Enlightenment of Development of Japanese and Germen Agricultural Management Main Body to China

Zehong NIU, Rao CHEN*, Weimin YANG, Shilong ZHANG

1. Economics & Management School, Beijing University of Agriculture / Beijing New Countryside Construction Research Base, Beijing 102206, China; 2. Library of Beijing University of Agriculture, Beijing 102206, China

Abstract As shown in the agricultural development experience of various countries in the world, the agricultural operating entity has become an effective means to increase the agricultural production efficiency and establish a scientific management model. Promoting the continuous improvement of the modern agricultural management system is not only an important means for solving the three rural issues in China, but also a key measure to enhance China’s agricultural competitiveness. This paper introduced the basic situation of agricultural operating entities in Japan and Germany, summarized their advanced experience, and finally came up with feasible recommendations for enhancing the competitive advantages of agricultural operating entities in China.

Key words Agricultural operating entities, Japan, Germany, Experience reference

1 Introduction

According to statistics by the Food and Agriculture Organization (FAO) of the United Nations, family farms are the main component of agricultural operating entities, accounting for more than 90%. In order to adapt to the increasingly intense global competition in agriculture[1], agricultural operating entities in every country are developing in a diversified manner, such as corporate farms in the United States, agricultural legal entities in European countries, and legal entities in Japan and South Korea.

In the world, from the perspective of the proportion of the number of farms of different sizes and the proportion of the cultivated land, the number of farms is inversely proportional to the scale. The number of family farms smaller than 1 ha accounted for 89%, but the total area of their farms was only 24% of the total area. The number of farms larger than 20 ha was less than 2% of the total number of farms, but the cultivated land they operate accounted for more than 72% of the total cultivated land, especially farms larger than 50 ha operated more than two-thirds of the cultivated land. For large farms with 500-100 ha or over 1 000 ha, the proportion of their cultivated land was close to 20%. The number of medium-scale farms and the proportion of operating cultivated land were 14% and 17%, respectively, which are roughly the same[2].

2 Current development situations of Japanese agricultural operating entities

2.1 Gradual decline in the number of sales-oriented farmers and gradual expansion of the scale of individual farmersJapan implements a policy of private ownership of land, and land is not subject to restrictions of merger and sale. According to statistics, from 2006 to 2018, the number of farmers in Japan decreased from 2.88 million to 2.19 million. The Japanese government divides farmers into two categories: sales-oriented farmers and self-sufficient farmers. Among them, sales-oriented farmers are the main agricultural operating entities engaged in professional agricultural production[3]. In recent years, the Japanese government encourages rural elderly people to sell their own land, which increases the overall scale of sales-oriented farmers year by year. Farmers determined as large farmers have accounted for 36%, and the total area has took up 68% of the total cultivated land in Japan. Large-scale operation has become the main development trend and direction of sales-oriented farmers.

2.2 Differentiated managementIn Japan, there is a set of evaluation standards and management system for part-time farmers. Japan also included the age in the evaluation indicators, not just taking business and income as the only measurement standard. Principal business farmers refer to those farmers with more than half of their annual income coming from agricultural production, of which at least one labor force must be below 65 years old and engaged in agricultural production for at least two months in one year. Semi-principal business farmers are those farmers with less than half of their annual income coming from agricultural production. Like the principal business farmers, they should be below 65 years old and engaged in agricultural production for at least two months in one year[4]. By contrast, part-time farmers are those farmers who are not engaged in agricultural production for more than two months in one year and are under 65 years of old. Self-sufficient farmers with part-time work as the main form, as another type of agricultural operating entity, are characterized by low degree of specialization, small scale, and low commodity rate. The Japanese government has formulated a measurement and encouragement policy that is different from sales-oriented farmers. The planting area and the sales of agricultural products are comprehensively calculated. The larger the planting area, the higher the sales are farmers, and the relatively small planting area and the low sales are non-farmers.

2.3 Constant deepening of the degree of sideline business

From 2015 to 2018, the number of sales-oriented farmers in Japan dropped from 1.38 to 1.26 million, with a decline of 8.6%. In 2018, among the sales-oriented farmers, 244 000 farmers were principal business farmers, 239 000 farms were semi-principal business farmers, and 777 000 farms were part-time farmers, separately accounting for 19.3%, 18.9% and 61.6%. In the same period of 2015, the number of sideline farmers was 806 000; although the total number of sideline farmers dropped by nearly 30 000 in 2018, their proportion increased by nearly 3%, making the proportion of sideline businesses in Japan’s agriculture show a rising trend year by year. In this sense, traditional agriculture cannot attract young labor, lacks follow-up development momentum, and agricultural competitiveness is restricted. With the decline in the proportion of traditional planting industry, engaging in agricultural production will not obtain objective production profits[5].

2.4 Developed socialized service systemAnother distinguishing feature of Japanese agriculture is the agricultural socialized production and service system in which the government and farmers are highly integrated. On the one hand, it is the agricultural knowledge and education guidance system guided by the government; on the other hand, it is the operation and management guidance system guided by the Japan Agricultural Cooperatives (JA)[10]. These two systems provide socialized services for all aspects of the Japanese agriculture chain from production to sales and all aspects of daily life, which effectively promote the sustainable development of Japanese agriculture and rural areas.

2.5 Implementation of production and operation and low-price subsidy policiesThe Japanese government’s policy inclination and protection in the agricultural sector is a significant factor in maintaining its high agricultural competitiveness. In order to mitigate the impact of income reduction and implement subsidies and compensation policies for adverse production conditions, the Japanese government established a household income compensation system in 2011. The policy mainly included the soybean and maize. According to the identification standards established for rural households, those who are identified as village operating farmers and agricultural employees will receive government subsidies and assistance from the government[9]. When the production cost of the product is higher than the market price, the government will provide subsidies to make up for the loss of farmers.

3 Current development situations of German agricultural operating entities

As a highly developed country, Germany has very small proportion of agriculture in the national economy, less than 5%. Therefore, German implements an elite selection system for farmers, and establishes a complete set of vocational access system, and sets up special vocational education and training courses for farmers. Every year, tens of thousands of farmers receive professional training, so the overall quality of German agricultural employees is relatively high. Besides, German agricultural production and management organizations have distinctive decentralization features, and the most representative one is family farms.

3.1 Small and medium-sized family farms taking up a major portionGermany adopts a market-oriented policy of free trade in agricultural land, which effectively lowers the access threshold for agricultural operations. Since 2013, small family farms accounted for about 65% of German family farms, medium-sized farms accounted for about 27%, and large farms accounted for only 8% of the total number of family farms, indicating that small and medium-sized farms are the main force of family farms[6].

3.2 High degree of farm segmentationFrom the perspective of management, family farms are divided mainly into two categories: professional and part-time. In professional family farms, in terms of degree of specialization, family farmers can be divided into professional farms and semi-professional farms. Professional family farms are those farms with 80% of their income in the past year coming from the farm’s operating income; part-time farms are farms with their major income coming from outside the farm’s own operations. Principal business family farms are the main component of family farms, accounting for more than 60% of the total; sideline family farms account for less than 40%. German family farms are well-known for their high degree of specialization. Most family farms are only engaged in one or two main businesses, mainly engaged in traditional farming and animal husbandry, a small part of family farms are engaged in flower planting, and some are engaged in rural tourism[7]. The high degree of subdivision and specialization of such type of operation has given full play to the division of labor and coordination capabilities of family farms, and has also greatly improved production efficiency and service capabilities.

3.3 Modernization of family farm managementAs early as in the 1980s, Germany had realized agricultural modernization in a broad sense, including the high application of agricultural machinery, the full coverage of chemical fertilizers and power facilities. Besides, it combines modern western business management ideas with agricultural production. In addition, combined with Germany’s strict agricultural practice system, German agricultural education can be divided into two categories: one is to train scientific and theoretical talents through universities to engage in scientific research and management; the other is to become professional farmers through vocational education and engage in first-line agricultural production activities. Therefore, German agricultural education has cultivated high-level talents at different levels. Combined with German high-level agricultural technology, the German family farms have reached a highly modernized level.

3.4 Improving the agricultural land contractual management rights and strengthening agricultural land ownership management and protectionThe German land system reform focused on guaranteeing the rights of land-use rights owners to the greatest extent, limiting excessive interference by land owners in their normal operations, and clearly dividing contracting rights to protect the legitimate rights and interests of all stakeholders. With reference to the successful experience of Germany, China can clearly divide the rights and responsibilities of contracting rights, and guarantee the realization of management rights in accordance with the law, and properly make agricultural policies tilt to the entities engaged in first-line agricultural production[8]. Germany strengthened agricultural land management through a series of policy formulations, including authorization and responsibility approval, strict planning, use restrictions, and the red line of agricultural land area. On the one hand, it makes the rights of the land clear and reduces the interest disputes caused by the gray boundary; on the other hand, it ensures the agricultural land use and realizes the sustainable use of the agricultural land.

4 Implications the development of agricultural operating entities in Japan and Germany to China

Germany and Japan have their own characteristics in the development of agricultural operating entities. Family farms dominate the main agricultural business in Germany, while the Japanese Agricultural Cooperatives play a key role. Through the special status, the Japan Agricultural Cooperatives not only organize the sale and lease of agricultural production materials and the purchase and sale of agricultural products, but also provide farmers with financial loans, insurance and medical care, pension, education and other services. Both types of entities have important reference value for China’s agricultural development.

4.1 Making clear property rights to promote the development of agricultural landThe rights and responsibilities of contracting rights need to be clearly determined, and the realization of management rights should be guaranteed in accordance with the law. At the same time, agricultural policies should be appropriately tilted to the entities engaged in first-line agricultural production[8]. In addition, it is necessary to establish a strict land registration and transfer system, and integrate cadastral management with farmland transfer, use control and development planning, to promote moderate scale management of farmland and sustainable agricultural development.

4.2 Properly expanding the business scale and making innovation of the operation and management systemUnder the premise of insisting on household contract management of land, China should pilot the transfer of agricultural land to large-scale and collectivized large-scale operations, form a moderately large-scale operation, and stress the development of certain intensive and high-level family farms. Besides, it is recommended to actively make innovation in the mode of common development of many kinds of operating entities. At the same time of further strengthening the family operating entities, it is recommended to establish a socialized and compound agricultural management system.

4.3 Increasing the efficiency of land transfer, to form a moderately large-scale productionIt is recommended to provide policy support and financial credit, to promote the land transfer, help the transfer of rural surplus labor to urban areas and provide labors of the right age to urban areas. In addition, it is recommended to promote the decline of the average age of agricultural employees, realize the improvement of the quality of agricultural production personnel, the implementation of moderately large-scale production, as well as the improvement of the comprehensive competitiveness of agriculture.

4.4 Accelerating the transformation of agricultural socialized services and promoting the development of new operating entitiesAt the same time of continuing to strengthen the social service organization, it is recommended to accelerate the exploration of the construction of operational service institutions, and promote the establishment of a comprehensive service system that combines and coordinated public services provided by the government, cooperative services composed of operating entities, and market services provided by capital markets, to promote the transformation of the agricultural service system in an all-round way.