Rural Land Transfers Must Benefit Farmers, Not Corporations
In June, I conducted fieldwork into government-sanctioned poverty relief programs in the city of Weinan, in the northwestern Chinese province of Shaanxi. In the nearby village of Shigushan, 147 out of 515 households are considered impoverished — in local terms, that means that their annual per capita incomes are less than 3,070 yuan ($460).
In order to meet the Chinese Communist Party’s stated goal of eradicating poverty by 2020, the municipal agricultural bureau funded the establishment of the Shengshan Modern Agricultural Development Company in Shigushan last July. Renting land from the village at an annual rate of 500 yuan per mu — a traditional unit of measurement — the company eventually gained usage rights to over 100 mu (6.6 hectares) of farmland. It planted half of this land with walnuts and the other half with rapeseed flowers. Thirty percent of company profits has been set aside for impoverished households in the village, 50 percent has been invested back into the company, and the remaining 20 percent has been given to the village collective to improve public infrastructure.
I had previously seen a similar initiative in Dayu — a village under the jurisdiction of Shanghai. There, residents were compelled to transfer their land use rights to the village collective, which then contracted it back to villagers with the capital and technical know-how to grow high-quality grapes. The leases stipulate that these villagers would pay a usage fee and hand over a portion of their profits, which the collective would then either split among villagers without leases or plow back into public services.
This land transfer model is important because it represents a way of consolidating China’s patchwork of smallholdings in order to cultivate high-efficiency, intensive agriculture on currently underused sites. In the process, rural residents not only collect a fee for the usage of their land, they also have the chance to earn money by working for the newly established company. Villagers in need — such as those who have lost their land or who are living below the poverty line — also benefit from the company’s success.
But land transfer initiatives are also interesting for another reason: They herald a reassessment of socialist agricultural reforms such as the ones carried out during the Mao era. In 1958, the Chinese government collectivized the country’s agriculture, forcing rural residents into so-called people’s communes. Life in the communes revolved around the collective ownership of production means: The commune set residents’ work schedules and remunerations, and was supposed to provide egalitarian access to food, education, accommodation, and other forms of state welfare. Yet this utopian vision soon proved inefficient, difficult to sustain, and profoundly vulnerable to abuse — most notably during the Great Chinese Famine of 1959 to 1961.
In 1983, as post-Mao China fell into an ever-closer embrace with market principles, the people’s communes were abolished. In their place, the government established the household responsibility system, which contracted a portion of farmland to individual households and allowed them to use it however they wanted. At the same time, the state gave farmers more autonomy in setting land production quotas, taxing output less stringently and allowing farmers to sell the remainder on the open market. Consequently, China’s agricultural sector shifted back toward a system of small-scale farming — similar to the one that had existed in the country for millennia. Individual farmers — not communes — once again became the basic unit of commercial production and management, participating independently in market competition. Rural market reforms quickly led to the growth of the Chinese agricultural industry: According to the Chinese economist Justin Yifu Lin, between 1978 and 1984, the reforms accounted for 42 percent of the growth achieved in the farming sector and for 16 percent of the growth in prices of agricultural produce in the post-marketization period.
Although the household responsibility system was an unqualified success, the Chinese government and many of the country’s academics continue to view individual farming as a transitional stage that will eventually be replaced by a modern, large-scale agricultural industry. After China entered the World Trade Organization in 2001, the country’s small-scale farmers found themselves competing not only with other Chinese growers, but with foreign producers as well. As a result, several conflicts emerged between farmers and the market: For example, many Chinese farmers lacked specialist knowledge of which products would be most marketable, which technical innovations could best help them manage the land, and how to negotiate prices that could ensure reasonable levels of profit.
According to the Chinese constitution, however, all land in China is publicly owned and all village land belongs to village collectives. It is illegal for any individual or group to occupy, buy, or sell village land. This unique system of land ownership poses systemic difficulties for anyone interested in trying to scale up operations in a market economy, because companies with usage rights to land still don’t own the assets they are utilizing for production.
Nevertheless, since the turn of the century, China has been feeling its way toward a unique tripartite system of land rights in which ownership rights, contract rights, and management rights are kept independent of one another. This means that while all rural land is owned by the cooperative, residents enjoy the right to contract it from the state and manage it on their own. Alternatively, farmers can contract land and then transfer the management rights to a third party, so long as it is used for agricultural purposes. This is the environment in which modern land transfer initiatives have emerged.
Currently, village land functions both as a basic guarantee of farmers’ rights to subsistence and as an opportunity to generate further wealth. So, by facilitating land transfer to private entities with the capital and knowledge to use it effectively, cooperatives can achieve economies of scale and increase labor productivity and economic efficiency — all while allowing farmers to share in the profits and labor gains. Philip Huang, a history professor at UCLA, believes that this unique system of property rights has prevented the rapid emergence of a social class of restive, dispossessed farmers that has taken place in so many other developing countries — India, for instance.
Shigushan and Dayu appear to support Huang’s theory. Thanks to the separation of land, contract, and management rights, China’s farmers seem free from concerns about losing their land. As a result, I doubt that China’s land transfer program will resemble, say, the enclosure movement of 16th-century England, when vast tracts of common pasture were privatized and large numbers of former farmers sought alternative work in the cities.
Based on my observations in Shigushan and Dayu, village land transfers seem to follow a similar pattern. First, local Party and village committees relabel “private fields” as “public fields” that belong to the cooperative. Then, they transfer this land wholly to one or more private entities.
For this model to succeed, grassroots organizations must be empowered at the village level to assert the rights and wishes of local farmers who previously used or contracted the land. Shigushan, for instance, was formed in 2015 as an administrative merger of three individual villages. Prior to the merger, each village elected its own committee. Later, when it came time to divvy up the land among interested parties, local grassroots organizations were weak and uncoordinated, because they had not yet acclimatized to representing farmers from across a larger area. Only when higher-level officials assigned a trusted crop protection manager to the role of Shigushan’s Party branch secretary was the village able to carry out the required land transfer.
In Dayu, the village branch secretary had worked in the area for more than 20 years, during which time she built up a reputation for her integrity. This made it easier for the village Party branch to promote the land transfer program, because a majority of residents trusted the secretary to work in their interests, not in the interests of businesses seeking to manage the land.
However, not every village in China enjoys Dayu’s high levels of grassroots organization, or the same level of support from high-level bureaus enjoyed by Shigushan. In some areas, the twin forces of capital and political power leave villagers disenfranchised. Sometimes, land is transferred on the sly to businesses who then illegally use it for nonagricultural purposes — such as real estate projects — and do not share the profits among local residents. Although, legally speaking, farmers may still enjoy contract rights, in practice they often find themselves severed from the transferred land, leaving them simultaneously landed and landless. They receive nothing more than minor fees for usage rights to the land, and are forced to sell their labor to a private entity in order to survive — allowing capitalized farms to exploit them, not empower them.
This room for abuse means that we should not overstate the effectiveness of China’s tripartite rights system. A simplistic belief in the power of such a system is not enough: If we do not show farmers that giving up usage rights to private entities will bring villagers sustained wealth, we risk fueling their large-scale organization into a disenfranchised social class of the type that led to periodic revolts in 16th- and 17th-century England. Such conflicts would certainly hamper the government’s long-hoped-for desire to create a large-scale, “modern” agricultural industry.
Translator: Kilian O’Donnell; editors: Lu Hua and Matthew Walsh.
This article was funded by the Sixth Tone Fellowship. In 2018, Sixth Tone sponsored eight young scholars to come to China for a six-week research trip to conduct fieldwork in eight provinces all over the country.
(Header image: A view of Shigushan Village, Shaanxi province, June 11, 2018. Fu Danni/Sixth Tone)