Sunday, January 25, 2009

Land Transfer Arrangements

Some commentators hailed the third plenum meeting last October as a major land reform that allows farmers to transfer land use rights and establish big farms. In fact, it has been possible to do this for some time.

There are already arrangements to transfer and consolidate land in relatively rich areas of eastern China where people have alternatives to farming. A recent article describes the arrangements and government policies that have supported land transfers for several years.

Cixi is an area in eastern Zhejiang Province that used to be a major rice-producing area but has now morphed into a center for industry. On average, each family is allocated about 2 mu of land (less than half-acre), usually split into multiple plots.

The local government issued a document in 1999 that supported land use rights trading, and the local government allocated 2 million yuan per year from 2000 to 2003 to support land transfer infrastructure and services. A network of 289 village land transfer stations and 20 township land transfer service centers has been established to serve as intermediaries. If a farmer wants to transfer his land use rights to another in the same village, he goes to the station and signs an agreement. If the land is to be transferred to someone from outside the village, he must go through the township service center.

A local official says the system has eliminated a lot of headaches and disputes that arose over land transfers in past years. In 2002, the first year the system was established, 60,000 mu of land rights were transferred, 6.5 times more than in past years. About 58% of the land in the region has been transferred, and about half of that has been accomplished under the new system. 120,000 mu of land is now in large farms of 100 mu or more. There are 450 large household-owned or jointly-operated farms.

The region has formulated a plan to turn the area into a big vegetable production base. It now has a major vegetable exporting business, as well as fruit, poultry, and government-operated demonstration farms to disseminate new techniques.

The land system is connected to the pension system. Most of the younger adults have left farming for nonfarm business or employment in factories, leaving predominantly old people in the villages. Most Chinese farmers are not covered by any pension or social security, but in Cixi there is a subsidized social security system. Between the social security payment and payments from contracting out land, a rural person can get 400-500 yuan per month, enough for basic needs.

Cixi's system is supported by an active nonfarm sector. Such systems may be the future of Chinese agriculture, but it will be harder to implement in poorer parts (i.e. most of) rural China. Farmers have already devised ways to contract out and consolidate their land in places where it's advantageous to do so. The October "land reform" is catching up with the reality of what is already going on and legitimizing it.

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