Supermarkets now rarely deal directly with small farmers. Instead, over the past five years, a new generation of companies has emerged to supply them with food. Some of these producers, such as Chaoda, a vegetable producer that operates farms in 29 different parts of the country, have managed to lease large enough tracts of land to justify big investments.
Aisen, which runs the organic pork farm outside Shanghai, is another such business. It has been operating this stretch of land in the Nanhui district of the city for five years and now has 12 different pig farms.
To qualify as organic, the pigs are given no antibiotics in the last few months of life and receive a diet free of animal fat. There cannot be more than 2cm of fat on a piece of meat, 25 per cent less than conventional pork cuts in Chinese supermarkets. “In the big cities, customers now want to know that the meat is safe and that it is not too fatty,” says Mr Yan.
Chinese agribusinesses are also beginning to carve out an export sector, especially in labour-intensive crops such as fruit and vegetables. Exports of these have doubled over the past decade and the country is a big supplier of apple juice and garlic. Anyone tucking into the Asian salad served at McDonald's in the US will be eating snow peas produced in China.
Agribusiness may have grown quickly but it has only begun to nibble at the edges of China's vast farming base. One of the few pieces of academic research on the subject looked at 200 communities in the greater Beijing area last year and found that the farmers had been only marginally affected by the creation of supply chains for the city's supermarkets. “It is happening a little, but so far it is not a huge story,” says Scott Rozelle, a Stanford academic and one of the authors of the report.
Some researchers are optimistic that modern retailing will increase productivity by creating the conditions for the consolidation of farms and greater investment in equipment, which they hope will lead to higher rural incomes. “There are more and more opportunities for larger-scale farms to develop,” says Hu Dinghuan, a professor at the Chinese Academy of Agricultural Sciences. “Supermarkets are going to be the driving force for agriculture in China. They are going to have a huge impact on farms.”
Yet there are also concerns about the impact agribusiness will have on rural life in China, with its patchwork of tiny farms. Experts believe that farms will have to become bigger for yields to rise, yet given the ambiguous property rights in rural China, the introduction of agribusiness could open the way to further abuses of small farmers that might aggravate rural poverty and social tensions.
Farmers are not allowed to buy or sell land and, although in theory they can lease their property, many titles have never been formalised. There is huge scope in the system for local officials to make arbitrary decisions that change the terms of land use without providing adequate compensation.
Indeed, land disputes have been one of the most controversial issues in recent years and the cause of many of the thousands of violent protests that have broken out all across the country. According to the Land Ministry in Beijing, there were more than a million illegal seizures between 1998 and 2005, usually for factories or apartment buildings, and the farmers often received little or no compensation.
So far, researchers say, there have been few cases of farmers being pushed off their land to make way for commercial agriculture and larger farms. But Li Xiande, another CAAS professor, says agribusiness groups are increasingly negotiating supply contracts with the village officials who control the use of the land, rather than with the farmers themselves. “It could become a serious issue if the officials do a deal and the farmers only get a small part of the compensation,” he says.
The controversy over land rights came to a head last month when a new property rights bill was approved by the National People's Congress in Beijing. The law has been hugely divisive: proponents think it an important step towards strengthening capitalism, while leftwing critics claim it will validate the illegal land grabs of recent years. Yet the law does not change the situation for rural land ownership and legal experts say it will not give farmers much more protection against unscrupulous officials.
Another level of protection could come from farmers establishing more co-operatives, which would allow them to negotiate collectively with buyers and organise larger-scale production. However, although farming co-ops are permitted, only 7 per cent of villages have created one, according to Mr Rozelle at Stanford. “In reality, the Communist party is not so keen on other groups organising themselves.”
Tens of thousands of farmers have been elbowed off their land in recent years to make way for the country's manufacturing boom, creating a dangerous well of resentment that China's top leaders have pledged to address. The introduction of agribusiness to rural China is a test of whether Beijing really can look after the small farmer.
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