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The Development of Farmers' Specialized Cooperatives in China: Status Quo, Issues and Policy Options


By Liu Tao, Research Team on "Policy of Optimizing the Circulation System of Agricultural Products in China", Institute of Market Economy of DRC

Research Report No 88, 2012

I. The General Picture of the Development of Farmers' Specialized Cooperatives in China

Based on surveys made in Weifang City, Shouguang City and Changle County of Shandong Province, in Zhengzhou City and Xinye County of Henan Province, in Chengdu City of Sichuan Province, as well as in Shanghai, we have found that recently, especially after the official implementation of the Law of the People's Republic of China on Specialized Farmers Cooperatives in 2007, the farmer's specialized cooperatives in China are developing rapidly.

1. The cooperatives are increasing rapidly and their overall strength is gradually enhanced

By the first half of 2011, there were already 446,000 farmer's specialized cooperatives nationally registered in China, rose by three times than that in 2007. The number of farmers who had participated in cooperatives stood at 30 million, accounting for about 12% of the total amount of farmers nationwide in China. Meanwhile, the total amount of contributions of the farmer's specialized cooperatives around China went up from 90 billion yuan in 2007 to 570 billion yuan in the first half of 2011, an increase of 5.3 times.

In particular, the farmer's specialized cooperatives in Shandong, Henan, and some other places are the fastest in terms of development, among which the number of cooperatives in Shandong ranks the first nationwide. By the end of June 2011, the farmer's specialized cooperatives registered in Shandong Province were nearly 50,000, accounting for about 11.2% of the total amount of the country. The members of the cooperatives totaled 486,000 and the total amount of contributions of cooperatives in this Province amounted to 55.27 billion yuan which increased by 2.8 times and 8.7 times respectively compared to those of 2008.

2. Cooperatives are widely distributed and focused on crop farming and breading industry

The development of the farmer's specialized cooperatives in China has gradually spread to a number of different sectors, including planting, breeding, agricultural machinery, plant protection and technical information, with crop farming and animal husbandry taking the lion's share. The specialized cooperatives in crop farming accounts for about 43.3% while the ones in animal husbandry 29.7%. Therefore, the amount of cooperatives in these two fields holds 73% of the total.

According to related surveys, the specialized cooperatives in many places concentrate mainly on local advantageous and characteristic agriculture. The ones engaged in crop farming and breeding are most common. Besides, there are also cross-sector and mixed operations. For instance, the specialized cooperatives in crop farming in Shandong Province are 24,594, accounting for 49.9% of the total. Those engaged in animal husbandry has reached 16,669, accounting for 33.5% of the total. The third largest is those engaged in technological and information services related with agricultural production operation which has reached 14,249, making up 28.6% of the total.

3. The cooperative services cover a wide range with emphasis laid on product sales and production service

With the rapid growth in recent years, the areas of operation and ranges of service have expanded from the information service to various links including agricultural materials supply, agricultural technology spreading, processing, storage, and sales.

In view of the development in Shouguang city, Shandong Province, it is learnt that the cooperatives focused on sales as major service account for about 53% of the total. Those focusing on information services, technical consulting, technical training, and supply of means of production hold for 32%. The ones centering on processing service take up 12% of the total cooperatives. Besides, some cooperatives have, through pilot practice, carried out other services such as credit cooperation and mutual insurance.

4. The cooperative unions are continuously emerging and the trans-regional and cross-sector developments witness a fast growth

With the expansion of management scale and the intensified market competition, some cooperatives have started to establish cross-sector and trans-regional cooperative unions. Different cooperatives have complemented each other and formed an organic whole based on resources sharing through the establishments of cooperative unions. During such process, the cooperation levels are advancing and its scopes expanding.

For instance, the Shouguang Xin Meng Fruits and Vegetables Specialized Cooperative Union established in July 2011 is the only trans-regional cooperative union with the most number of cooperatives, the largest members, and the most complete farming categories in Shandong Province. This union has incorporated thirty-one cooperatives from Ji'nan, Weifang, Weihai, Binzhou and Liaocheng cities. The annual output of grapes and apples are respectively 15 million jin (two jin make one kilo) and 46 million jin. That of various kinds of vegetables amounts to 60 million jin. The establishment of this union has made it a bridge to connect the scattered farmers with the market.

5. The cooperatives have a diversified mode of operation with "cooperative plus farmers" as the major pattern

At present, there are about four types of operating modes related to farmers' specialized cooperatives. The first one is "cooperative plus farmers". Such cooperatives are generally the voluntary organizations set up by farmers in which they sell their products to the market. The second one is "cooperative plus production bases plus farmers". Such cooperatives often own production bases of a certain scale. The cooperatives guide the farmers in terms of farming activities through production bases and they buy or sell the members' products on a commission basis. The third type of cooperatives is "leading enterprises plus cooperatives plus farmers". Such cooperatives are established by the leading enterprises of agricultural industrialization. These enterprises hold most parts of shares of the cooperatives. The members mainly become shareholders by labor or products. Most of the responsible officers of the leading enterprises serve concurrently as the legal representatives of the cooperatives. The cooperatives even build a bridge between the leading enterprises and farmers and become the production shops. The fourth type of cooperatives is "cooperative union plus farmers". This organization mode is composed of different types of related cooperatives. It promotes the formation of a union combining production, processing, and marketing together which give incentive to cooperative members and farmers in production.

Survey findings show that the "cooperatives plus farmers" is the major form of farmers' specialized cooperatives in many places. Take the situations in Shandong and Henan Provinces as an example. By the first half of 2011 the farmer members in farmers' specialized cooperatives in Shandong Province amounted to 470,000, accounting for about 96.8% of the total. Those in Henan Province reached 227,000 which made up 98.2% of the total. The members from enterprises in the two Provinces were only 1,571 and 350 respectively. If calculating according to per enterprise participating in one specialized cooperative, the type of "leading enterprise plus cooperative plus farmers" made up 3.2% and 1.1% respectively in the total amount of the cooperatives in the two Provinces.  

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