Teaching Comparative Government and Politics

Wednesday, May 07, 2014

Economies of scale in Communist agriculture

Long before the concept of economies of scale were described by Adam Smith, farmers and landlords knew that up to a certain point, agriculture could be more efficient. In China landlords and their relatively large farms were the players and the revolution came in part because the landlords misused their power and wealth.

After the revolution's initial land redistribution, the Communist government created large state farms and communes which offered economies of scale. The Communists promised that peasant workers would no longer be exploited. With the beginning of the Four Modernizations and the Responsibility System, families were allowed to meet quotas using small plots of public land. In the 1980s, farmers were allowed to rent land.

Now, the economies of scale and the successes of some farmers who rent lots of land (relative to the average Chinese family plot of just over an acre), means the Party and the government are reexamining agricultural policies.

Bring back the landlords

CHINA’S Communist Party has always had a problem with big landowners. In Communist culture, they are synonymous with evil… Yet when it comes to letting individual families control large tracts of farmland, Communist Party leaders are beginning to have a change of heart.

Since January last year the term “family farm” has come into vogue in the party’s vocabulary…. [A] Communist Party directive known as “document number one”… said the consolidation of household plots into family farms should be given “encouragement and support”.

As is often the case whenever party policy appears to shift in the countryside, reality on the ground had long been changing before official rhetoric began to catch up. (Peasants started dismantling Mao’s disastrous “people’s communes” before the party began formally doing so in 1982.) The exodus from the countryside has allowed entrepreneurial farmers to build up their holdings by renting land from neighbours who no longer need it…

Officials have long spoken of the virtues of scale farming, but of all the ways of achieving this—including renting land to agri-businesses or to farmers from other areas—the idea of family farms run by locals has a particularly strong appeal…

Many ordinary Chinese see the irony of party officials rushing to help an emerging class of big-scale private farmers. “He’s a little landlord,” quips a Shijiazhuang resident on seeing the expanse of ripening wheat around the farmer’s office. “He’ll be struggled against”, he jokes, alluding to the fate of landlords when Mao took over in 1949. Some 2m of them were killed.