas, and improved crop breed and agricultural machinery subsidies to farmers in some areas. In 2006, the government started to grant general subsidies for means of agricultural production. The varieties and amount of subsidies increased year by year. In 2011, the financial input in “rural areas, agriculture and farmers” hit a record high of 1 trillion yuan. The total amount of the said four subsidies reached 140.6 billion yuan. In the new era of building a moderately
II. Policies Stabilizing the Basic Management System Stabilize the land contract relations: A series of household contract management policies have been formulated. In 1993, the household contract management system was written into the Constitution of the People’s Republic of China. The Law on Land Management revised in 1998 prescribed on the rural land contractor, contract period and contract agreement. On August 29, 2002, the NPC Standing Committee passed the Law on Rural Land Contract which was to go into force on March 1, 2003. This law elevated a series of land contract policies formulated by the central government to the higher status of being legislations, and it prescribed on the principle and procedure of rural land contract, the acquirement and protection of land contract management rights, the rights and obligations of the contractees and contractors, the circulation of land contract management rights, the settlement of disputes, as well as the legal liabilities.
II. Policies Stabilizing the Basic Management System1. As the law provides, “the farmland contract period is 30 years, the grasslandcontract period is 30-50 years, and the forest land contract period is 30-70 years.2. As the law provides, “when participating in organized land contractingactivities in line with the relevant regulations, the members of collectiveeconomic organizations shall have the equal land contract right according to law,and may voluntarily waive such right”. “Any organization or individual may notillegally restrict the members from contracting the land or deprive them of suchright”.3. As the law provides, “the land contract management right obtained fromhousehold contract may be circulated in the form of subcontracting, leasing,exchange, assignment or others”. “Any organization or individual may not force orprevent the contractor to circulate the land contract management right”. “Theprofit generated from the circulation of right shall go to the contractor. Anyorganization or individual may not retain or withhold such profit withoutauthorization”.
III. Institutional Guarantee for Rural and AgriculturalDevelopment(I) Farmers are guaranteed with basic employment andincome sources.229 million farmer households in China have contracted 94% of the collectively-owned farmland. In recent years, with the continuous advancement ofindustrialization, urbanization and agricultural modernization, the circulation ofrural land contract management right has also witnessed rapid development. Bythe end of 2011, the total acreage of farmland circulated under the householdcontract system had reached 228 million mu, accounting for 17.8% of the totalarea of land under the system. The earnings from land contract has always beenthe major source of income of the farmer households, accounting for 67% of thenet income of farmers’ household operations in the 1980s, 65% in the 1990s, 55%in 2000 and 40% in 2011. (II) Farmers have become the market player with autonomyin production management and employment.Autonomy in production management has promoted the agriculturalrestructuring and comprehensive development of rural economy; and freedom inemployment had facilitated the transfer of rural labor force and population. Theurbanization rate in China increased from 17.92% in 1978 to 51.27% in 2011.
III. Institutional Guarantee for Rural and AgriculturalDevelopment(III) The policies have facilitated sustainable agriculturaldevelopment and agricultural eco-construction.The production enthusiasm of farmers is lasting and has stimulated the farmersto actively improve the production capacity of farmland. The multiple croppingindex increased from 149% in 1978 to 161% in 1997, equivalent to an increase of 10million hectares of farmland.(IV) Conditions have been created to develop all forms ofrural cooperative economic organizations.The activities of rural cooperative economic organizations cover a variety oftrades, including crop farming, animal breeding, agricultural machinery, forestry,plant protection, technical information, handcraft, and rural inn. Crop farming andanimal breeding are the two dominant industries, accounting for 44% and 29%,respectively. In the extended areas of activity, the production technology andinformation service accounts for 21.8%, transportation and storage service 6.1%,and processing and sales service 21.8%.
IV. Major Experience in Implementing the HouseholdContract Management System(I) Establish the rural land system in accordance with thenational conditions.The basic national conditions of China include: First, there is such a largepopulation with comparatively so little farmland. The conflict betweenpopulation and farmland is prominent. Currently, the acreage of arable land inChina has totaled 1.84 billion mu, with 1.4 mu of land for each person. China hasto feed a population accounting for 21% of the world’s total on less than 9% ofthe world’s farmland. Second, the proportion of farmers in the total population isso large that it has become difficult to transfer these farmers massively. Third, ittakes a long time to establish and improve a social security system that coversthe whole of rural China. The household contract system is an inevitable choicewhich suits China’s national conditions. Large numbers of people will stay in therural areas for a long period. Thus, only by securing the basic rights of eachfarmer for subsistence and development (i.e. having some land) can we avoidserious social problems caused by a large number of unemployed farmers withno land, and keep the stability of rural China and the Chinese society at large.Since rural land in China has the dual function of ensuring both society security
Rural land in China shouldnot be placed under privateownership, because once theland gets into private hands,land trade and land mergerwould be unavoidable andsome farmers would lose theirland easily. They would causesevere social problems, asthey have no land, no job, nosocial security and no house.Therefore, by avoiding theprivate ownership of land,China can better realize andguarantee the right of eachfarmer for subsistence anddevelopment.
IV. Major Experience in Implementing the HouseholdContract Management System (II) Grant long-term secured land use right to the farmers, and properly address the relationship between farmers and land. In the early days of household contract management, as the land contract period was often short and the contract land were usually subject to constant adjustment, the farmers were less motivated to make long-term investment to improve the land capacity, despite their enthusiasm in production. In order to ensure sustainable agricultural development in China, the Chinese government put forward the policy of extending the land contract period and keeping stable land contract relations, and even wrote the policy into the Law on Rural Land Contract. In this way, the farmers obtained long-term secured land use right, and their enthusiasm in farmland protection and improvement, as well as in production investment, was substantially enhanced.
IV. Major Experience in Implementing the HouseholdContract Management System (III) Create favorable conditions for the production management activities of farmers. The Chinese government has constantly increased its input in and construction efforts for agriculture and rural areas. As a result, the agricultural equipment, support capacity and general production capacity have been significantly improved. Major progress has been achieved in agricultural technology and rural market construction. The agricultural and rural economic restructuring has been deepened, with the rural infrastructure and living conditions being continuously improved.
V. Focus for Further ImprovementPay attention to the following four aspects while accelerating the developmentof farmers’ cooperative organizations and industrialized agriculturalmanagement and fostering major players of new-type agricultural productionmanagement :First, strengthen land circulation management and service. Particular effortsshould be made to establish pilot programs for standardized circulationmanagement and service, to build the agricultural management capacity reviewsystem and the land circulation risk deposit system, to popularize the use ofmodel contracts for the circulation of rural land contract management right, andestablish and improve the rural land contract management right circulationservice platform.Second, steadily expand the pilot projects for land contract management rightregistration, and solve the problem of inconsistency and ambiguity.
V. Focus for Further ImprovementThird, render support and cooperation to the revision of the land management lawas well as the drafting of policy regulations on compensation for theexpropriation of collectively-owned rural land. Strengthen protection over thematerialization of land contract management right. Pay attention to properlydealing with the mediation, settlement and arbitration of land contractmanagement disputes.By late 2011, the total acreage of circulated farmland under the householdcontract management system reached 228 million mu, accounting for 17.8% of thetotal area of farmland under the system; the number of large farmer householdswith over 2 hectares of farmland under management reached nearly 9 million, andthat of crop farming households with over 6.7 hectares of farmland undermanagement reached nearly 480,000 households.
V. Focus for Further ImprovementFourth,Vigorously develop the service for socialized agriculture, and fosterservice organizations at multiple levels with multiple players.---strengthen the public service capacity building of agriculture. Improve thetownship or regional public service bodies for the extension of agriculturaltechnologies, prevention and control of plant and animal diseases, as well ascontrol of agro-product quality. Significant progress has been made in theconstruction of village-level service centers. Provide better remuneration foragricultural technicians and improve their working conditions.---vigorously foster and support the new-type socialized agriculture serviceorganizations. Support the farmers’ specialized cooperatives, leadingenterprises, supply and marketing cooperatives, specialized service companies,specialized technical associations and farmer agents to provide diversifiedproduction management services to the farmers.--- innovate the socialized agriculture service mechanism. By means ofgovernment stimulation, directional mandate, and bidding and tendering, thegovernment should endorse the farmers’ specialized cooperatives, specializedtechnical associations, agriculture-related enterprises and other social forcesto participate in the agricultural service before, during the after production.