Bigger farms reap fortunes upon rural land reform

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Publish time: 8th February, 2014      Source: China Daily
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Updated: 2014-02-07 09:46:46

 

As the owner of one of the largest family farms in Xuancheng city, Anhui province, Zan Xiaoma has been both elated and deflated by his farmland.

 

Through planting rice on some 2,000 mu (133 hectares) he rents from those who abandoned farming to seek fortunes in the cities, Zan pockets over 1 million yuan (164,000 U.S. dollars) every year. Profit notwithstanding, his large-scale farming has reached its limit as he lacks funds and confidence to expand his business further.

 

"Financial support does not come easily for big family farms," Zan said. "Besides, I don't dare invest much in infrastructure as my leases with other farmers are usually only for 5 years. Nobody can assure me as to what will happen when the leases expire," he added.

 

With new rural reform to be rolled out soon, Zan sees solutions to his problems and dreams of a bigger fortune still.

 

TOP-DOWN PLANNING

 

China's rural reform started in 1978 in a village of Anhui, with the introduction of the household contract responsibility system, which ended communal farming. Agricultural productivity significantly increased when farmers got their own contracted land.

 

Unlike the bottom-up system of 36 years ago, progress today needs more planning at the top, said Wang Weiguo, a law professor at China University of Political Science and Law.

 

After more than three decades of breakneck economic expansion, China's urban-rural divide is alarming, a problem China's leadership is addressing through a more fair land policy.

 

Urban land is owned by the state and most of rural land is normally under collective ownership. While trading of land-use rights in urban areas has evolved into a vigorous market over past decades, the situation in the countryside has remained largely stagnant as farmers only have the right to use contracted land, but cannot directly trade or mortgage it.

 

Lured by better employment and salaries, as many as 260 million farm workers have left the countryside for cities. A side effect of the exodus is a vast amount of land being left uncultivated. Farmers have very little wriggle room in land transfers and don't make much money from land deals anyway, so they often simply abandon their land and start afresh on their urban journey.

 

With food security and the economic potential of rural and ex-rural residents foremost in their minds, authorities are promising more property rights for farmers. These include transfer and mortgage of land-use rights, and the ability to take shares in large farming entities, according to a document released after the Third Plenary Session of the 18th Communist Party of China Central Committee last November.

 

As the policy-making meeting concluded, Anhui announced its own plans, once again leading rural land reform. Twenty counties will pilot a new system of rural property transfers, with new modes of financial support for conglomerate farms being explored.

 

MORE REFORM DIVIDENDS, BETTER FORTUNE PROSPECTS

 

As one of Anhui's 20 pilot counties, Xuancheng, where Zan lives,announced its plans at the end of January, allowing owners of big family farms to mortgage management rights of their land. The news has cheered Zan.

 

"I used to borrow from my friends and relatives for my investment needs," he said. Zan has even resorted to mortgaging his own house and those of his relatives. If he can borrow more by mortgaging his farm, Zan will develop more land for organic rice, a lucrative business given high prices and market demand. At the moment, he has only 500 mu under organic rice; it is an expensive crop to grow.

 

"Mortgaging land is being discussed as a way to apply policy," said Wang Lixiang, of Xuancheng agriculture department, citing issues such as which items shall be mortgageable and how to control risk.

 

While big farm owners like Zan see hope in these plans, individual farmers can expect dividends as well.

 

According to Wang, Xuancheng is issuing more land-use certificates to individuals, an essential step if they are to transfer their land to big farmers.

 

Agriculture Minister Han Changfu said last year that China aims to complete land-use rights registration within five years.

 

Xuancheng will choose five towns to pilot a land reclamation scheme. Farmers will be able to move to new villages with better infrastructure and services and their abandoned homesteads reclaimed as arable land. The rights to this newly developed land will remain with the farmers.

 

Despite the bright prospects, analysts have cautioned against unbridled optimism.

 

Farmland contracts for individual farmers in China normally last 30 years. As the renewal of land contracts for farmers in Anhui was mostly carried out in 1995, farmers now have around 10 years of use rights remaining. This is a major bugbear for farmers like Zan who pine for longer leases with farmers.

 

For Zan, a 10-year lease is an improvement. Combined with expected reform, Zan has some right to his optimism.

 

"As policy support materializes, I will try to make more money from my land," he said.