Abstract
Under the so-called ‘de-involution’ of the young leaving and women and elderly left behind in the countryside, how can the Chinese rural sector accomplish a structural transition and achieve large-scale agricultural production? This is the issue to be discussed in this paper. The conventional understanding is that large-scale production is about land concentration and scale management through agricultural businesses, family farms, or agricultural cooperatives. In our view, given the unfavorable Chinese land/people ratio, any attempt to eliminate household-based, small-scale farming is bound to fail. This study suggests that a paradigm shift is needed from ‘Scale Management’ to ‘Scale Service.’ Today’s agricultural production is no longer a ‘Pole-like Straight Way’ model. Different stages and processes of production have their own unique characteristics and functions. With the advancement of agricultural technology and the marketization of production factors, agricultural service has needed to catch up in scale. However, this development does not have to be based on land concentration and the elimination of household farming. On the contrary, it can be done through local social networks. Local social networks can significantly reduce the organizational costs of large-scale services without changing the current household-based small farming community structure. This will bring about a new system of ‘Agricultural Business Management’ that can both improve production efficiency and protect small farmers’ livelihoods. Such a model is a combination of tradition and market. It should play an important role in the rural reconstruction and urbanization of central and western China.
Keywords
Introduction: The challenges of China’s agricultural economic transition in the ‘de-involution’ trend
The output increase in small-scale farming in China has traditionally been seen as resulting from excessive labor input or working hours in response to population pressures. This kind of increase is different from production growth through advancement in production technology or reforms in labor organization; it is a kind of ‘growth without development’ (Huang, 2000b). Therefore, small-scale farming in China is also called ‘involutionary’ small-scale farming (Huang, 2000a). Population growth is the main reason for the involution of Chinese agriculture, along with the backward commodity economy. Since the 1970s, however, with the changes in population policies and economic policies, the status of involution in Chinese agriculture has begun to alter, for several reasons.
Firstly, the birth control policy greatly changed the size and structure of the population. Since the 1970s, when the Chinese government implemented its strict birth control policy and completely altered the growth patterns of the Chinese population, the speed of population growth has greatly decelerated. The drastic decline of population growth has brought about fast changes in population structure. By the end of 2012, the absolute size of the working-age population from ages 15 to 59 in the Chinese mainland had declined for the first time. It is an undeniable fact that the size of the labor force will decrease year by year in the future.
Secondly, the establishment of a market economy and urbanization has resulted in the migration of a large portion of the agricultural labor force. In the 21st century, the number of non-agricultural employees in China significantly surpassed that of agricultural employees, and the gap is becoming wider year by year. Since 2003, the number of non-agricultural employees has been growing by 14 million per year, while the number of agricultural employees has been decreasing by 11 million per year. In 2012, the number of non-agricultural employees exceeded 500 million, while the number of agricultural employees dropped to less than 260 million (National Bureau of Statistics of the People’s Republic of China, 2013).
The radical shift in population size and structure and the large-scale transfer of the agricultural labor force to the non-agricultural domain has greatly alleviated the contradiction between population and farmland in rural China. With the large-scale, cross-regional, and city-bound flow of the rural labor force, the Chinese rural areas, especially in central and western China, are inhabited by more and more empty-nest families and hollow villages. The great outflow of young labor force members (especially men) from the rural areas has resulted in changes in farming subjects and the aging and feminization of the labor force structure (Bai et al., 2007; Huang, 2001; Pang et al., 2003; Tan, 2007; Wu, 2008). The loss of the rural labor force, together with the aging and feminization of rural employees, has left farm workers incapable of doing intensive cultivation; in addition, the low proportion of income from agricultural production in the total income of agricultural households is insufficient to motivate farmers to increase per-unit output. Extensive operation in agriculture is very serious (Cao, 2013; Luo et al., 2012; Zhang, 2013). Chinese agriculture follows a trend of ‘de-involution,’ and large-scale agricultural economy has become the realistic choice for agricultural development in China.
As a matter of fact, Philip CC Huang proposed the concept ‘de-involution’ as early as 2007. Huang believed that since the 21st century began, the convergence of large-scale, non-agricultural employment, the slowing of natural population growth, and the structural transition of agricultural production might improve the problem of hidden unemployment in Chinese agriculture that had developed over the past 10 years, while the low-income problem in agriculture might be alleviated in the succeeding 25 years. Therefore, in future decades, agriculture in China might realize so-called ‘de-involution’ (Huang and Peng, 2007).
Although the shift of the mass labor force in China has given rise to the trend of de-involution, the household contract responsibility system involving ‘distribution of land to household’ that was implemented in the 1980s, maintained land fragmentation and largely restricted the scale development of agriculture (Du, 1988). One might say that the contradiction between land fragmentation and the scale development of agriculture has become the chief contradiction in the agricultural economic transition in China. Currently, the methods used to solve the problem of land fragmentation include land adjustment and land transfer; the former depends mainly on administrative interference, while the latter depends more on the market mechanism (Tian and He, 2015). Both land adjustment and land transfer imply a trend of land annexation or land concentration. On the one hand, the upsurge of urban housing prices has greatly impeded farmers from flowing into cities to establish homes, and together with the unsound social security system, this problem has brought about the embarrassing situation of population ‘flowing’ instead of ‘migration.’ Although some farmers might settle in some eastern cities, the majority have to return to their hometowns in the central and western regions of China. The land in the returning farmers’ hometowns can provide a basic living for their households and serve as basic living security, but the intensified land concentration or land annexation may nevertheless affect livelihoods or even social stability in rural areas. This is the challenge that the agricultural economic transition and urbanization of the central and western regions of China is facing.
On the one hand, the agricultural economic transition and urbanization require scale management of agriculture in China; on the other hand, the land contract system and land fragmentation constitute the basis of life and production for farmers in rural areas of central and western China. How can we realize an agricultural economic transition while ensuring people's livelihoods? The ideas of ‘labor exchange’ and ‘labor borrowing’ in traditional small-scale farming in China have provided worthwhile experiences for modern agricultural development. To reduce risks in agricultural production, traditional small-scale farming may depend on agricultural communities to solve problems in production, such as labor exchanges, livestock or tool borrowing, cooperative farming, joint livestock feeding, etc. In an investigation of a rural area in northern China around the turn of the century, Myers (2013) found that farming households engaged in different kinds of cooperation to make up for lack of labor force and capital. The mutual aid ‘circle’ was a rural society network based on blood ties, affinity and geographical relationship. Members of such a network have basic trust in each other. The scale service in agricultural production described in this paper is a kind of agricultural production mode based on the rural society network. In contrast with traditional small-scale farming, this kind of production mode has introduced modernized production factors which are more specialized and marketized. An agricultural service characterized by a production ‘package’ can realize an agricultural economic transition and promote scale agriculture by ensuring farmers’ livelihoods and the patterns of rural society and thus promote the urbanization of central and western China.
Scale management or scale service: Realistic reflections on practices of agricultural scale development in China
The transition in agricultural economic policies after the founding of the People's Republic of China
China has been attaching great importance to the transformation of traditional agriculture since 1949, and modernization of agriculture was cited as one of the ‘four modernizations.’ Over the past 60 years since the founding of the People’s Republic of China, the Chinese government has conducted all kinds of trials of scale agriculture. In the 1950s, the government launched an influential campaign of agricultural collectivization, which could be seen as an attempt, based on learning from the then Soviet Union, to alter the status of small-scale farming in Chinese agriculture. It could be said that agricultural collectivization in rural China embodied the theories of Lenin and Stalin, and without a doubt, it was a failure, which various scholars have attempted, from different perspectives, to explain (Alchian and Demsetz, 1973; Chen et al., 1993).
Since implementing the reform and opening-up policy, China has created the household contract responsibility system, with production contracted to each household, marking the end of agricultural collectivization. In the first years after this system was implemented, farmers’ production initiative was greatly improved (Lin, 1994). From the middle and later years of the 1980s, the household contract system released all the incentive effects on agricultural development, but the disadvantages of small-scale farming became prominent, and scale agriculture again became an issue on the agenda. The No.1 Document in 1984 for the first time proposed that the government encourage land concentration to master-hands of farming … During the contract period, members who are unable to farm the land or change to other professions can hand the land over to their collectivity for a unified arrangement or find other members for subcontracting with the approval of the collectivity. that land transfer in rural areas should take place mainly among farming households … The central government does not encourage industrial and commercial enterprises to rent or operate contracted land of farming households for long periods and in large areas.
Three current practices in scale agriculture in China
In the past two or three decades, during the mass outflow of agricultural labor, the scale development of agricultural economy has become a realistic choice for agricultural development in China. However, to realize scale agriculture, both central and local governments have conducted positive explorations. Current practices mainly involve agricultural enterprises, family farms and agricultural cooperatives.
Agricultural enterprises did not originate from farmer households by participating in market competition, increasing production input, or enlarging scale; instead, they came from industrial and commercial enterprises. These industrial and commercial enterprises entered agriculture through capital investment and brought ‘modern production factors’ to agriculture, as Schultz (1987) remarked. This kind of phenomenon is called ‘capital going to the countryside.’ Some studies show that scale agriculture led by enterprises is a money-losing business and thus unsustainable (Wang and Gui, 2011). Furthermore, the main motivation for ‘capital going to the countryside’ was to obtain urban construction land and direct fund support (Zhou and Wang, 2015). It is thus obvious that the intention of capital going to the countryside was not ‘farming,’ but ‘land encirclement’ and ‘money encirclement.’
The family farms showed strong flexibility in the environment of commercialization and market economy. In the well-known ‘Lenin–Chayanov’ debate, Chayanov asserted that the small-scale farms in Russia would last for a long time and would continue to play a leading role there (Chayanov, 1996). Huang demonstrated the strong business competitiveness of small-scale farmer households in China since the Ming and Qing dynasties from the perspective of economic efficiency (price of labor force and labor supervision) (Huang, 2000a). Some scholars believed that family business was the most suitable mode of agricultural operation (Zhou, 1985). Thus, for family farming businesses, the most important problem is the scale of farms. It is generally accepted that a scale of less than 100 mu 1 is suitable for a family farming business (Liu, 2012).
Many agricultural economists have maintained that the agricultural cooperative organization is ideal for agricultural transformation. Chayanov (1996) believed that the transformation of small-scale farming should take the form of farmers organizing voluntary small cooperatives. Huang (2010) had a similar view, in a recent work, that cooperative organizations might provide Chinese farmers with a different future. It is worth noting that although the number of agricultural cooperatives in China boomed in recent years, there are a great many bogus cooperatives, such as ‘bosses’ cooperatives,’ ‘large households’ cooperatives,’ ‘cadres’ cooperatives,’ and even ‘briefcase cooperatives.’ Excessively strong administrative interference brought about the phenomenon of not respecting farmers’ willingness in cooperation and gaining the support of state policy and finances by cheating in the name of cooperatives (Research Group of the Development Research Center of the State Council (DRC), 2012).
The three kinds of practices in scale agriculture in China at present have been described above. Although agricultural enterprises, family farms, and agricultural cooperatives differ in terms of composition of assets, organizational form, and operating subjects and have corresponding advantages and disadvantages in realizing scale agriculture, they bear internal similarities in many aspects. Firstly, the three modes set small-scale farming against realization of scale agriculture, assuming that we should demolish small-scale farming to realize scale agriculture; secondly, the three modes all require land transfer in varying degrees and hold that only by concentrating land to business operators can they realize scale agriculture; thirdly, the three modes all emphasize the external transformation of small-scale farming by ignoring its potential and the self-adjustment ability of the small-scale farming society; and finally, agricultural enterprises, family farms, and agricultural cooperatives are all unified organizational forms lacking the possibility of building a network as a form of production organization.
From ‘scale management’ to ‘scale service’
According to statistics in the Communiqué on Land and Resources of China 2014, by the end of 2013, China had 2.027 billion mu of cultivated land and a population of 600 million in rural areas, with per capita cultivated land just over 3 mu. Taking into consideration the huge population and inadequate farmland per capita in rural China, it is impossible to wipe out small-scale farming and realize land concentration. Can China then find a way to achieve the goal of innovating the agricultural business system and realizing scale agriculture by keeping small-scale agriculture and land fragmentation? In the past two years, the central government proposed that China should encourage commercial and industrial organizations to enter into the service domain before and after production, leave the domain of agricultural production to farming households’ operation, and actively develop a new type of agricultural management system.
At the China Agri-business Development Forum held in Beijing in June of 2014, Mr. Xiwen Chen, Deputy Director of the China Central Rural Leader Group Office made a keynote speech on agricultural development in China in which he elaborated on rural reform policies and addressed key points in agricultural business system innovation, especially the issue of improving agricultural production efficiency through scale service and improving scale agriculture. Chen (2014) believed that first the ‘fundamentals’ in agriculture in China should be identified: A certain large household plants on thousands of mu of land, and a certain company has obtained tens of thousands of mu. These cases are not uncommon; however, generally speaking, they do not represent the fundamentals; our fundamentals lag far behind... We can never ignore the fundamentals in rural society; namely, small-scale management by 100 million farming households. This is our basic situation.
In this basic situation, it is essential to propose innovations in the agricultural business system. By calling it a ‘new type of agricultural business system,’ Chen (2014) emphasized that ‘this system includes different subjects, which have different functions.’ In other words, with the improvement of agricultural production technologies and the popularization of agricultural mechanization, agricultural planting no longer means the whole process from plowing to harvesting; instead, it has subjects with different functions in different stages of production. Thus, farmers can ‘reduce their labor intensity by purchasing production services and thus improve the efficiency of agriculture.’ Chen (2014) also pointed out that at present, the comprehensive agricultural management rate for ploughing, seeding, and harvest was about 60%, and the marketization level of agricultural production factors had plenty of room for improvement. Thus, agricultural production efficiency can be accelerated by expanding the service scale.
The idea of constructing an agricultural scale service system that Xiwen Chen proposed is totally different from the current three modes of practice in scale agriculture. A scale service system does not require wiping out small-scale farming; moreover, it takes the existence of small-scale farming as its premise. Therefore, this system also does not require land annexation and concentration; rather, it has given full consideration to the realistic condition that small-scale management of over 10 mu per household constitutes the better part of Chinese agriculture. As de-involution will become an irresistible trend of agricultural development in China, based on the ‘fundamentals’ in rural areas and agriculture, the agricultural scale service system will play an important role in guiding the agricultural economic transition.
This paper presents a case study on practices of agricultural production scale service and shows and analyzes these practices in central and western China. The scale service in Ningcheng County is not an exogenous factor originating from urban capitals. Instead, it comes from the small-scale agricultural society; it is a form of production organization built on the rural society network.
Package service: Agricultural scale service rooted in the rural society network
Basic information on the investigated area 2
Grain planting structure of Ningcheng County (unit: mu).
Note: *This means the percentage of planting area of the crop in the total farmland area where the total of the last four crops (maize, sorghum, millet and others) are grain crops. The last number after the decimal point in the percentage may have differences, which were made by rounding off.
By the end of 2013, the total population of the county was 612,140, and there were 217,664 households, in which the rural household population was 525,724. There were 272,000 rural employees, in which the number of laborers in agriculture, forestry, animal husbandry and fishery was 176,000. 3 In the over 270,000 employees in towns and villages, only a little over 170,000 were agricultural employees, and the other nearly 100,000 employees were non-agricultural, which was similar to the national level in 2012. This illustrates that although the proportion of residents of agricultural households in Ningcheng County was very high, a great many agricultural laborers quit agricultural production, and agriculture began to show the trend of de-involution.
The total area of farmland in Ningcheng County was 1,542,377 mu, and per capita farmland area in rural areas was about 3 mu, which is almost the same as the national level, showing the situation of land fragmentation. In 2014, the area of contracted land in transfer was 189,000 mu, taking up 12.3% of the farmland, which was much lower than the national level during the same period (28.8%); 4 of all contracted land in transfer, the area in transfer among farming households took up the largest proportion. In other words, the level of land transfer in Ningcheng County was very low, most cases of land transfer occurred between farming households, there were few cases of large-area land transfers, and operation by farming households constituted the chief mode of agricultural planting.
Given the sharp decrease in rural employees and the unchanged status of land fragmentation, how did Ningcheng County develop a new type agricultural business system, avoid extensive operation in agriculture, and realize the growth of grain output represented by maize with each passing year? How could a new type of agricultural business that took scale service as the core content be achieved through a rural society network? This paper will analyze the organization of maize production by comparing the traditional planting mode and the new planting mode and will discuss the origin, operation characteristics, and mechanism of scale service in agricultural production with ‘package’ as its characteristics.
The traditional mode of maize planting
Maize planting procedure.
In the traditional small-scale farming mode, stubble-breaking and tilling place high demands on labor intensity, and thus laborers in the prime of life need to be employed and supported by animal power, with each farmer able to finish only 2 mu each day. Broad irrigation is undertaken. Thanks to modernized irrigating devices, the labor intensity of this step is not very high: each farmer can irrigate 10 mu each day. In the words of farmers, ‘We only have to press the button and look at the machine working.’ The labor intensity of harrowing and moisture preservation is also not high, and animal power is not a requisite. Each farmer can finish 10 mu per day at this stage. It is better to finish harrowing by pure manpower, as harrowing and moisture preservation require flattening of soil cracks, and the soil trod by livestock may affect seeding in the next stage. Seeding requires animal power, and each farmer can finish 7 to 8 mu per day at this stage. The labor intensity of soil flattening with a stone roller is not high, but it requires precise work, and each farmer can finish 15 mu per day. Soil flattening with a stone roller is similar to harrowing in that pure manpower is better at this stage, as it is very difficult to flatten soil that has been trod by livestock and may cause loss of moisture. During the field management period, animal power cannot be applied in weeding and fertilizing. Each farmer can finish only 2 mu per day during weeding. Fertilization cannot be finished by a single person; instead, it requires coordination between three persons, who collectively can finish only 3 mu per day, which means that each person can finish only one mu per day. It is thus clear that weeding and fertilizing are typically labor-intensive. Two rounds of weeding and fertilizing during the field management period take up the better part of maize planting. 6 As the labor intensity of manual harvesting is very high, each farmer can harvest only 1 mu per day.
Situation of manpower, expenses, machinery usage and employment in traditional farming mode.
Note: *Stubble-breaking and tilling as well as seeding should be finished by manpower supported by animal power.
According to the traditional planting mode, the maize yield per mu is less than 1500 jin of dry maize (the unit price for dry maize is 1 yuan per jin); if the input per mu is 180 yuan, then the net income per mu is 1320 yuan. 9 The traditional farming mode uses a self-employed family labor force, planting being done by manpower assisted by animal power; therefore, the production cost per mu is very low, input of manpower per mu (labor input for one farmer per day) is very high, and the manpower input is the input of the family labor force. A low production cost per mu means that for farming households, the capital investment in agricultural planting is relatively low; high manpower input per mu means that the labor productivity in agriculture is much lower than the overall labor productivity in the whole society. The high input in crop planting in the family labor force means that the main force engaged in agricultural production is lower-aged old people 10 and at-home women. On the one hand, they are not strong enough to complete some planting stages; on the other hand, it is difficult for them to find part-time jobs near their hometowns, and thus doing so would not help to increase the family’s overall income.
The new mode of maize planting
The new mode of maize planting is characterized mainly by the application of agricultural machinery and the introduction of fine varieties of maize and fertilizers. The labor intensity of stubble-breaking and tilling is very high and requires men of prime working age. Since these men work outside their hometowns, it can be very difficult for the lower-aged old persons and at-home wives to accomplish this stage. Therefore, the stage of stubble-breaking and tilling is in urgent need of mechanization. Furthermore, investment in one kind of production factor depends on the economic status of the family engaged in small-scale farming. The stubble cleaner is powerful but expensive, with prices ranging from thousands to tens of thousands of yuan. Common families engaged in small-scale farming cannot afford the price. For instance, Dianzi village, the very village where Dianzi town government in Ningcheng County is located, has only three stubble cleaners. Therefore, at the stage of stubble-breaking and tilling, common farmer households choose to purchase services rather than machinery, as an operator can till 100 mu a day. 11 The operation methods of irrigation, harrowing, and soil flattening with a stone roller remain unchanged from the methods used in the traditional farming mode. Farmers still adopt the traditional broad irrigation, which is completed by self-employment or employing farmers. Each farmer can finish 10 mu per day. Harrowing is similar to soil flattening with a stone roller, as neither stage demands high labor intensity but both stages require precise operation, and manpower yields better effects than machinery. Therefore, these two stages just follow traditional methods using self-employment or employing farmers, with one farmer finishing 10 mu per day in harrowing, and one farmer finishing 15 mu per day in soil flattening with a stone roller. Like stubble-breaking and tilling, harvesting demands high labor intensity. After the short frost-free season in the region, during which farmers return crop stalks to the field using a large-scale corn harvester, the frost freezes the stalks and thus their decomposition cannot be achieved, creating difficulties for the next year’s planting. There is no need to return stalks harvested by manpower to the fields, and thus harvesting is done this way. When the family labor force is not large enough, the family may employ farmers from outside, each of whom can finish 1 mu per day in harvesting.
The stage that can best demonstrate the differences between the new farming mode and the traditional farming mode is the seeding stage, for several reasons. Firstly, seeding is mechanized. It can be accomplished by self-employment or employing operators. With mechanized seeding, the work efficiency has been greatly enhanced, with an operator on one seeder finishing 30 to 40 mu per day. Secondly, fine varieties of maize and fertilizers have significantly reduced the labor force input during the field management period. The seeding stage in the traditional farming mode only includes seeding; no weeding and fertilization are involved. Germination marks the beginning of the five-month field management period. During this period, two rounds of weeding and two of fertilization are needed. Since fine varieties and fertilizers are introduced in the new farming mode, herbicides and fertilizers (the counterpart of manure in the traditional farming mode) are applied during seeding; after germination, the field management period no longer requires weeding and additional fertilizers, freeing humans from labor during the following five months.
Situation of manpower, expenses, machinery usage and employment in new farming mode.
Note: *Manpower per mu refers to common situations, whether self-employment or employing farmers.
Each mu of field worked with the new mode of maize planting can yield over 1800 jin of dry maize, and the average input per mu is 325 to 535 yuan; thus, the net income per mu is 1265 to 1475 yuan, 12 which is similar to the income for the traditional planting mode (1320 yuan). However, the new mode of maize planting is much better in terms of family labor force input and agricultural production efficiency. The new farming mode combines self-employment and employment of other farmers, introduces fine varieties of maize and fertilizers and achieves mechanization in seeding; therefore, the production cost per mu is high but the manpower input per mu is greatly reduced. Although production cost per mu for the new farming mode is much higher than that for the traditional mode, compared with output per mu, the net income per mu is not reduced. For the farming households, the capital input in planting by the new mode is still not high. However, mechanized seeding as well as fine varieties and fertilizers in the new farming mode free up labor input during the five-month field management period, and thus the total manpower input per mu is significantly reduced, showing a remarkable improvement in agricultural production efficiency. In addition, if farming households choose to employ outside farmers at each production stage, there will be no input from the family labor force in the production stages. If they choose self-employment at each stage, the manpower input per mu will be much lower than in the traditional mode. In this way, farming households can save energy and power, and lower-aged old persons and at-home wives engaged in farming can be liberated from heavy farm work, giving them the opportunity to look for part-time jobs in neighboring regions. In this case, the family’s income can be increased.
The net income per mu in maize planting demonstrates well the reason for the low level of land transfer. Land transfer embraces production costs and farmland rent. The average land rent is 700 yuan per year in the region. Farming households may lose 6000 to 7000 yuan of income per household yearly with 10 mu of farmland if they collect rent by land transfer. By applying the new planting mode, this income can be obtained without investing much labor force and many working hours. Industrial and commercial capitals and big planting households have the motivation for scale management on large areas of farmland; however, the common farming households are often unwilling to transfer their land to other parties.
Two issues need to be addressed below: first, fine varieties of maize, fertilizers and herbicides must be applied together; if only fine varieties are applied without using complementary herbicides and fertilizers, the corresponding yield cannot be ensured; and second, the mechanized seeding of fine varieties requires highly skilled seeder operators. Inappropriate operation in seeding may also affect maize yield. As small types of seeders are much cheaper, costing only a few thousand yuan, most farming households choose to purchase mechanized services while other households buy seeders for seeding. This is the ‘package service’ in this paper: the ‘first package’ costs 240 yuan and includes fine varieties of maize, fertilizers, and herbicides; and the ‘second package’ costs 290 yuan and includes 240 yuan of fine varieties of maize, fertilizers, and herbicides plus 50 yuan of mechanized seeding service. The farming households can choose to purchase only the package of fine varieties, fertilizers and herbicides, with seeding completed by their own purchased seeders, or they can choose to purchase the package of fine varieties, fertilizers and herbicides and mechanized seeding service.
However, this kind of package service is very different from the service packages in our daily lives, such as fee packages for mobile phones. First, the package service in agricultural production contains human elements. Mechanized seeding of fine varieties makes high demands on operators; hence, the second package, in which ensuring the operating quality of operators is a challenge. A fee package for mobile phones, on the other hand, is a completely materialized service, involving no problems of service quality being determined by humans. Second, the purchasing behavior of a single buyer (farming household) is irrelevant to other buyers. A seeder operator can seed 30 to 40 mu per day, and the average farmland area of one farmer household is about 10 mu. If a farming household needs to buy a mechanized seeding service and a neighboring household also needs this service, this is ideal in that the two households can then join together in one-time working. Thus, an overall plan for all farming households is needed. In the case of fee packages for mobile phones, the behaviors of package buyers are independent, and the purchase behavior of any given buyer is irrelevant to other buyers. This paper conducted a case study on seed retailers in Dianzi town of Ningcheng County to show how the organization cost in agricultural production was reduced through rural society networks in rural areas.
An organizer of agricultural scale services: Seed retailers
In the new maize planting mode, fine varieties of maize, fertilizers, and mechanized seeding are so essential that the seed retailers that provide these agricultural materials or services have become central to solving problems. There is a seed retailer in the center village of Dianzi town, which is also the very seat of Dianzi town government. This seed retailer grew out of an agricultural cooperative, which used the traditional maize planting method and engaged in the unified purchase of agricultural materials and equipment. How did the agricultural cooperative become a seed retailer that provides both agricultural production services and agricultural materials? Another case can help explain this. In the Harqin Banner, which is located northwest of Ningcheng County, a big seed distribution household surnamed Song (people called the boss ‘Old Song at Western Bridge’) introduced fine varieties of maize and fertilizers as well as new technologies of mechanized seeding from northeastern China and developed a new marketing mode. The specific method of the Song family was to sign purchase order contracts with farmers that had the following provision: as long as farmers purchased seeds, herbicides, and fertilizers from the Songs and hired seeder operators from them, the Songs could ensure the buyer’s maize yield. If the maize yield failed to reach the designated amount, then the loss would fall on the Songs. During its prosperous period, the Song family had over 360 seeder operators, and the farmland area that was planted with seeds from the family reached around 70 mu in the surrounding counties. Starting in 2010, the Song family intended to expand its marketing range to Ningcheng County. Very quickly, this kind of marketing mode occupied hundreds of mu of farmland in Ningcheng County.
However, the Song family’s new mode of maize planting and marketing was reproducible, and the family had few connections in Ningcheng County. The agricultural cooperative in Dianzi town quickly mastered the Songs’ planting and marketing methods and formed an operation mode of ‘seed retailer + seeder operator + agent + farming households’ by utilizing rural social networks in the locality. The cooperative of Dianzi town established a seed retailer, which introduced fine varieties of maize and fertilizers, purchased 14 seeders, and signed contracts with over 20 seeder operators. The seed retailer in Dianzi town also signed a verbal agreement, which stipulated that the retailer would recommend business to operators, and operators would follow the retailer’s arrangement in accepting business, though they could also do business of their own when they had enough time. Mechanized seeding places high demands on skills. The contracted operators were all very skillful; in the words of an operator in that region, ‘The operators who signed contracts with the seed retailer were the top, most excellent ones.’ The seed retailer sold the first package and second package in Dianzi town and neighboring towns. In the second package, the seed retailer would arrange for operators to do the seeding. The 290 yuan expenses in the second package were first paid to the seed retailer by the farmers, after which the seed retailer took out 50 of the 290 yuan to pay the operators. The seed retailer also promised a certain germination number and yield to farmers who bought the second package; if farmers failed to achieve the amount, the seed retailer would make up the loss. This promise, however, was not made to farmers who bought the first package.
Thus, there was a symbiotic relationship between the seed retailer and contracted seeder operators. On the one hand, for the seed retailer, providing the mechanized seeding service was actually selling a ‘value-added service’ in agricultural materials, aimed at encouraging farmers to purchase the second package of production service. As a matter of fact, the fee for the Danzai farmers to employ operators by themselves was not less than 50 yuan; moreover, employing operators by themselves could not match the seed retailer’s promise on germination number and yield. On the other hand, operators contracting with a single farming household would be unable to coordinate seeding area and time. This could affect the seeding efficiency as well as the operator’s income, and therefore, operators preferred to accept business through the seed retailer. The symbiotic relationship between the seed retailer and operators was built on mutual trust. There would be problems of supervision if the two parties were not acquaintances. For example, the Song family made up for the loss of 5000 mu for not achieving the germination amount and yield. The loss was caused by inadequate supervision in fast-scale expansion. Therefore, the marketing range of the seed retailer was limited, and the factor that determined the limit was the ‘circle of friends’ of the seed retailer managers. If the seed retailer was unfamiliar with the operators, or if there was not a selection mechanism, then it would easily happen that operators had bad performances during seeding and germination and yield would be affected. Whenever farmers ran into trouble, they would ask the seed retailer for compensation. Therefore, the seed retailer tended to employ excellent operators with whom they were acquainted. As they could ensure technological level and ensure the operators’ sense of responsibility, there would be no problem in supervision.
The information collection and integration on farmers for the seed retailer was accomplished by agents. The seed retailer in Dianzi town had seven agents who covered both Dianzi and neighboring towns. The agents were friends of the seed retailer’s managers. Their responsibility was to persuade people to purchase agricultural materials from the seed retailer and pass the farmland information on buyers (number of land lots, area and location) to the seed retailer. As a reward, the seed retailer would pay a commission of 10 yuan per mu to agents. Then the seed retailer integrated the farmland information on farming households and dispatched operators to seed the farmland. With the guidance of agents, operators finished seeding. During this process, the function of the agents was to organize farming households who purchased the second package and connected farmlands to form a scale. Therefore, they served not only as the seed retailer’s agents in the villages, but also as the farming households’ agents. What farming households were concerned about was the possibility of combining their own farmland with that of their neighbors in seeding. But it was impossible for them to get together to discuss the issue, as the cost of communication would have been very high. By taking advantage of their interpersonal connections, the agents visited each household and coordinated among them. Thus, they were finally able to combine farmland and reduce the organization costs of production coordination. The relationship of the seed retailer, operators, agents and farming households is shown in Figure 1.
Relationship of the seed retailer, operators, agents, and farming households.
It can be concluded from the description above that the agricultural scale service that takes package service as its chief characteristic has developed into a new agricultural business system against the background of a mass outflow of young adults, women being the main force in farming and population aging in central west China. This system is rooted in the rural society network. The acquaintances in rural areas significantly reduce organization costs in agricultural production and realize scale production services in agriculture. In this process, land fragmentation and small-scale farming are preserved. Thus, we can understand the phenomenon as follows: in terms of the organization method of agricultural production, the new farming mode is no different from traditional small-scale farming in China, as both modes have basic production organizations based on farming households, and both depend on social networks in rural communities to solve problems and avoid risks. However, the new farming mode contains more advanced and modernized agricultural technologies (including fine varieties of maize, fertilizers, and agricultural machinery), as well as more specialized and marketized agricultural production factors (in the aspects of services purchased by money rather than by mutual assistance and labor or tool exchange). Moreover, with the advanced agricultural technologies introduced in a certain stage, farming may become more specialized and more marketized. However, before any changes in ‘fundamentals’ occur in rural areas and agriculture in China, namely, small-scale farming by most households with only around 10 mu of farmland, it is necessary to maintain the current status of taking each farming household as the production unit for people’s livelihoods and the stability of rural China. This means that the rural society network holds key realistic significance for the development of the new agriculture.
Brief summary
The following four points can be concluded from the case studied in this paper: (1) scale agriculture not only signifies large-scale farmland area, but also includes scale production service. Farming households can decide to purchase or not purchase the package service based on their own status in agricultural operation; (2) the scale service of agricultural production is flexible. By matching the different production services at different production stages, different service packages are formed. Thus, farming households can take the initiative in choosing the appropriate package service for themselves; (3) with the progress of agricultural technologies, more production stages may become more specialized and can be converted to production service. Therefore, there might be more kinds of packages which cover more production stages, and the scale of production services will be expanded; and (4) the rural social network played a key role in the formation of the new production mode. It reduced the production cost in the whole process of agricultural production, resolved the contradictions between small-scale farming and scale management, and realized scale farming without destroying the social form of small-scale farming and land transfer.
It needs to be emphasized that the large-scale package service applies only to field crops like maize. Field crops mainly demand production factors on farmland while making few demands on labor force and capital. The package service is not suitable for economic crops, which require intensive labor force and capital input.
Additional discussion: New agriculture and urbanization
Xiaotong Fei pointed out in his early book, Rural Recovery: Selected Works of Fei Xiaotong (Volume 4) (1999), that by developing rural industry, traditional and declining agriculture-based rural areas might recover to form a ‘new countryside’ that includes modern industrial civilization in which industry and agriculture complement one another. The concept of ‘rural industry’ that Fei refers to is a broader one, including electric power, the internal combustion engine, as well as sideline productions, such as grain processing and domestic industry. In this sense, the package service introduced in this paper can be regarded as one kind of rural industry.
Fei believed that, in the modern industrial civilization, the ‘deterioration’ of rural industry includes two aspects: the first is technological factors, including the introduction of new agricultural technologies and operation modes; and the second is organizational factors, namely the fundamental principle of ‘coordination’ in the development of rural industry. According to Fei, the deterioration of rural industry undoubtedly relies on the application of new technologies; however, ‘without the function of social organization (especially allocation method), the new technologies may do harm to people's livelihoods’ (Fei, 1999: 395). In the efficient, organized and decentralized rural industry, farming households do not have to quit agricultural operation to be involved in an ‘industry,’ and therefore, this kind of rural industry is flexible, not completely centralized or decentralized, but rather having different matches based on realistic conditions, agricultural technology, and each household’s specific situation. ‘Another kind of power to gather population’ emerged from the commercial activities in rural industry. The concentrated community formed by the power can be called ‘cities and towns developed from trading’ (Fei, 1999: 324).
The case discussed in this paper shows that on the one hand, new agriculture has boosted industrialization in rural areas. The lower-aged old persons and at-home wives liberated from agricultural production have provided an abundant labor force for industrialization in rural areas. The biggest problem for rural enterprises was that they could not afford salaries for young adults, while the ‘half labor force’ composed of old people and women could meet the demands of rural enterprises. On the other hand, new agriculture brought about the prosperity of the private sectors. Driven by units of agricultural production service, the commerce departments, traffic, and transportation in the centers of towns all enjoyed rapid growth, with the business scope from maintenance of agricultural machinery and grain storage to catering, grocery, clothing, appliances, or even entertainment, tourism, and accommodation making the town a bustling and busy place.
Fei’s idea was not an imitation of the industrialization path of the Western world, nor an obsession with going back to tradition, but a clever ‘grafting’ of modern industrial civilization with traditional rural society. This paper presented a case study on maize planting and tried to explore a ‘third path’ in the agricultural transition and urbanization of China, offering a supplementary illustration of Fei’s idea. The maize planting mode at the transitional zone between the Inner Mongolia plateau and the Northeast China Plain might be seen as epitomizing agricultural production in China; however, the unique operation method in this mode is a valuable reference for the transition of agricultural development in China. Chinese agriculture might maintain its present status for a long period, with continuous upgrading of agricultural production technologies and continuous marketization of production factors while social networks in rural areas and small-scale farming continue to exist and become more vigorous. In the process of urbanization in the central and western regions of China, only by realizing this point can the people-oriented urbanization, rather than land-oriented, be really achieved.
Footnotes
Acknowledgements
Special thanks should go to Professor Feizhou Zhou of the Department of Sociology, Peking University, for his careful guidance in writing this paper. In addition, the author appreciates the valuable suggestions offered by Wei Fu, Changquan Jiao, Shaochen Wang, Zongyang Xu, Dai Li and Heng Li. The author takes sole responsibility for his views.
Funding
The writing of this paper was supported by the joint project ‘New type development path of urbanization in Chifeng’ of the Department of Sociology of Peking University and the China Academy of Urban Planning and Design.