Monday, November 3, 2014

Shaanxi Farmers Reluctant to Rent Land

The results of a new survey show that "farmers view land like gold, and they're reluctant to give it up." Villagers' uncertainty about their rights to their land makes them reluctant to let go of it, posing a problem for the new class of large farms looking to consolidate farmland.

On October 13, the Shaanxi branch of the National Bureau of Statistics rural survey team announced the results of a survey of rural land transfer conducted in 2013. The survey found that 11.8 percent of the province's contracted land had been transferred from its original "owner" or contractor to someone else. That rate was lower than the national average of 21.7 percent, and much lower than the 40 percent share of land transferred in some eastern provinces, according to the survey report.

Of the 11.8 percent of land transferred, 64 percent of it is rented to neighbors and relatives they know, often just on a verbal agreement. About 13 percent each is transferred to companies or cooperatives, and 11 percent to "others." They seldom rent to a person or company from outside their village.

The Shaanxi study claims that villagers are supportive of land transfer but they are afraid to let go of their land since they are worried they might lose their rights to the land and/or the subsidies attached to the land. Villagers working off-farm want to have their land as a fall-back in case they lose their job and have to take up farming again. In some places on the outskirts of cities, villagers are holding on to their land hoping for a big payday from developers.

The report gives the example of a farmer who has 20 mu (3+ acres) of his own land plus 200 mu he rents to grow wheat. All the land is on a flood plain (so it's probably classified as "waste"land that is not a core part of the village's land contracted to collective members). The farmer would like to rent 1000 mu (165 acres) to grow grain, horticultural crops, and raise livestock, but coordinating with collective members to consolidate a large parcel of land is difficult.

With villagers reluctant to let go of their land, rents have gone up to over 1000 yuan per mu (about US$ 1000 per acre). With such high rents, producers are inclined to use rented land to grow high-value crops instead of grain.

In Shaanxi direct subsidies for grain range from 56 yuan per mu to 81 yuan per mu, depending on the region. This is equal to 25-35 kg of grain or less than a day's wages and you get the subsidy whether you grow anything or not. Large-scale farmers say the subsidies don't have much impact now. They would prefer to get help with financing.

The inclination to rent land has always been relatively low in Shaanxi. In 2007, Shaanxi reported only 2 percent of its land had been transferred, compared with a national average of 6-to-7 percent that year. Since then it has risen fast. Shaanxi's land transfer was up to 5.7 percent in 2009, 10 percent in 2012, and 11.8 percent in 2013.

Shaanxi officials have been trying hard to promote land transfer. In an article earlier this year, Shaanxi officials said land transfer was very important to releasing surplus rural labor and promoting coordinated rural and urban development. Officials attributed Shaanxi's low rate of land transfer to the province's low level of development, few large-scale farmers, and villagers' lack of understanding of the land policy. Officials said villagers were afraid the policy might change after they entered a land transfer agreement and they would then lose their land. So they would rather leave their land idle than rent it out to someone they don't trust.

Shaanxi has been setting up township and county offices to coordinate land transfer, settle disputes, etc, but this has been disrupted by a  consolidation of townships. Some 17 percent of townships have been eliminated as administrative units and have no funds to support the land transfer services. In 2011, the province issued a document offering financial support for land transfer but little of the promised money has been allocated.

Many of the verbal agreements are vague, and disputes often arise over the deals. Multi-year rental agreements often set a one-time rental fee that doesn't change. When rents and prices go up in later years, lessors want to renegotiate the rent. Some rental contracts extend beyond the period of the lessor's contract on the land, posing possible disputes in the future. Some renters change the use of the land to a nonagricultural use after getting control of the land.

Shaanxi officials want to bring their land transfer rate up to the national average. In May, another policy document was issued to promote land transfer. They will educate villagers about the importance of land transfer and their rights. Within 3 years they plan to issue certificates of land rights to all villagers.

A provincial fund to support land transfer will be initiated. In developed regions, villagers will get a subsidy of 100 yuan per mu if they rent out their land. In poorer areas, the large-scale farmers, companies or cooperatives renting-in land will get the subsidy.

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