The rationale for the development of associations controlled by farmers is strong and further gaining momentum, according to a new World Bank Report released in Beijing today.

The report China: Farmers Professional Associations, Review and Policy Recommendations focuses on groups with economic functions, aiming to increase the incomes of their members by enhancing their effectiveness or efficiency in agricultural production and/or marketing.

China's membership in the WTO, changing consumer demands towards higher-value products, and a shift towards integrated market chains are all forces driving a rapid and profound change of the agricultural sector. While the opportunities for China's agriculture are substantial, enormous challenges exist for the hundred millions of small-scale farming households to effectively participate in, and benefit from these transformations.

"A key solution is for farmers to take collective action by forming their own groups or associations that assist them in meeting these challenges," said Sari Soderstrom, the World Bank’s Rural Sector Coordinator for China. Government support for farmer-controlled groups has increased, especially since the beginning of this decade, and significant progress in the development of farmer associations has been made. Nevertheless, while the vast majority of farmers around the World are organized in farmer cooperatives or other forms of farmer-controlled associations, in China only a few percent of farmers are members of such groups.

"Further support from the Government it crucial. It needs to find the appropriate role in what is essentially private initiatives and activities, and is faced with the challenge of further developing a conducive legal, regulatory and policy framework," said Achim Fock, World Bank Senior   Economist for Rural Development and one of the authors of the Report. The new law on “Farmers' Cooperative Economic Organizations," which is being prepared by the National People's Congress, could be the single most important factor for the sustained success of farmer associations in China.

Whether the law will indeed play that role depends, not the least, on an effective campaign for its implementation. "There is a need to publicize the law and promote a common understanding of farmer associations and farmer cooperatives, e.g. how they can be defined, how they should operate, how they are formed and governed, and what they can be expected to achieve or not to achieve," the report says.

While direct financial support might not the most effective use of public resources and, if  wrongly applied undermines the development of farmer-controlled associations, there are many areas in which the Government can help also through active interventions. In addition to the publicizing and awareness-raising, this includes training to farmers, farmer associations and local Government officials; business-services; applied research; and technical assistance, e.g. through so-called "promoters" or "facilitators." The Government might partly finance these activities, but a diversity of delivery mechanisms could complement each other, including research institutes, private businesses, local consultants, Civil Society Organization, and existing associations.

(China Development Gateway October 19, 2006)