Cooperative Farms Bring New Wealth to Rural China

Until last year, Zhang Fengming kept only five ducks in his yard. For the destitute farmer, duck eggs were an important source of protein, and a duck feast during the annual Spring Festival was greatly anticipated every year.

Zhang now has a good reason to expect more. With a yearly income of 100,000 yuan (US$15,770) from his duck farm, Zhang is considering buying a new car.

Zhang is a member of a cooperative farm in Anze county in North China's Shanxi province, where eight families collectively manage a flock of 300,000 ducks.

"Initially, I was told that a duck farm could make more money than my small cornfield, but to build a large and profitable farm, one cannot succeed without pooling capital with others," said Zhang.

The eight families pooled 2.5 million yuan in the spring and set aside a patch of land for the farm to be erected. Its members buy ducklings and sell products as one unit, and a large company has signed up to provide vaccines and technical support, services that an individual farmer could not afford on his or her own.

"We have our own accountant and liaison. For issues regarding the farm's operation, we hold meetings and make decisions together," said Zhang.

Zhang's cooperative farm is legally categorized as a "specialized farmers' cooperative," a thriving rural organization in which farmers voluntarily merge their lands, manpower and capital to increase the size of their businesses and gain greater profits.

According to the Ministry of Agriculture, China has 446,000 registered rural cooperatives, the members of which include 35.7 million households, or 14.3 percent of China's rural population.

"Cooperative farms have many advantages. For example, larger farms can purchase raw materials in larger quantities and thus benefit from lower prices. They also have greater bargaining power when pricing their products," said Fu Qiang, head of Anze's Ducun township.

Rough start

In the mountainous county of Anze, 237 co-op farms have sprung up over the last three years after several ambitious farmers introduced the concept to locals in 2008.

Li Mingqiang, who led a bustling cooperative hen farm in the village of Sangqu, said grinding poverty has been the main cause of the increasing number of co-op farms.

"As the village has just a small amount of arable land, each household is allocated only a tiny bit of land. The meager harvests left most people living hand-to-mouth," said Li.

Although Li's farm eventually brought prosperity to its 20 member families, villagers initially balked at the huge investment needed to build the farm and buy advanced equipment.

"Some villagers frowned at the concept of 'cooperative farming' and refused to make investments until it could be proven," said Fu, explaining that the farm's collective elements reminded some of the farmers of the hardships they dealt with in the 1960s and 1970s.

China once used political means to promote collective farming, creating "people's communes" for farmers to live and work together. Its highly egalitarian distribution, however, compromised farmers' work incentive and ended in reduced agricultural output.

In the early 1980s, China introduced a household responsibility system, which distributed land and allowed farmers to manage their own production. The fragmentation of farmland, however, complicated the use of modern machinery and curbed the development of large-scale farming.

"The weakness of small-scale farming makes cooperative farms and mass production an inevitable trend, but expansion may be slow at the beginning," said Wei Jinping, director of Anze's agricultural committee.

The financial threshold required for co-op farming has held back many farmers. Starting up a hen farm requires an initial investment of 200,000 yuan per member family, according to Wei, which is enough to plunge many rural families deep into debt.

However, Wei believes cooperative farming will eventually become more inclusive as costs drop and options open up for individual farmers.

"When a farm becomes large enough, it can lower its entry threshold and allow individual farmers to participate in multiple forms. They can contribute their land, buy the farm's shares or work as its employees, and enjoy the benefits of collective farming more easily," said Wei.