Sunday, July 10, 2016

More "crossing the river by feeling the stones"

FT points to one more example of reform with Chinese characteristics in agriculture sector. This time it is with contract farming in Xiaogang village. Incidentally, it is the same place where the experiment on decollectivization by way of breaking up commune land and allotting them to individuals was initiated successfully before its nationwide scale up.

Even today Chinese law does not recognize rural land ownership. All lands are owned by the village collective and are contracted to households with 30-year farming rights for an average 6-10 mu (1-1.5 acres) of land. There are also large swaths of reclaimed "wasteland" belonging to enormous state farms. Since 2008, Beijing has legalized the transfer of this right, or "renting". Accordingly, nearly half the land in places like Anhui province is "rented".

These trends have led some farmers in Xiaogang to experiment with "renting" in land, hiring labor, and effectively doing contract farming. But such experiments have to be carried out discreetly without attracting the glare of Beijing. Further, in the absence of property rights, they suffer from significant risks arising from land owners demanding their lands back and the 30 year rights expiring.

It helps that such examples coincide with a period of massive urban migration, especially by the youth who have left their old parents to till the lands. Increasing swaths of rural areas are left with such people who are too old to work. The country therefore needs to transition into a new trajectory of agricultural development, one which is more capital intensive. 

President Xi Jinping, recently visited Xiaogang, like Deng did decades back to bless the decollectivization experiment, and endorsed the transfer of rural lands to create modern state farms.

No comments: