China needs to give better property rights to its farmers if it is to produce more food

CHINA NEEDS to step up its programme of rural land reform to give property ownership rights to farmers if it wants to secure future food supply in the world’s biggest economy and prevent rural unrest over land grabs.

Under the communist system, farmers lease their land for 30 years from their village collective, run by the local Communist Party, and they are allowed to own the crops they produce, but not the land.

China’s 680 million farmers are not allowed to put land up as collateral, and this is an obstacle to improved agricultural productivity, Deutsche Bank’s chief economist for Asia, Michael Spencer, has said in a report.

Spencer says China’s ability to feed its population may hinge on giving farmers what city dwellers have had for several years now – clearly defined property rights.

That would enable “better” farmers to take over more holdings, he says.

“Ultimately, land ownership is still held at the village level . . . the inability to mortgage farmland makes it difficult for farmers to convert their business from smallholder family farming to the industrial farming necessary to feed 1.4 billion people on less than half the current agricultural workforce,” Spencer says in the report.

While farmers can rent other land, not being able to buy is a “significant barrier to the further increase in agricultural productivity,” he writes.

It would help to introduce more efficient farming methods through larger farms and investment in farming technology, important steps in a country that has more than 20 per cent of the world’s population but only 7 per cent of its arable land.

A “massive injection of capital” is needed for mechanisation. If farmers get secure rights, “they will be the agents of this agricultural transformation,” Spencer writes.

The current focus at the Ministry of Land and Resources is on clarifying who “owns” collectively owned rural land.

Land reform would also go some way to clarifying the messy issue of land ownership in China. Some 80 per cent of new land projects are illegal, according to government data.

Farmers and villagers regularly riot against local cadres who have sold their land to greedy property developers.

China has been trying to crack down on illegal land grabs to ensure there is enough arable land to feed its people and protect farmers.

However, local governments rely heavily on land sales for revenue and have been known to give preferential treatment to property developers.

The authorities say that implementing reform involves major logistical problems and could take a long time.

A report from Xinhua, the Chinese news agency, last month showed that the acreage of illegal land seizures has risen every month since January, although the number is falling year-on-year. The ministry uncovered 15,000 cases of illegal land use involving 150,000 mu (10,000 hectares) of land in the first six months, down 35.3 per cent year on year.

People are wary about land reform in China. The Great Leap Forward in the 1950s, Mao Zedong’s disastrous effort to modernise the agricultural economy in which at least 20 million died of starvation, is still in living memory. But there are positive stories of land reform.

One of the most impressive meetings I have had here was in 2009, with Yan Lixue, a farmer from Xiaogang village in Anhui province, who spoke of how he and his neighbours sparked a rural revolution in 1978 that became the model for farming reform nationwide.

Starving after years of poor harvests in the 1970s, he and his friends secretly divided communally owned farmland into individual pieces called household contracts.

This flew in the face of the prevailing ideology, but rather than crushing their initiative, the then leader Deng Xiaoping saw the merit of the plan and it was adopted nationwide as a way of feeding China’s people.

In 2008, President Hu Jintao visited Xiaogang, a major symbolic gesture meant to underline his government’s efforts on land reform, allowing farmers to transfer or lease their land and effectively removing one of the last major elements of Mao’s collective revolution.