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A Brief Summary of the Development of Farmer Cooperatives in China

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A Brief Summary of the Development of FarmerCooperatives in China著者 Jia LEIjournal orpublication titleJournal of Integrated Field Sciencevolume 12page range 63-67year 2015-03URL http://hdl.handle.net/10097/6051663Oral PresentationA Brief Summary of the Development of Farmer Cooperatives in ChinaJia LEIGraduate School of Agricultural Science, Tohoku UniversityIntroductionChina’s agricultural production has been conducted in a fragmented small-manner and the production of agricultural products has remained highly dispersed for a very long time. Farmer cooperatives are regard-ed as one way to resolve the contradiction of “small-scale production” and the “big market” under the current food marketing system whilst improving eco-nomic welfare benefits to farmers. After the imple-mentation of “Law of the people’s Republic of China on Specialized Farmer Cooperatives” in 2007, the number of cooperatives has increased dramatically. However, the development of cooperatives in China has been strongly infl uenced by political approaches. This paper begins by briefl y laying out an overview of the development of cooperatives after the founda-tion of People’s Republic of China in 1949; it then gives an introduction to the current situation of coop-erative’s development by conducting a case study of Zhejiang Province. The author tries to contribute to the understanding of the development and the driv-ing forces of the great emergence of cooperatives in China in order to provide references for the develop-ment of cooperatives and future research. The Development of Farmer Cooperatives after 1949The promulgation of “Land Reform Law” in June 1950 marked the beginning of nationwide agricul-tural reforms in China. The so-called “Land Reform Period” lasted from 1950 until 1952, abolishing landownership by the landlord class and introducing private landownership. As a result, Chinese farmers owned their own farmland for the fi rst time in history (Figure 1).2.1 Agricultural Collectivization Period (1952-1958)Under a state monopoly economy, by establishing the agricultural collectives, farmers were proposed to form “mutual aid teams” of 5-15 households, which was regarded as the fi rst stage of the agricultural col-lectivization movement in 1953. From 1956 “elemen-tary agricultural cooperatives” of 20-40 households and “high level cooperatives”, consisting of 100-300 families, were initiated (Feng 2003). Through this movement, the land that had been handed out to the farmers was slowly returned to the state. By 1958 private ownership was entirely abolished and house-holds all over China were forced into state-operated communes.JIFS, 12 : 63 - 67 (2015)Figure 1. Evolution of Agricultural Cooperation Movement in China642.2 People’s Commune Period (1958-1978)After 1958, rural life was collectivized completely after various forms of rural cooperatives were merged into very large people's communes. People’s com-munes had become the new form of economic and political organization throughout rural China that marked the entire abolishment of private landown-erships. Farmers in the communes received points instead of wages. In terms of grain production, the fi gures were fi xed much higher than their true value due to the excessive zeal of local offi cials, who were whipped up in the general atmosphere of enthusiasm while at the same time afraid to be seen as moving too slowly. Approximately 25,000 communes had been set up by the end of the year, with an average of 5,000 households each. The collectivization move-ment achieved some early success, with grain output increasing by 21.8% from 1952 to 1958 (Table 1). However, in the following three years China expe-rienced its worst economic crisis, which caused the Great Famine due to the decline of food production from 1959 to 1961 (Great Leap Forward Period). The existing empirical findings mainly support the ‘exit right’ hypothesis to explain the dramatic productivity fluctuations in the Chinese agriculture, and support grain availability and the urban-biased food distribu-tion system as important causes of this disaster (Lin 1998).Jia LeiTable 1. Average Grain Output Per Mu 1951-1958Source: China Agriculture Year Book 1980Year 1952 1953 1954 1955 1956 19571958Total Output (10 thousand ton)20000  16392 16683 16952 19394 19275 19595Average Yield Per Mu (kilo)104.48 88.14 87.83 87.61 94.44 94.25 97.312.3 Household Contract Responsibility Sys-tem (1978-2007)The period from 1978 to 2007 was characterized by the implementation of a “Household Contract Responsibility System” which had become the main policy tool for the reform in rural areas. Through signing long-term contracts with the collective, farm-ers were able to manage agricultural production on their own initiative while the ownership of farmland still remained in the hands of the rural collective. The start of this system is also viewed as a milestone for the economic opening-up of China.The people’s commune system was abolished under the reform and a system of township government was restored. Farmers’ ambitions were stimulated, result-ing in a substantial increase in agricultural produc-tion. Between 1978 and 1990, rural farmers’ incomes increased by 6.7% (Lin 1992). However, farmer co-operatives were growing slowly during the early and middle reform years (1980s and 1990s); farmers in some places found it especially diffi cult to purchase inputs after the abolishment of the commune system (Stone, 1988). Part of the problem was that the Sup-ply and Marketing Cooperatives failed to provide marketing services for millions of individual small farmers. In order to facilitate better access to inputs, the central government issued a policy encouraging Supply and Marketing Cooperatives to work with farmers and jointly establish early versions of farmer cooperatives in 1987, which might have triggered an early surge in the emergence of farmer cooperatives (Deng, 2010).By the late 1990s, the ground rules for the agricul-tural economy began to fundamentally change, as emerging national markets in agricultural produce shifted from a supply to a demand orientation (Zhang 1999), which increased opportunities to specialize in producing higher-value cash crops and specialty commodities. Farmer cooperatives had begun to emerge, especially in the fruit and vegetable sectors. The Ministry of Agriculture began to slowly promote farmer cooperatives and launch pilot programs in the late 1990s and early 2000s. The research conducted by Deng (2010), argued that the determinants of the development of agricultural cooperatives show that the role of the government is of primary importance. It was clear that the lack of legislation affected the development of farmer cooperatives before 2007. 65A Brief Summary of the Development of Farmer Cooperatives in ChinaThe Development of Farmer Cooperatives in Zhejiang ProvinceWith the implementation of the “Law of the peo-ple’s Republic of China on Specialized Farmer Coop-eratives” in 2007, the number of farmer cooperatives increased dramatically. This gave formal legal status to farmer cooperatives, which also enabled them to sign contracts and act as business entities. There were 828,000 registered farmer cooperatives (32 times more than in 2007) with 65,400,000 members, ac-counting for 25.2% of the total number of farmers in China in August 2013 (Ministry of Agriculture).3.1 Introduction to Zhejiang ProvinceZhejiang is located on the southeast coast of China and is traditionally known as the “Land of Fish and Rice, Home of Silk”. The province has a very high level of economic development and has made itself one of the richest provinces in China. The total popu-lation of Zhejiang Province in 2012 was 54,728,000, of which 34,599,000, or 63.2% of the total popula-tion, were farmers. Of this number only 1,002,800 farmers had joined farmer cooperatives, accounting for 2.9% of the total. The number of farmer coopera-tives in Zhejiang Province increased from 5,141 in 2007 to 37,428 in 2013 while the number of members increased from 385,000 to 1,149,000 - a growth rate of 628% and 198% respectively.3.2 Farmer Cooperatives’ Formation PatternThe formation pattern of farmer cooperatives re-fl ects the identities of their founders, as these farmer cooperatives usually revolve around the industries or professions most familiar to the founders. There are mainly fi ve types of foundation patterns in Zhejiang Province as fi gures 3 shows. Figure 2. Formation Pattern of Farmer Cooperatives of Zhejiang ProvinceSource: Zhejiang Province Department of Agriculture, 20133.3 Farmer Cooperatives’ CategoriesTable 2 shows that in 2013 crop farming coop-eratives accounted for 58.4% of the total, of which 20.5% were fruit cooperatives and 14.9% were vegetable cooperatives. The livestock husbandry cooperatives and fi shery cooperatives accounted for 21.8% of the total. Product from crop farming and breeding industry has a very high commodity rate and also shows that farmers are more familiar with the traditional industry, such as farming and livestock husbandry that do not require high investment.Table 2. Farmer Cooperatives’ Categories in Zhejiang ProvinceSource: Zhejiang Province Department of Agriculture, 2013Category Crop farming Livestock husbandry Fishery ForestryOthersProportion12.7% 58.4% 13.9% 7.9% 7.1%66Jia LeiFarmer Cooperatives and Nongchaoduijie4.1 Supermarkets and Farmer Cooperatives in the Nongchaoduijie ProgramThe Nongchaoduijie project was launched in 2008 by the central government and refers to the signing of contracts with farmer cooperatives, with supermarket chains encouraged to procure fresh agricultural prod-ucts directly from farmer cooperatives. This will help reduce intermediate links in the distribution channels of agricultural products and improve the quality and safety of agricultural products as well as farmers’ in-comes. As for the Zhejiang provincial government, a series of relevant policies in support of big supermarket chains in building distribution centers and infrastruc-tural facilities to adapt to Nongchaoduijie were also implemented. By the end of 2012, there were 27 su-permarket chains in 11 major cities in Zhejiang Prov-ince that were participating in the Nongchaoduijie pilot program. The cities of Hangzhou, Ningbo and Quzhou each have four supermarkets chains, which have collaborated with 250, 215, and 232 farmer cooperatives respectively. Jiaxing city had only one supermarket and 25 farmer cooperatives that were participating in the Nongchaoduijie pilot program (Figure 3).Figure 3. Nongchaoduijie participation in Zhejiang ProvinceSource: Zhejiang Province Department of Agriculture, 20134.2 Problems for Farmer Cooperatives and Nongchaoduijie ProgramThere has been very little research that has conduct-ed any methodical evaluation of Nongchaoduijie. Al-though a few successful cases have been reported in the early stages of this program, there are still many complications. Among the most pressing are the dif-fi culties farmer cooperatives have had in meeting the high requirements of supermarket chains in terms of volume. Also, supermarkets have not been able to make timely payment settlements for agricultural products delivered from cooperatives (Chen, 2011). Warehousing and logistics for small and medium-sized supermarkets without government subsidies have also been lagging behind. The transmission of market and technical information from retailers to producers is vital for nongchaoduijie. Nongchaoduijie is not yet able to cover the major-ity of fresh produce aside from some fruits and veg-etables. Supermarkets engaged in the fresh produce business often have a very small profit margin and merely employ it as means of attracting customers. Therefore, large supermarket chains are often reluc-tant to participate in Nongchaoduijie without govern-ment support. They prefer to establish their own pro-duction base or distribution center to ensure a stable supply, and yet this approach also requires supermar-ket chains’ high economic strength as a guarantee.DiscussionsResearch conducted by Deng (2010) argues that the role of recent government policies in promoting farmer cooperatives explains the great emergence of farmer cooperatives after 2007. Moreover, local offi -cials’ performance in promoting farmer cooperatives is usually counted as one of the items in the evalua-tion of their overall political performance. Although the number of farmer cooperatives has increased 67A Brief Summary of the Development of Farmer Cooperatives in Chinaextraordinarily after the newly enacted Farmer’s Spe-cialized Cooperative Law and its role in providing a legal environment for the establishment of coopera-tives in China, it is still not apparent how to success-fully develop and operationalize cooperatives. The development of cooperatives has been strongly infl u-enced by political ideology; it is still the same today as it was in the past. The Nonchaoduijie project is one of the measures intended to foster the vertical coordination of agri-cultural production under the current farming system. According to our research on the problems of Non-gchaoduijie in Zhejiang Province, we found that the size of the farmer cooperatives has a huge impact on Nongchaoduijie, as large supermarket chains tend to work with farmer cooperatives with large-scale pro-duction and guaranteed stable supply. The Govern-ment sets very high entry barriers for supermarkets while supermarkets are also creating certain require-ments such as size for their potential suppliers in the farmer cooperatives. Under these conditions, small and medium-sized supermarkets and cooperatives that cannot spread overhead costs over large volumes of product are excluded (Gale, 2012). In this paper, we have looked at the evolution of farmer cooperatives, and then illustrated the current status of the development of farmer cooperatives in Zhejiang Province. Though this paper does not pro-vide conclusive research findings, it does provide a foundation for future research based on the under-standing of the key driving forces behind the great emergence of farmer cooperative in China.ReferencesChen, J.T, (2011) A Study of the Model, Problems and its countermeasures on Nongchaoduijie. Eco-nomic Research Guide, 36: 202-203. (in Chinese)Clegg, J. (2006) Rural cooperatives in China: policy and practice. Journal of Small Business and Enter-prise Development, 13: 219-234.Deng, H. S. ,  J .  K. Huang, Z.  G. XU and S. ROZELLE, (2010) Policy support and emerging farmer professional cooperatives in rural China. China Economy Review, 21: 495-507.Feng, K. W. and J. Li (2008) Essentials of Chinese Agricultural Economic History. In China Agricul-tural Economic Review, China Agricultural Uni-versity Press(Ed.), pp. 310-312, Emerald Group Publishing Limited, Bingley (in Chinese).Gale, F. and D. H. Hu, (2012) Food Safety Pressures Push Integration in China's Agricultural Sector. American Journal of Agricultural Economics, 94: 483-488.Lin, Y. F and T. Yang, (1998) On the causes of Chi-na's agricultural crisis and the great leap famine. China Economic Review, 9:125-140.Luo, X. H., (1985) In Economic Changes in Rural China, H.X. Luo (ed.) New World Express, Bei-jing.Stone, B. (1988) Developments in agricultural tech-nology. China Quarterly, 116: 767-882.Zhang, X. 1999. Cooperatives, communities and the state: The recent development of Chinese rural co-operatives in transition. Journal of Land Reform, Land Settlement and Cooperatives (1-2): 92-105, www.fao.org/DOCREP/X3720t/x3720t08.htm, ac-cessed on July 20th, 2014.

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A Brief Summary of the Development of Farmer Cooperatives in China

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