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The new-round land contract and agricultural industrialization,
currently underway in China's rural areas will further boost
agricultural production and rural development.

by Li Rongxia (Bejing Review, May 31, 1999)

China has ushered in a new stage for agricultural and rural economic development.

This new stage has some special characteristics. Firstly, the overall shortage in the supply of farm produce has given way to structural and regional over-supply, and the traditional mode of agricultural growth simply seeking maximum output no longer suits current economic development needs. Secondly, agricultural production is increasingly oriented toward commercialization, specialization and regionalization. Thirdly, agricultural development is increasingly dependent on capital and technological input and is less dependent on land and labour. Fourthly, fundamental changes have taken place in the labour structure. The turning point was 1992, when the abso1ute number of labourers engaged in agricultural production began to decline, dropping below 50 percent of the national total by 1997. Lastly, agriculture has received much government support and protection. While the Government has continuously increased investment in agriculture by a large margin, it has also increased the purchasing price of farm and sideline products at an unprecedented rate.

Given the agricultural sector's periodic changes, Minister of Agriculture Chen Yaobang stressed the necessity to readjust the ministry's work styles and methods to meet the new requirements.

CPC General Secretary Jiang Zemin pointed out that while formulating rural policies, primary importance should be given to mobilizing farmer initiative. He called on Party and government officials to respect the farmers' pioneering spirit, boldly explore effective forms for the realization of public ownership in rural areas, constantly improve rural ownership structures and persist in market-oriented rural.

The general objective is to establish a rural economic structure based on the household contract responsibility system and backed by the agricultural social service system, farm produce market system and government support and protection system, which can meet the requirements for developing a socialist market economy.

New-Round Land Contract

Deepening rural reform firstly calls for long-term stabilization of the double-tiered management system combining unified and separate operations on the basis of the household contract responsibility system. The household-based operation is determined by the law governing agricultural production. Household operation plus socialized service can accommodate different levels of agricultural productive forces and suit both traditional and modern agriculture.

President Jiang Zemin pointed out that the key to stabilizing household-based contracted operations and ensuring rural social stability lies in stabilizing the land contract relationship. For this purpose, the central authorities have set a clear land contract policy stipulating another 30 years for the term of the land contract. It also seems that it is not necessary to change the policy even after the 30-year term expires.

Stabilizing the land contract relationship is a basic precondition for rural reform and development. 0nly when the land contract relationship is stabilized, will farmers be inspired to make long-term plans, digging irrigation ditches and wells and improving the soil by applying fertilizers, this also can help farmers who have moved away to become involved in secondary and terciary business to set their minds at ease. It will also provide conditions for the rational distribution of work and structural readjustment in rural areas. Moreover, rural property rights will be clearly defined, management regularized, and a land transfer mechanism for a market economy can be genuinely established. It will also resolve the problem of land lying waste in some localities while farmers elsewhere don't have enough land.

The policy on land contract has created a strong repercussion among farmers and rural cadres nationwide. Many feel the policy facilitates the current dvelopment of rural productive forces and meets the basic desire of farmers. It is of great importance to opehing up new vistas for the development of agricultural production and rural areas.

For residents of Xigou Village in Fuping County, Hebei Province, the policy has set their minds at ease, relieving worries about policy changes.

The policy has also fired the farmers' enthusiasm. At present, in the suburbs of Beijing, there are 233,000 hectares of land contracted by individual farming households with a term of at least 30 years, accounting for 61.8 percent of the total cultivated land there. This has enabled the farmers to become the masters and investors of their contracted land.

Wang Yupu, a farmer of Muchang Village in Changping County, Beijing, signed a 30-year contract to develop a local gully. He mapped out a development plan and invested more than 200,000 yuan to build embankments,  level the land and dig irrigation ditches, with the goal of  the annual income growing to 300,000 yuan in five years.

By October 1998, some 80 percent of land contractors in Jiangsu Province had received the "rural collective land contracted operation right certificate". In the two cities of Xuzhou and Suqian, all contractors had received the certificate, while in Lianyungang and Nanjing, the rate had reached 99.6 percent and 96.2 percent respectively.

To date, farmers in more than 80 percent of the rural villages throughout the country have signed new-round, or second-round, land contracts lasting at least 30 years.

In Anhui Province, after the new-round land contract was signed, 658,000 rural households have transferred to non-agriculture businesses while 3.68 million others engage in both agricultural and non-agriculture production, 5.6 percent and 31.6 percent respectively of the province's total rural-households. Of the 348 households in Dawang Village in Huailin Town, Chaohu City, 95 percent of farming households have shifted to fishing net weaving and marketing and transferred the land to those skilled in farming. At present, the village's per-household annual income tops 10,000 yuan, the highest exceeding 100,000 yuan. More than 50 percent of the households have moved into new buildings.

The Ministry of Agriculture has pledged to do a good job in guiding and examining the land contract work, to promptly resolve problems, and complete related management systems.

Advancing Agricultural Industrializatlon

Advancing the industrialization of agriculture is a major task for furthering rural reform and development. It is of great importance to boosting the rural economy, enhancing farmers' income, increasing rural employment, and expediting the building of a socialist market economy and modern agriculture.

In the early 1990s, the Government encouraged the development of a commodity economy and high-yield, high-quality and high-efficiency agriculture. Shandong Province took the lead in formulating a strategy for agricultural industrialization, relying on leading enterprises to develop diversified management, with marked results.

Some counties and cities in developed east and central regions have achieved agriculture-industry- trade integration and production-processing-marketing integration.

Agricultural industrialization has effectively linked up production, processing and marketing of farm and sideline products in a new operational mechanism, with a precondition that the household-based contract responsibility system remains unchanged.

It has helped improve the quality of products, reduce intermediate links, lower transaction costs, enhance overall competitiveness, increase agricultural added value and, through integrated production and service systems, guided and helped farming households engaged in commodity production to achieve specialization, socialization, regionalization and intensive operation.

Shiyan City in Hubei Province has constantly readjusted its development strategy in line with local conditions. In recent years, its agricultural output value has increased by more than 30 percent annually, while farmers' per-capita net income has exceeded 1,300 yuan. Industrialization has contributed more than 80 percent of increased agricultural output.

Shiyan began with the development of a diversified economy. It defined eight major varieties of products for industrialization: vegetables, konjak, ginger, tea, animals and poultry, fruit, tobacco and edible fungus. At present, a total of 133,000 hectares of land has been marked off for industrialized operation.

Progress in Shiyan's agricultural industrialization process has quickened the pace of the city's poverty relief-program. At present, the city's annual income from this source approaches 2 billion yuan, accounting for 80 percent of its total agricultural revenue. The poor population in mountainous areas has been reduced to less than 370,000.

Practice proves industrialization is the only way to transform the traditional planned rural economy into a socialist market economy and move from an extensive to intensive mode of economic growth. It is also an effective development mechanism that guides individual farming household operations to enter a market economy, helps enhance the value added and comparative efficiency of agricultural production, and enables the agricultural sector to achieve self-accumulation with independent and sound development. It is a new production management method and a new industrial organizational form that better suits the development of rural productive forces under the conditions of a socialist market economy.

According to Li Hui'an, an official of the Ministry of Agriculture in charge of agricultural industrialization, this will not only, promote the development of agricultural productive forces, but also represents the deepening of rural reform. It can achieve centralized and specialized agricultural production and socialized services, and greatly enhance agricultural productive forces by transforming the traditional agriculture to a commercialized, specialized and modern agriculture.