Chinese authorities have implemented somewhat liberal reforms with respect to rural civil society organizations in issuing the he Law on Professional Farmers' Cooperatives
[LPFC] on October 31, 2006 (effective
on July 1, 2007).  The law creates a channel for farmers to register and obtain legal status for organizations that they create to protect their collective economic interests.  The LPFC requires farmers to register professional farmers' cooperatives with the Ministry of Industry and Commerce, but does not subject them to the sponsorship requirement that Chinese authorities use to control the growth of civil society organizations such as social organizations or non-governmental, non-commerical enterprises.

Chinese farmers face significant challenges as a result of changing consumer tastes, economic restructing, and increased international competition. Small-scale farming is becoming less productive.  Farmers face pressure to engage in larger scale production.  Farmers' ability to organize themselves collectively to defend their interests is an essential component for them to be able to respond to these changes, notes the October 19, 2006 World Bank report, China – Farmers Professional Associations: Review and Policy Recommendations.

Many farmer organizations already exist in China.   The World Bank report cites 2003 Chinese statistics showing that about 7 million rural households, about 2.9 percent of total farming households, belong to some type of organization.  Farmer organizations allow their members to pool assets for the purpose of jointly purchasing inputs in bulk (think of Costco), and provide technical assistance to their members.  The World Bank report notes that many of these organizations have social and political dimensions as well, serving as a vehicle for farmers to address land disputes or conflicts with local authorities. 

Not all farmer organizations represent the interests of the farmers who belong to them. The World Bank report notes that "[t]he
initiative for the
creation of farmer organizations has often been made by government
agenices rather than farmers themselves." They include "[e]verything from empty
shells and government-dominated set-ups to real, farmer-controlled
associations," according to comments made by Achim Fock, a senior rural economist with the Bank and one of the main
authors of the study, cited in the October 2006 China Development Brief. Tim Zachernuk, co-author of
the study and a consultant to the China-Canada Agricultural Programme,
notes that many PFCs are in fact created by agro-processing industries
receiving strong backing from local governments who see them as tools
for agricultural modernization.

Farmers' organizations lack clear legal status under prevailing Chinese law.  They are subject to conflicting national, provincial, and local registration rules.  Many are unregistered, or registered with a conflicting range of different ministries.  The World Bank report notes that "[t]he lack of a clear legal status is one of the main constraints on
the development of farmer professional associations. . .  Without legal
status the organizations lack access to credit, cannot enter into
legally binding contracts, and there is no legal standing to the mutual
obligations and responsibilities of associations and their members." 

Central Chinese authorities have emphasized the need to support and
develop professional farmers cooperatives (农民专业合作社) as a component of
their efforts to address rural issues. (See prior blog entries on January 29 and February 7).  Local authorities have undertaken different experiments with regard to establishing standardized channels for farmers' organizations to register and gain legal status.  See, for example, the analysis by the Congressional-Executive Commission on China regarding the 2004 provincial reforms enacted by Zhejiang authorities.

On October 31, 2006, Chinese authorities moved to create a standarized national framework for the registration of farmer organizations, in passing the Law on Professional Farmers Cooperatives
[LPFC] that Chinese authorities, effective
on July 1, 2007.  The LPFC requires farmers to register professional farmers'
cooperatives with the Ministry of Industry and Commerce, but does not
subject them to the sponsorship requirement that Chinese authorities
use to control the growth of civil society organizations such as social
organizations or non-governmental, non-commerical enterprises.

The LPFC appears aimed at allowing farmers to organize to protect their economic, as opposed to political, interests.  It defines professional farmers cooperatives {PFCs] as associations of at least 5 producers of the same type of agricultural product, providers or users of the same agricultural product or service.  The LPFC defines the aim of PFCs as providing information or services related to agricultural production.  National People's Congress (NPC) delegates say that the central government's attitude toward farmer
organizations remains "cautious" and that central officials only
support these reforms because they have concluded that these
cooperatives are economic in nature, and will not become involved in
political issues, as noted in the Civil Society section of the 2006 Annual Report by the Congressional-Executive Commission on China.

The LPFC generally requires that PFCs use a one-person, one-vote principle for the determination of internal affairs.  But it does allow PFCs to assign additional voting rights of up to 20 percent for any individual member who contributes substantial capital to the PFC or conducts significant transactions with it. 

Whether the LPFC will help to address China's rural problems depends on
whether PFCs are permitted to evolve as meaningful representatives of
farmers' own interests, as opposed to those of local authorities. The
World Bank report recommends "[e]ncouraging and enabling the development of
organizations owned and controlled by farmers themselves . . . The
development of farmer-owned and -controlled organizations might first
begin within small localities but can eventually lead to federations of
organizations to promote the interests of members on a larger scale and
at higher levels.  However, such federations should be allowed to
develop bottom-up, in response to the needs of the organizations and
members themselves, rather than be imposed from [the] top down."