The plot thickens

Changes in land ownership rules are designed to boost crop yields


Time to get more technical?

Land rights in China differ between town and country. The state owns all urban plots, while local collectives – first enshrined under Mao’s Great Leap Forward – own all the rural land.

But it gets more complicated: while rural land is owned by the collectives, ‘usage rights’ are held by individual families under the Household Responsibility System, the arrangement that replaced collective farming in the early 1980s. The system was designed to incentivise farmers and boost production after the failure of collectivisation and the Great Leap Forward.

And it did just that. But as economists have argued for a while, another overhaul has been needed to encourage millions of people to move on from smaller, less productive plots, and allow larger, more modern farms to develop.

After a decade of experimentation and pilot schemes (see WiC199 for a previous mention), the Chinese government is rolling out the nattily titled ‘Three Rights Division Approach’ to encourage just that.

As the title suggests, the new regulations add a third ‘right’ to rural land use laws. The collective will still own the land and the local famer will retain the usage rights. But crucially the government is now encouraging farmers to hand management of the land over to a third party – one that will pay the farmer for the right.

The hope is also that by protecting farmers’ claims to the land and guaranteeing them an income, more rural residents will feel comfortable moving to nearby cities.

The new document – issued by the State Council this month – says that farmers should not be required to give up their land rights if they exchange their rural hukou for an urban one (the hukou is a crucial document as it determines where Chinese citizens get access to social welfares services such as education and healthcare).

The regulations also stipulate that farmers should be allowed to mortgage their land – something that hitherto had only been possible under pilot schemes.

“Implementation of the ‘three power division’ is an important measure to deepen the reform of the rural land system,” proclaimed the State Council in an announcement.

The hope is that the measures will “promote the rational use of land resources and the construction of a new agricultural management system… improve land productivity, labour productivity, resource utilisation, and promote the development of modern agriculture,” it said.

China is in the unenviable position of being home to 20% of the world’s population but only 10% of its arable land. Maintaining basic food security has been a constant concern for the ruling Communist Party since it came to power in 1949.

Hence the focus on improving crop yields. A report by the Chinese Academy of Sciences in 2012 described China as being a century behind Japan and the US in agricultural know-how – quite something for a country which invented the seed drill and iron plough to admit. The report identified small plot sizes as one of the biggest problems. Another obstacle was that many farms still weren’t using modern machinery. As much as half of China’s arable land was being tilled manually by man or animal, it said.

Part of the problem is that small-scale farmers don’t have the capital to invest in more modern equipment. Another problem is that the farming population is aging. The rural young have mostly migrated to the cities, only returning to their villages to help with the harvest.

Productivity is low, new techniques aren’t being adopted and some land is lying fallow because there aren’t enough people to work it.

The new approach aims to make it easier for villagers to monetise their land by renting it to the bigger agribusinesses the government wants to see upping agriculture output and raising efficiency.

The income they receive in rent should in turn also make it a little easier to settle into city life, with more financial resources to rent a flat or to start a new business.

The overhaul will also strengthen usage rights, the government says, because it will launch a land registration drive to allow more people to participate. Anyone who rents out their land will get a contract with the entity that has taken on the management rights to prove that it belongs to them in the first place.

Pilot schemes in places like Jiangsu province have worked well. For instance, modern combine harvesters now thresh much larger fields of wheat where villagers have rented land out to a firm called Tian Niang Family Farm. Locals have been able to work the land too, getting salaries, as well as rent.

“It’s easier when you are not doing it all for yourself,” one farmer told WiC during a visit to a trial project a year ago. “We never had machinery like this before,” he added, gesturing at a new tractor.

One potential issue is that some of the larger agribusinesses don’t always appear to be keen to deal with huge numbers of individual farmers, preferring to rent larger swathes of land which have been packaged up by the local collective.

This leaves some individuals open to pressure from their collective.

In one recent case near Beijing, a majority vote of the village council was all that was needed to allow the collective to hand a big parcel of land to a property developer and a fruit company. Some of the elderly villagers were happy about the cash payments and also relatively pleased that they no longer needed to tend the orchards in their dotage. But others were asking what they should do with their time.

“I have been a farmer all my life,” one woman told WiC. “I don’t know what I’ll do now that I can’t work.”

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