The Ministry of Agriculture is mulling the introduction of special measures to help facilitate the implementation of a new law on rural cooperatives, sources said yesterday.

The Ministry of Agriculture (MOA) is collaborating with other ministries to arrange preferential financial and tax terms for the cooperatives, Zheng Wenkai, a division director with the ministry said at a press conference yesterday.

"The ministry is also helping some leading cooperatives to get their products onto the shelves of giant supermarket chains, so as to promote the brands," Zheng said.

The Law on Farmer's Professional Cooperatives came into effect last Sunday. It aims to unite China's millions of loosely scattered rural households and pave the way for agricultural industrialization so they can compete under the WTO framework.

The law is the latest "policy revolution" for China's vast rural area, following the Household Contract Responsibility System initiated in 1978 and the reduction of agriculture taxation last year, experts said.

"The cooperatives have become an important link between individual farmers and the changing market which is vital if China is to modernize its agriculture and build a new socialist countryside," Zheng said.

According to ministry figures, the 34.86 million members enrolled in the country's more than 150,000 economic cooperatives now account for 13.8 percent of all rural households. About 80 percent of the cooperatives will be eligible to register with local business bureaux after the implementation of the new law which set a low economic threshold on registration, Zhao Tieqiao, an official with the MOA, said.

Prior to the introduction of the new law, farmers and cooperatives have been hindered by a number of problems.

For example, most cooperatives founded by farmers previously didn't have official legal status, so their rights on contracting, securing loans and getting permission to expand operations were impaired.

Experts see the new law as a launch pad for China to gradually move toward full competition on the world's agricultural market.

"It fits in with relevant WTO rules," Zheng said, adding that the cooperatives will standardize agricultural production methods and expand capacity to be able to accommodate market trends.

It will also help ensure product safety and lower production and sales costs, he said.

"In the long term, cooperatives are the only effective way to build a modern agriculture industry, develop international trade and break down trade barriers," Zheng said.

But Liu Xiaoying, an expert in rural studies with the Development and Research Center under the State Council, said the law had failed to make a breakthrough in the reform of rural financing mechanisms, as it still rules out the possibility of farmers establishing rural finance cooperatives.

Others have also said the law does not cover all the forms of farmers' cooperative in existence, as it limits its categories to only professional groups such as those specializing in buying, producing and selling.

Figures for 2005 showed economic cooperatives help boost members' annual income by an average of 500 yuan (US$65), 200 yuan more than the average income rise for other farmers.

(China Daily July 7, 2007)