The system of organizing agriculture in China

1. The system of organizing agriculture in China Jia Guangdong Deputy Director of Department of Rural Economic System and Management, Ministry of Agriculture, the People’s Republic of China 28th July, 2012

2. Contents 1 A brief introduction on the system of organizing agriculture in China 2 Development of the socialized service system for agriculture in China 3 Status quo of the socialized service system for agriculture in China 4 Work to be done

3. 1 A brief introduction The system of organizing agriculture in China consists of the management and service system of the government, the self-organization system of farmers, and, most importantly, the socialized service system whose aim is to provide a whole range of supportive services before, during and after production.

4. 1 A brief introduction China’s socialized service system for agriculture takes the provision of public services as its major task, the provision of operation services as its supplementary work and agricultural technology extension, product distribution, supply and sales of agricultural materials and product quality and safety as its focus. The system has been improved over recent years and has played an important role in developing modern agriculture, organizing agriculture in a better way and sustainably increasing farmers’ income.

5. 2 Development of the socialized service system for agriculture in China 2.1 The concept of socialized agricultural services was put forward in 1978 when China just started to reform and open up. 2.2 Since the1980s, as the people’s commune was replaced by the two-tier management system that integrates unified with separate management on the basis of household contract management , to meet the need of this new household management system and deal with low capacity, efficiency and profits of small scale farming, the Central government issued four No.1 documents in a row. These documents put forward the idea of developing socialized services for agriculture to promote commodity production in rural areas.

6. 2 Development of the socialized service system for agriculture in China 2.3 In 1990s, the market system has been established. Market participants gained bigger strength, new organizations of production and management services developed rapidly. Among them were farmers’ professional cooperative organizations and leading enterprises of the industrial management of agriculture. Other social service organizations such as agricultural service companies and brokers emerged. The socialized service system for agriculture covered all aspects and links of agricultural production, management and distribution.

7. 2 Development of the socialized service system for agriculture in China 2.4 In the 21st century, the socialized service system for agriculture has been put in place. The system is based on the household contract management system, guided by public service institutions and joined by diverse market participants.

8. 2 Development of the socialized service system for agriculture in China 2.4 In terms of public services, institutions in the areas of technology extension, animal husbandry and veterinary, quality and safety, and management have been established from the Central level to villages and towns. Agricultural machinery service system continues to develop. 2.4 In terms of management services, based on the industrial management of agriculture, service systems for product processing, distribution and agricultural materials supply have been put in place. These systems are expanding and they have rational design. Under them, the division of labor is improving and the operation is being standardized. Different market participants have all become part of these systems. 2.4 Village collective economic and farmers’ professional cooperatives innovate themselves. Their capacity to integrate their services is improving.

9. 3 Status quo of the socialized service system for agriculture in China 3.1 The agricultural technology extension system in China China’s agricultural technology extension institutions are the main body of its agricultural social service system. They are the main channels for delivering public services. Since the 1950s, China has established scientific, educational and agricultural technology extension systems, covering agriculture, forestry, water and weather. Over half a century has passed, relatively developed extension service organizations have been established from the Central level to villages and towns, covering such areas as crop farming, animal husbandry and veterinary, aquaculture, agricultural mechanization, forestry and water.

10. 3 Status quo of the socialized service system for agriculture in China 3.1 The agricultural technology extension system in China China’s agricultural technology extension system performs the following functions: introduce, experiment on and demonstrate key technologies; monitor pests and disasters; prevent and handle pests and diseases; handle plant epidemic; promote standardization in production; inspect and monitor quality and safety; inspect the use of agricultural resources, environment and inputs; and provide agricultural information, training and educational services. Up until now, there are 98,500 extension institutions and 729,000 staff nationwide.

11. 3 Status quo of the socialized service system for agriculture in China 3.2 Organizations for the industrial management of agriculture The industrial management of agriculture is the product of China’s ever-deepening rural reform. It is a great invention of Chinese farmers. Organizations for the industrial management of agriculture adopt a market-oriented interest-binding mechanism that is based on household contract management and relies on all kinds of leading enterprises, economic organizations and farmers. They integrate agricultural production, processing and marketing. They make regional arrangements and unified operations. They adopt specialized production and business management methods, and provide social services.

12. 3 Status quo of the socialized service system for agriculture in China 3.2 Organizations for the industrial management of agriculture Organizations for the industrial management of agriculture emerged in the late 1980s. They offered a practical path for thousands of small scale farmers to enter the big market under the market economy. Since the 1990s, thanks to the attention from the Chinese government and the full support and promotion from local departments, the industrial management of agriculture have been developing smoothly, with better content and mechanism, more innovative form and larger scale.

13. 3 Status quo of the socialized service system for agriculture in China 3.2 Organizations for the industrial management of agriculture Form: from “leading enterprise+ household” to “leading enterprise+ cooperative organizations+ farmers” and “ wholesale markets+ farmers” Interest-binding mechanism: from contract relation to close relations of interests such as cooperation and stock ownership Product: from fresh vegetables and fruits, table poultry and live pig to bulk commodities such as crop, cotton and oil Region: from developed regions to the mid-western region. The number of such organizations continues to increase.

14. 3 Status quo of the socialized service system for agriculture in China 3.2 Organizations for the industrial management of agriculture By the end of 2011, there are 284,200 such organizations in total. They have been joined by 1,100 million households and created over 52 million jobs. Member households have seen their annual household income increase by an average of 2,477 yuan. Organizations for the industrial management of agriculture have become an effective instrument for adjusting agricultural structure and developing a prosperous rural economy, an important measure for increasing agricultural efficiency and farmers’ income, and an effective way for developing modern agriculture and enhancing agricultural competitiveness.

15. 3 Status quo of the socialized service system for agriculture in China 3.3 Farmers’ Professional cooperatives Farmers’ Professional cooperatives emerged in the mid-1980s. Due to China’s reform of its agricultural management system and the development of market economy, it was natural for farmers to demand market entry. As thousands of small scale farmers found it difficult to deal with the ever-changing market, they need to come together under a cooperative mechanism and enter the big market as a whole. As a result, farmers’ professional cooperatives came into existence.

16. 3 Status quo of the socialized service system for agriculture in China 3.3 Farmers’ Professional cooperatives On October 31st, 2006, the Law on Farmers’ Professional Cooperatives of the People’s Republic of China was passed. This is a milestone in the establishment and development of farmers’ professional cooperatives in China. The Law states the legal status of a cooperative, the principles and conditions for establishing one and its members’ rights and. The Law creates a sound institutional environment for the development of farmers’ professional cooperatives, opens up a wide road for the independent development of the cooperatives and ushered in a new stage where the cooperatives can develop in accordance with law.

17. 3 Status quo of the socialized service system for agriculture in China 3.3 Farmers’ Professional cooperatives Due to standardized production, unified purchase of raw materials, unified processing and sales, technology extension, product marketing and credit cooperation within the cooperatives, more and more farmers have walked from “small scale production” to “the big market”, from scattered management to professional management, and from poverty to prosperity. Farmers’ professional cooperatives have become a major force in developing modern agriculture, increasing farmers’ income and creating a prosperous rural economy.

18. 3 Status quo of the socialized service system for agriculture in China 3.3 Farmers’ Professional cooperatives At present, there are 550,000 farmers’ professional cooperatives and covered 91.2% of all the administrative villages nationwide. Total members exceed 43 million, 17.2% of all the households nationwide. Members’ income is 20% higher than that of non-members.

19. 3 Status quo of the socialized service system for agriculture in China 3.4 The rural management system Since the 1950s, rural management institutions have been set up at all administrative levels. Thanks to years of efforts, professional teams that are familiar with the rural situation, agro-policies and are always ready to help have been formed, thus improving the quality of rural management. Now, there are 38,300 rural management institutions and 150,000 staff.

20. 3 Status quo of the socialized service system for agriculture in China 3.4 The rural management system Rural management institutions perform the following functions: manage rural land contracting and transferring and provide related services; supervise and manage farmers’ burden; manage collective-owned asset and financial records; manage the instruction for farmers’ professional cooperatives and the industrialized development of agriculture. The rural management system is a major force for implementing basic agro-policies formulated by the CPC and safeguarding farmers’ legal rights and interests. It plays an important role in promoting rural reform, harmony and stability.

21. 3 Status quo of the socialized service system for agriculture in China 3.5 Village collective economic organizations The village collective economic organization takes land and other collective-owned assets as a linking bridge and targets its “members”. It is an “economic” organization responsible for managing collective-owned assets. It manages such “economic” affairs as land contracting, resource development, capital accumulation and asset appreciation. As the major part of the basic rural management system of unified level of management and organizations that aim to safeguard farmers’ basic economic rights and interests, they play a fundamental role in organizing and providing services for agricultural production.

22. 3 Status quo of the socialized service system for agriculture in China 3.5 Village collective economic organizations First, they provide services for agricultural production. Village collective economic organizations play a positive role by solving the problems of small scale farmers and providing services for production such as organizing improved seed, machine ploughing, irrigation and drainage, plant protection, cultivation, technology and information, purchasing raw materials, finding product market, and building farmland irrigation facilities. Second, they are responsible for resource development and asset accumulation. As the owner of rural land and collective-owned assets, their duty is to manage collective-owned assets.

23. 3 Status quo of the socialized service system for agriculture in China 3.5 Village collective economic organizations Third, they provide public management and services for communities. They perform a broad range of public management and service functions. They have played an important role in improving education for rural children, supporting households entitled to the five guarantees (food, clothing, medical care, housing and burial expenses), implementing family planning policies and improving rural health care and infrastructure. At the same time, they still have an important role to play in transforming rural electric power system, renovating domestic water system, and constructing roads inside the villages.

24. 3 Status quo of the socialized service system for agriculture in China 3.6 Other social service organizations Agricultural research institutes, colleges and universities have made good use of their own advantages and promoted the integration of agriculture, science and education, and cooperation among agricultural industries, schools and research institutes. This gives rise to professional organizations that provide services for agriculture. The areas include agricultural machinery, plant protection, seed and seedling. The team of agricultural brokers grows rapidly. Large scale farmers adopt the demonstration and radiation method to instruct small farmers on technology, information, seed and seedling, and machine ploughing and harvesting. Their services are of broader scope and the service mechanism is more flexible. To a large extent, it neutralized the negative impact of insufficient coverage and services of public organizations that provide services for agriculture.

25. 4Work to be done 4.1 We will keep innovating in the capacity-building of public supervision and management We will improve public supervision and management institutions in villages and towns or regions. The related areas include agricultural technology extension, animal and plant epidemic prevention and control, agricultural product quality monitoring, and rural management. We will ensure fiscal inputs and improve infrastructure construction, working conditions, the capacity of public service workers and the employing system. We aim to stabilize the household contract management system and ensure Farmers’ right to own, use and profit from the contracted land, by conducting registration and certification, setting up service systems land transfer with stations in villages, centers in towns and markets in counties and cities, and setting up arbitration systems for disputes settlement.

26. 4Work to be done 4.2 We will keep innovating in the capacity-building of management service institutions such as farmers’ professional cooperatives and leading enterprises. We aim to improve the capacity for democratic management and the market competitiveness of farmers’ professional cooperatives as well as farmers’ ability. We aim to implement and improve all supporting policies and measures and optimize the environment for the development of farmers’ professional cooperatives. We aim to strengthen the capacity of leading enterprise and agricultural production bases, enhance agricultural brands, improve agricultural product distribution and establish new interest-binding mechanisms. To achieve this, we will innovate national demonstration bases for the industrial management of agriculture, encourage industrial clusters of leading enterprises to make the most of their advantages, integrate and utilize resource elements, enhance the radiation drive ability, build four public service platforms in the bases, regarding technological innovation, quality inspection, brand cultivation and promotion and financing services, improve logistics and build online transaction platforms.

27. 4Work to be done 4.3 We will keep innovating in agricultural credit and insurance. In terms of agricultural credit guarantee, we will encourage regions with favorable conditions to establish guarantee funds or companies. The government will finance them and leading enterprises will hold the shares. We will expand the scope of effective guarantees and increase credit supply to drive the development of all kinds of guarantee institutions. In terms of agricultural policy insurance, local governments and management institutions of agricultural insurance will explore the model of co-founding coordination institutions responsible for coordinating cross-department work.

28. We believe that in the upcoming future, the new agricultural social service system will be established. It will be based on public service institutions and cooperative economic organizations; it will uses leading enterprises and other social forces as supplements; and it will integrate public services, management services, specialized services and comprehensive services.

29. I Wish the 3rd China-Africa poverty reduction and development forum a complete success! Thank you!