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Counselor Zhou Pingjian:HELP- Agriculture Management in China

Paper delivered by counselor Zhou Pingjian of the Chinese Embassy in South Africa at the 10th Annual National Public Service Trainers' Conference

14 September 2006



Ladies and Gentlemen,

Dear Friends,


You are almost an Old China Hand if you have a clear understanding of what happened in China in 1978. Indeed, without the launching of the reform and opening-up program in December 1978, what is now called the China Miracle would never happen.

If you further challenge yourself to be an Old China Hand on agriculture management, then, a deep insight into what happened in China in 1998 is a must.


For China's agriculture management, the year of 1998 is a watershed. It was in 1998 that the market structure of China's farm produce reached a turning point. The long-standing sellers' market was replaced by a somewhat buyers' market. The catchphrase "hard to buy" was increasingly replaced by "hard to sell". As a consequence, the purpose of China's agriculture management has been redefined as twofold: to boost agricultural production, and to increase farmers' income. As is well known, the demand for farm produce is inelasticity. More produce does not necessarily mean more income for farmers. Quite the opposite, actually, in a buyers' market. More produce, less income. So, safely to say to serve the twofold purpose at one time is very challenging. China needs to manage its agriculture more effectively more than ever in order to realize the twofold purpose.


With a rough idea of what happened in China in 1998 in mind, now it might be a bit easier for me to share with you my understanding of agriculture management in China. To my way of thinking, suffice to say that the role of the Chinese government in agriculture management is simply to HELP.


  To understand agriculture management in China today, HELP is not only the right word, but also the right word for word. H-E-L-P, word for word, tells both the basics and the major thrusts of China's agriculture management.


H: Household Responsibility System (HRS)


China's reform in 1978 started from the countryside. The single most important policy adopted at the early stage of the reform was no other than the introduction of the Household Responsibility System. In fact, the replacement of the People's Commune System by the Household Responsibility System was the hallmark of China's rural reform.


According to the People's Commune System, collective ownership, collective production, and collective management were strictly put into practice. There was little room left for the households to make their own decisions.


But according to the Household Responsibility System, collective production and management is no longer the common practice. The collective ownership of the land is still there, while the rights to production and farming belong to farmers.


This was a fundamental change in China's agriculture management. China's 240 million households in the countryside have become independent market players under the Household Responsibility System. This fundamental change has excited the activity of billions of Chinese farmers, promoting the rapid development of China's agriculture and its entire economy.


Some people inside and outside China are now advocating the abolishment of the Household Responsibility System. They argue, in a socialized big market how can the scattered farmers face problems such as how to collect market information, how to arrange production activities, and how to gain market competitive advantage. As they see it, there is no chance for China to modernize its agriculture on the basis of the Household Responsibility System.


We are not in favor of this kind of view. As the part and parcel of the Household Responsibility System, household land contracting is not only an important source of capital for Chinese farmers, but also their basic means of living. On the foundation of household land contracting and household responsibility, we can, through methods such as the industrialization of agricultural management, guide the scattered farmers into the big market. Moreover, wherever conditions permit, the transfer of the contractual right of land can be carried out according to law so as to develop production of scale step by step. In a word, by using household contracting as a foundation, the interconnected dual level management system in China's countryside has extensive suitability and thriving vitality, which benefits rather than hinders agricultural modernization and rural progress.

China has a very large population and relatively scarce land. The Household Responsibility System is a major feature as well as a major advantage in China's countryside. In light of China's particular national conditions, we believe, only based on the Household Responsibility System can China realize a meaningful modernization of agriculture. That is to say, to achieve China's modernization of agriculture at no cost of social instability. China will guarantee the long-term right to independent farming for Chinese farmers. This guarantee will remain unchanged for fifteen years, for thirty years, or even forever.

E: Empowerment of Farmers

Because of the fundamental situation of China we've mentioned earlier --its population is so large and its land is scarce-- small scale management will last for quite a long time for Chinese farmers.

Then, how to bridge the gap between the scattered farmers and the big market? This is a somewhat make-or-break fundamental problem China has to deal with to effectively manage its agriculture. A main part of the solution is to empower the farmers.

First, promote industrialized management of agriculture.

After years of exploration, China is pushing forward the industrialized management of agriculture. Preferential policies in the areas of finance, taxation and credit have been adopted to support a group of key and leading agribusinesses.

What these agribusinesses are expected to do is to integrate a certain number of household farmers as their contract customers or even stakeholders. Together with the household farmers, these agribusinesses develop farm produce processing, sales, storage, transportation and preservation to extend the farm produce-related industrial chain. Thanks to the much more powerful agribusiness, the household farmers now could be less vulnerable while entering the big market.

Socialized agricultural services help empower household farmers a lot. In order to develop all kinds of socialized agricultural services, China also encourages innovation in agriculture-serving organizations and helps cultivate middlemen.

Second, foster farmers' industry associations.

China became a member of the World Trade Organization (WTO) in 2001. Since then, more and more farm produce associations from outside China have landed in Chinese mainland. A common setting for China's agricultural trade negotiations has one side of the table filled by representatives from foreign farm produce associations, who represent the interests of farmers, while the other side is composed of Chinese government officials. It is fair to say that China has one of the world's most poorly-organized farming sectors. The contradiction between traditional ineffective self-production model and the current demanding market economy has brought negative influences to China's agriculture.

But things are changing rapidly. Thanks to the joint efforts made by the government and farmers, the traditional self-help production model among Chinese farmers is being replaced by a new cooperative style -- the farmers' industry association. At present, there are more than 100,000 farmers' industry associations of various kinds in China. The farmers hope that the establishment of industry associations will be a nice way out.

The farmers' industry associations are mostly self-organized by farmers. By offering professional services ranging from planting to marketing, they are helping to strengthen cooperation between household farmers. This is an effective way for farmers to empower themselves worldwide. As many Chinese economists believe, the farmers' industry associations organize farmers more effectively in their access to the market and may become the major force of China's agriculture industry in the future. The Chinese government is only too happy to see the farmers speak for themselves in a louder and clearer voice in this way. Thus, the prevalence of farmers' industry associations may not only changes the landscape of China's rural economy, but also provides a new channel for the government to support agriculture and farmers.

Third, facilitate rural exodus.

  It is an inevitable course of industrialization and modernization worldwide for surplus rural labors to move to non-agricultural sectors and cities. China is no exception. Since the early 1990s, the number of rural migrant workers in China has been on the increase by some 5 million annually on average.

To help a rational and orderly rural exodus, China is trying hard to remove all the institutional and policy obstacles. The government has adopted the policy of "treating fairly, guiding rationally, and improving administration and service" for rural migrant workers.

The government is working to provide better information and administrative service for migrant workers. Public job agencies and information networks have been set up to facilitate job-seeking. The administration of labor contracts for rural migrant workers has been improved gradually to protect their legitimate rights and interests. The supervision over the employers and job agencies about payment and working conditions has been tightened. Illegal job agencies and those providing false information are severely punished.

Efforts have also been made to cover rural migrant workers with social security. In major provinces and cities where rural migrant workers rush to, social security has included rural migrant workers. Relevant policies and regulations have been issued about their work-related injury, medicare and pension.

Another essential way to empower the rural migrant workers is to help them acquire basic skills. In this regard, China has put forward the National Plan for Training Rural Migrant Workers, 2003-2010. Through this plan, 60 million prospective rural migrant workers will acquire certain skills through free vocational training in seven years.

To better facilitate rural exodus in different natural and socio-economic conditions, the Chinese government has carried out some pilot projects in 98 counties across China since 1991. Such projects focus on unified planning for employment in both urban and rural areas, rural migrant workers' returning home to start their own businesses, and training of the rural migrant workforce.

L: Land Protection


China has been successful in feeding 22% of the world's population with 7% of the world's farmland. In 2005, China used 104 million hectares farmland to produce 484 million tons of grain. To reach the production target of 500 million tons in 2010, China's farmland is expected to be at least 103.33 million hectares. At the predicted rate of land shrinkage, the amount of land in 2010 will be just enough to meet that target.

  In the near future, vast areas of farmland will irreversibly shrink due to urbanization and government plans to turn some not-so-fertile farmland into forests. In the next five years, China's farmland will be reduced at a rate of 0.18% a year.

 Against such backgrounds, China has no choice but to implement the strictest farmland protection policy. This bears not only on China's agricultural development and rural stability, but also on China's sustainable development of industrialization and urbanization.

In the last few years, a large amount of farmland has been turned into non-agricultural use in China. This has not only contributed land resources to industrial and urban development, but also accumulated a great deal of financial capital for the rapid development of urban construction. But this also tends to decrease compensations for farmers and lead to blind farmland transfers in some regions. As a consequence, over-investment and over-production happen, and large numbers of farmers without farmland emerge, causing serious problems for the sustainable development of China's overall economy and society.

China simply can not afford this to continue. Therefore, China has started to tighten both land and credit "valves" to cool down its economy. Of these two "valves", the land valve can be used to "take the fuel out of the stove" in certain regions and industries where investment is excessive. It has already limited blind and speedy increases in investment and protected the most precious farmland resources. It works.

However, the pressure of rebounding fixed asset investment in China is still very great, the impulse in some regions to occupy farmland is still extremely intense. Land protection is still a very difficult task for China's agriculture management.

P: Policy Coordination


"Building a New Socialist Countryside" is one of the hottest catchphrases in China today. To keep up with the latest development in China and to understand the policy coordination measures China has taken to ensure a better agriculture management, one cannot afford to neglect this phrase.


What is a New Countryside?


A New Countryside is defined in China as one where farming production grows, and farmers enjoy a good living in villages with democratic management, a clean natural environment and healthy morals. The focus of building a New Countryside is to develop modern agriculture and improve the comprehensive agriculture capacity.


Why reintroduce the notion of New Countryside?


Actually, "Building a New Socialist Countryside" is not a newly coined phrase in China. The primary reason for the reintroduction of the notion is that China's economic and social development has entered a new stage. The government has the strong political will for some time and only until recently has the capacity to walk the talk.


After almost three decades of rapid economic growth, time is nigh for China to support the development of its agriculture and rural areas and to coordinate the economic and social development between urban and rural areas. The government now has more financial resources to do this important job than ever before. By reintroducing the notion of New Countryside, the Chinese government is putting agriculture and rural development more prominently on the agenda of China's overall modernization drive.


There are many reasons for putting forward the notion of "Building a New Socialist Countryside".


To begin with, agriculture is still not a foundation sound enough to meet the requirements of China's overall economic and social development and the uplift of people's livelihood.


Secondly, China's grain output reached 484 million tons in 2005, still insufficient to meet demand and nearly 30 million tons lower than the record high.


Thirdly, the lack of farmland and water resources both constitute bottlenecks limiting the development of China's agriculture.


Fourthly, more investment in the agriculture sector is required to improve production conditions, enhance the application of science and technology, and increase the output of farmlands.


Last but not least, the gap between urban and rural areas is widening. The average yearly per capita net income of Chinese farmers was only 3,255 yuan (407 US dollars) in 2005, while the disposal income of urban dwellers was 10,493 yuan (1312 US dollars), 3.22 times the income of farmers. The rural-urban gap is even more dramatic in infrastructure and social undertakings such as education, health care and culture.


Moreover, Building a New Countryside is an essential requirement for China to expand its domestic demand. The farmer's low income and lack of purchasing power have adversely affected the expansion of China's domestic demand. In 2005, only 32.9% of the total retail sales of consumer products in China were realized in counties and rural areas under counties.


  Building a New Countryside is also an essential requirement for China to build a harmonious society. Only by doing so, can China achieve social equity and justice and making the benefits of economic and social development available to all people.


What are the policy priorities to build a New Countryside?


  The next fives years will be crucial for China to lay a solid foundation for building a New Countryside. The aim is to boost modern agriculture, develop new relationships between industry and agriculture, cities and countryside, and increase rural affluence. The policy priorities include:


No.1, plan economic, social development in urban, rural areas as a whole, and firmly promote the construction of a New Countryside;

No.2, boost modern agriculture to consolidate industrial support to the New Countryside construction;

No.3, ensure sustained increases of farmers' income to lay a solid rural economic foundation;

No.4, enhance infrastructure construction in rural areas to improve rural material conditions;

No.5, accelerate development of pubic services in the countryside and train new farmers;

No.6, deepen comprehensive rural reform to guarantee systematic protection for rural people;

No.7, improve democracy in rural areas and perfect rural management;

No.8, enhance leadership and motivate the entire society to care, support and participate in the building of a New Countryside.


We know Rome was not built in a day. To build a New Countryside is not only China's first and foremost task in the next five-year period, but also a long-term task in the process of China's modernization. It takes time. We are working hard to do it bit by bit.


Ladies and Gentlemen,


China is soberly aware that it will remain a developing country for a long time to come. With more than 800 million people living in the countryside, the development of agriculture and the rural areas has always been the number one priority and an arduous task for China. To feed 1.3 billion people is never easy. To help farmers get rich is even harder. Agriculture management in China has come a long way and has a long way to go.


Thank you!

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