It is crucial that China establish a sound socialized agricultural services system to help the agricultural sector overcome the limitations of its small-scale, decentralized agricultural operations.
Although China`s agricultural development has entered a new era, with agricultural reforms well underway, of which supply-side structural reforms are the key. Agriculture, rural areas and farmer`s issues remain China`s top priorities and badly need theoretical elaboration and guidance.
Since the late 1970s, an array of academic theories have been put forward on how to transform the traditional agricultural sector under market conditions, focusing on technology, investment in agricultural infrastructure and human resources, and institutional innovation, among other things. These theories have indeed guided the agricultural modernization process of a large number of developing nations including China.
But studying agricultural modernization from the fresh perspective of socialized agricultural services not only emphasizes the fact that scale operation of land does not equal scale operation of agriculture, it also identifies sufficient socialized agricultural services and a well-functioning market as the most significant factors for ensuring the high-quality development of the agricultural sector, land-centric operation entities or modes are secondary.
Both farmers and large-sized agricultural operators are in dire need of lots of services from the outside to support their agricultural production and operation. Forging a bond between farmers and the development of modern agriculture has therefore become a core task of agriculture modernization. This should be based on the specialized division of labor and socialized agricultural before, during and post-production services for agricultural producers and operators. Such services include material supplies for agriculture, technical training, agricultural machinery operation, warehousing and transportation, processing of farm produce, market information, brand marketing and finance and insurance.
According to latest estimates by the Ministry of Agriculture and Rural Affairs, the 14th Five-Year Plan period (2021-25) will be a golden period for agricultural services, with the market size expected to surpass 1 trillion yuan ($143 billion).
An overall survey of developed countries` agricultural modernization shows that the process was completed with the support of a sound socialized agricultural services system based on family operations. For instance, agricultural labor in the United States accounts for a mere 2 percent of the total labor force, while people who provide all sorts of services for the sector account for over 10 percent, far exceeding the number of people directly engaged in farming. Right now, China has over 200 million smallholder farmers, which have lots of agriculture-related production and operation activities that they are incapable of doing or can only do in an uneconomical way.
A socialized agricultural services system that boasts both Eastern and Western characteristics is taking shape in China, offering plenty of opportunities for all types of agricultural service providers. At present, in addition to non-profit organizations including governments and research institutes, various types of agricultural operation entities, such as farmers` cooperatives, agricultural businesses and collective economic organizations, are making use of social capital to make a foray into the agricultural services sector. The results include the "Renfa model" created by Renfa Agricultural Machinery Cooperative in Keshan County of Heilongjiang Province, the "SinoChem Modern Agricultural Platform (MAP) model" created by Sino-Chem Group, the "Jinfeng Cooperative model" created by Kingenta. These models differ from the "business+ farm model" adopted by European countries and the US, or the "farmers` association model" that provides comprehensive agricultural services in Japan and the Republic of Korea.
However, while this system is creating favorable conditions for the revitalization of rural industries, it is also producing new demands for institutional reforms.
Increasing policy support is the biggest strategic opportunity for agricultural development. Although the central government has been advocating the promotion of "various forms of moderate-scale operations" for many years, local governments have been focused solely on "land transfers". Such inadequate understanding and implementation of the central government`s will mean local land transfer-related policies bear too many expectations and increase the risks for moderate-scale agricultural operations.
Local governments should recalibrate their policy focus regarding the acceleration of agricultural modernization and carry out a strategic repositioning toward agricultural services. Which means that now, and for a certain period to come, moderate-scale operations should be promoted with the development of socialized agricultural services at the core, rather than land transfers. Such a strategic adjustment would change the narrow industry attribute that agriculture only belongs among the primary industries and it would promote an overall value increase of the agricultural sector by expanding its functions from mainly supplying food to an integration of primary, secondary and tertiary industries.
This would not only transform the pattern of agricultural development, but it would also be in line with the requirements of agricultural supply-side structural reform for transforming the pattern of agricultural development. It would also help to greatly alleviate the pressure caused by policy changes regarding farmland property rights, especially a recently unveiled policy on "the separation of ownership rights, contract rights and management rights". Most importantly, it provides a new, feasible way of achieving agricultural modernization with Chinese characteristics in the new era.
A strategic repositioning toward agricultural services could successfully push the nation with hundreds of millions of smallholder farmers toward agricultural modernization, it would be the biggest Chinese characteristics in China`s development experience, and would offer a valuable "China Solution" for global agricultural development.