ABSTRACT
Against the backdrop of rural revitalization, China’s new agricultural management system has developed rapidly, making its institutional and policy evolution, as well as its mechanisms for actor interaction, important issues worthy of close attention. This paper examines the institutional and policy evolution of China’s new agricultural management system and the mechanisms of interaction with cooperatives. The study finds that China’s new agricultural management system has gradually taken shape through the long-term transformation of agricultural management institutions, and that its policy evolution has been characterized by a shift from the cultivation of single actors to multi-actor coordination and systematic institutional development. Meanwhile, cooperatives play an important role within the new agricultural management system. They are not only a key organizational vehicle linking smallholders with modern agriculture but also develop multi-level and multi-form collaborative mechanisms through interactions with agricultural enterprises, industry organizations, and government, thereby jointly promoting the operation and improvement of the modern agricultural management system. This paper contributes to understanding the developmental logic of China’s new agricultural management system from the dual perspectives of institutional evolution and actor interaction and provides a reference for further improving the agricultural management system in the context of rural revitalization.
Keywords: rural revitalization; new agricultural management system; farmers’ cooperatives; institutional-policy evolution; interaction mechanisms
INTRODUCTION
The rural revitalization strategy represents an institutional summation of China’s long-term exploration of agricultural and rural development. China’s exploration of rural revitalization can be broadly divided into three stages. After the founding of the People’s Republic of China, rural areas assumed the important function of supporting urban industrial accumulation in service of the overall strategy of prioritizing industrial development. Following the implementation of the Household Responsibility System in 1978, agricultural productivity improved significantly, and surplus rural labor began to move into cities and non-agricultural sectors. After 2005, the construction of the “new socialist countryside” further prompted the state to pay greater attention to rural underdevelopment and to improving farmers’ living conditions. These explorations, at different stages, respectively emphasized industrial accumulation, improvements in production efficiency, and the enhancement of rural conditions, but they did not fundamentally resolve the problems of unbalanced and inadequate agricultural and rural development.
The Nineteenth National Congress of the Communist Party of China stated that the principal contradiction facing Chinese society had been transformed into that between unbalanced and inadequate development and the people’s ever-growing needs for a better life. Accordingly, agricultural and rural development shifted from an emphasis on aggregate expansion to greater attention to structural optimization, quality improvement, and balanced development. It was in this context that the rural revitalization strategy was formally proposed and became the overarching guideline for advancing agricultural and rural modernization in the new era.
Against the backdrop of the comprehensive advancement of the rural revitalization strategy, building an agricultural management system that meets the requirements of development in the new era has become an important issue in promoting agricultural and rural modernization. For a long time, smallholder family farming has been the basic form of agricultural operation in China. The Opinions on Promoting the Organic Linkage between Small Farmers and Modern Agricultural Development clearly state that smallholder family farming will continue to exist for a relatively long period of time. Therefore, the key to achieving agricultural and rural modernization is not to simply replace smallholder farming with large-scale operations, but to promote the effective integration of small farmers into modern agricultural development through new organizational forms and service systems. The challenge of integrating smallholders into modern agriculture is closely connected to a broader transformation in China’s agricultural development goals. With the further implementation of the rural revitalization strategy, the goals of agricultural development have expanded beyond output growth to include improving the quality of agricultural products, enhancing production efficiency, promoting industrial integration, and increasing farmers’ incomes. This shift requires the traditional model of fragmented agricultural operation to gradually transform toward a more organized, specialized, and moderately scaled form of operation. Taken together, these two developments explain why new agricultural business entities have become increasingly important. On the one hand, they provide institutional and organizational mechanisms through which dispersed smallholders can be connected to modern agriculture. On the other hand, they respond to the growing demand for more specialized, organized, and moderately scaled forms of agricultural operation.
Within this context, the cultivation of new agricultural business entities has been positioned as a key approach to restructuring China’s agricultural operation system The Opinions on Accelerating the Establishment of a Policy System to Foster New Agricultural Business Entities, issued in 2017, proposed accelerating the formation of a three-dimensional and composite modern agricultural management system based on household farming, linked by cooperation and association, and supported by socialized services. The Strategic Plan for Rural Revitalization (2018–2022) further emphasized the need to uphold the foundational position of household farming in agriculture and to promote the coordinated development of household operations, collective operations, cooperative operations, and enterprise-based operations. Taken together, these policy arrangements indicate that the rise of new agricultural business entities represents an important pathway for overcoming the limitations of smallholder farming and enhancing the competitiveness of the agricultural industry under the rural revitalization strategy.
Among various types of new agricultural business entities, farmers’ cooperatives occupy a distinctive position. First, cooperatives are characterized by voluntary association, democratic management, and mutual assistance among members. These features are highly compatible with the reality of China’s smallholder-based household contract farming system. Through cooperatives, dispersed small farmers can be effectively organized, thereby strengthening their ability to enter the market, participate in the division of labor in modern agriculture, and share in the value-added benefits of agricultural industrial development. Second, within a development pattern in which family farms, leading agribusiness enterprises, socialized service organizations, and other actors coexist, cooperatives also play an important connecting role. They link production with the market, and they also connect ordinary farmers with other new agricultural business entities. In this sense, cooperatives serve as an important bridging actor within the new agricultural management system. Against this background, this paper takes the rural revitalization strategy as its historical context. Based on a review of the institutional transformation and policy evolution of China’s new agricultural management system, this paper further examines the interaction mechanisms between cooperatives and other new agricultural business entities to better understand the institutional value and practical role of these entities in China’s agricultural modernization.
INSTITUTIONAL EVOLUTION OF CHINA’S AGRICULTURAL BUSINESS ENTITIES AND FARMERS’ COOPERATIVES
Evolution of China’s agricultural business entities
The evolution of China’s agricultural business entities can be roughly divided into three stages: the pre-reform period (1949–1978), the post-reform period (1978–2012), and the new era (2013–present).
From the founding of the People’s Republic of China to the early stage before reform and opening, the core objective of rural governance was to carry out socialist transformation in the countryside and incorporate rural China into the national modernization system. Under the planned economy, agricultural business entities evolved from smallholder households based on private landownership, to agricultural producers’ cooperatives based on collective ownership, and then to the people’s commune.
The land reform of 1950–1953 transformed land ownership from feudal landlord ownership to individual peasant ownership, and dispersed peasant households based on private ownership of the means of production became the most fundamental units of agricultural production and operation (Zhang, Tsai, & Chung, 2024). The agricultural collectivization movement of the 1950s marked another major transformation of the basic rural management system after land reform (Sreedhar, 1969). By the end of 1956, the socialist transformation of agriculture had been basically completed. In this process, the organizational form of agricultural operations shifted from privatized, dispersed smallholder households to mutual-aid teams, elementary cooperatives, and advanced cooperatives. Through the collectivization movement, the previous household-based management model was transformed into a cooperative collective management model (Shen, 2014). Although socialist cooperatives were, to some extent, compatible with the level of agricultural productive forces at the time, they could not meet the strategic needs of national industrialization. To realize this developmental objective, the movement to establish people’s communes was launched nationwide in 1958. Production teams, as micro-level economic organizations within the people’s commune system, became the most fundamental and principal entities of agricultural production and operation under that system (Xin, 2012).
Although the people’s commune system initially laid an industrial foundation through agricultural accumulation, it could not conceal the low efficiency of resource utilization and poor organizational economic performance under the system. Production and management activities relied on coercive administrative and political means; farmers lost autonomous decision-making power in production and management, and their enthusiasm for production was seriously undermined.
After reform and opening up, with the implementation of the Household Responsibility System, the people’s commune system gradually disintegrated. In the subsequent period, agricultural business entities evolved from household farming based on the “separation of two rights” and the “dual-layer management” system under the Household Responsibility System into a pattern characterized by the coexistence of multiple actors under agricultural industrialization. The institutional core of the Household Responsibility System lies in the land rights arrangement of the “separation of two rights” and the “dual-layer management” system combining unified and decentralized operations (Liu, 2019). The “separation of two rights” refers to the separation of collective land ownership from household land contract and management rights: land ownership belongs to the collective, while rural households possess contractual management rights and may contract collectively owned land on a household basis.
The establishment of the Household Responsibility System once again made independently operating farm households the most fundamental entities of agricultural production and operation in China. The “dual-layer management” system comprises two levels: unified collective management and decentralized household management. While farming is conducted at the household level, collective economic organizations mainly large-scale agricultural infrastructure, thereby coordinating individual and collective interests (Yi, 2023). This reform not only greatly expanded farmers’ autonomy but also liberated and developed rural productive forces, promoted substantial increases in agricultural output, and improved farmers’ living standards (Feng, Ren, & Zhang, 2019). The Household Responsibility System significantly increased farmers’ incentives to produce. However, with the development of agricultural production and the advance of rural marketization, the organizational form of household farming came to face increasing challenges, especially in establishing effective market linkages (Xu, 2008).
In 1997, the Fifteenth National Congress of the Communist Party of China emphasized the need to actively promote agricultural industrialization and the formation of an agricultural industrial system, so as to realize the transformation of agricultural organizational forms from traditional to modern ones. Thereafter, agricultural industrialization was promoted nationwide. Market-oriented agricultural industrialization became the direction for improving and further developing the Household Responsibility System.
As agricultural operations became increasingly marketized and socialized, linkages among different economic organizations grew closer, and various agricultural industrialization organizations emerged, gradually becoming the principal organizational forms of rural agricultural production and management. Agricultural industrialization mainly took four basic organizational forms: the leading-enterprise-driven model, the intermediary-organization-driven model represented by cooperative economies, the market-driven model, and other forms (Niu, 2002). Agricultural production and management institutions explored and innovated around the contradiction between small-scale household production and the large market. Agricultural industrialization became an effective pathway: by linking household farming with modern operations through various benefit-linkage mechanisms, it overcame the disadvantages of dispersed, small-scale household farming while also leveraging the advantages of socialized and industrialized agricultural production. This represented an innovation and development in agricultural management institutions.
Since the Nineteenth National Congress of the Communist Party of China, China has entered a new era of socialism with Chinese characteristics. As the principal contradiction in society changed, unbalanced urban-rural development and inadequate rural development became major issues. Since the beginning of the twenty-first century, the processes of industrialization and urbanization have accelerated, and large numbers of rural laborers have left the countryside. Along with the “hollowing out” of the rural population came the multiple “hollowing out” of rural population, land, and industries. As a result, the questions of “who will farm” and “how farming will be carried out” have become increasingly salient. Cultivating new agricultural business entities has therefore become an important policy orientation for advancing agricultural modernization and laying the economic foundation for rural revitalization.
At the 2013 Central Rural Work Conference and in the 2013 No. 1 Central Document, new agricultural business entities were emphasized and systematically deployed, and the term “new agricultural business entities” appeared in an official document for the first time. Thereafter, such entities gradually became the most important agricultural production and operation organizations in rural areas. Farmers’ cooperatives, leading agricultural enterprises, family farms, and specialized large households are the most basic and important types of new agricultural business entities (Zhong, 2018). These entities are capable not only of realizing integrated development among organizations within the same industry, but also of facilitating integration across different industries. Organizational forms built upon the basic model of “agricultural enterprise + farmer,” such as “agricultural enterprise + farmers’ cooperative + farmer,” “agricultural enterprise + family farm,” and “agricultural enterprise + base + farmer,” represent optimized innovations that have promoted the integration of different agricultural organizations within agricultural industries (Lai, Du, & Hao, 2021).
Evolution of farmers’ cooperatives
Since the reform and opening-up, China has attached great importance to the development of cooperatives. Cooperatives are important actors in the rural revitalization strategy. Since the beginning of this century, a series of meetings and policy documents on agriculture, rural areas, and farmers have discussed the development of farmers’ cooperatives and set out relevant policy requirements, all of which are reflected in successive No. 1 Central Documents. The policy evolution of Chinese farmers’ cooperatives can be roughly divided into three stages (Liu, Zhang, & Wang, 2020).
The first stage, from 1949 to 1978, saw cooperatives transformed from production and management organizations into instruments of national strategy. In the early years of the People’s Republic of China, agricultural productivity was extremely low. In order to develop agriculture and improve production efficiency, the state launched the agricultural collectivization movement, during which supply and marketing cooperatives, as well as credit cooperatives, developed rapidly. However, in the later part of this stage, with the establishment of policies of “unified production, unified procurement, and unified sales” for agricultural products and agricultural inputs, supply and marketing cooperatives and credit cooperatives became policy tools serving the state’s industrialization strategy. Ultimately, the establishment of the people’s commune marked the end of agricultural cooperation in its earlier form. During this period, the main function of cooperatives was to support the development of the collective economy and to provide grain and financial support for the state’s heavy industry.
The second stage, from 1979 to 2006, witnessed a transition from the restoration of commercial functions to comprehensive market-oriented services. The Household Responsibility System brought the people’s commune system to an end and marked the beginning of rural reform. In 1982, China’s first No. 1 Central Document restored the commercial service functions of rural supply and marketing cooperatives. In the subsequent No. 1 Central Documents from 1983 to 1986, cooperatives were redefined as “regional cooperative economic organizations.” Thereafter, cooperatives entered a period of self-exploration and development, gradually transforming toward marketization. The policy of a “30-year land contract period” and policies promoting agricultural industrialization spurred the emergence of various specialized cooperatives. During this stage, cooperatives served household farming and the rural economy through market-oriented mechanisms, increased farmers’ incomes, and promoted the development of diverse cooperative forms. At the same time, however, cooperative development also faced a range of problems, including a lack of legal constraints, weak internal management, and irregular operations.
The third stage, from 2007 to the present, has seen cooperatives evolve from specialized farmers’ cooperative organizations into new agricultural business entities. The promulgation of the Farmers’ Specialized Cooperatives Law in 2007 marked the beginning of the government’s use of legal means to regulate and supervise the operation of farmers’ specialized cooperatives. The Law on Farmers’ Cooperatives specifies matters such as methods of capital contribution and the rights and obligations of members, thereby standardizing cooperative operations and management. The 2014 No. 1 Central Document positioned cooperatives as “new agricultural business entities,” and in 2016 they were further designated as “new agricultural service entities,” thereby confirming their dual functions in both operation and service provision. The revised Law on Farmers’ Cooperatives promulgated in 2018 highlighted the necessity of building standardized cooperatives and establishing cooperative unions, so as to promote the linkage between new agricultural business entities and modern agriculture and extend agricultural industrial and value chains. At this stage, the major functions of cooperatives lie in linking smallholders with modern agriculture, promoting moderately scaled agricultural operations, facilitating industrial integration, and developing modern agriculture.
POLICY SYSTEM OF CHINA’S NEW AGRICULTURAL BUSINESS ENTITIES
China’s policy system for new agricultural business entities has gradually taken shape and continuously improved amid sustained agricultural modernization and the comprehensive implementation of the rural revitalization strategy. The earliest official documents concerning modern agricultural business entities in China date back to the 2007 No. 1 Central Document, and policy support for the development of new agricultural business entities has continued through 2025. The formation of China’s policy system for new agricultural business entities can be roughly divided into three stages.
The first stage was the initial stage (2007–2012), in which policy focused on fostering different types of agricultural business entities to meet the needs of modern agricultural development. The 2007 No. 1 Central Document explicitly proposed the development and cultivation of modern agricultural business entities and encouraged the development of specialized farming and breeding households, farmers specialized cooperative organizations, leading enterprises, and collective economic organizations. In the same year, the Law of the People’s Republic of China on Farmers’ Specialized Cooperatives was promulgated, providing legal protection for the development of cooperatives. Thereafter, the Report to the Seventeenth National Congress of the Communist Party of China, along with the 2008 and 2010 No. 1 Central Documents, continued to emphasize agricultural industrialization, the construction of cooperative organizations, and the enhancement of the level of organization in agricultural production and operation. By 2012, the No. 1 Central Document further proposed promoting the organizational and specialized development of agricultural business entities by establishing demonstration cooperatives, encouraging cooperatives to establish processing enterprises or take shares in leading enterprises, and fostering specialized farming households and major agricultural machinery operators. During this period, although the concept of a “new agricultural management system” had not yet been fully articulated at the policy level, institutional groundwork had already been laid around such new business entities as cooperatives, specialized large households, and leading enterprises, thereby paving the way for the subsequent systematic construction of the new system.
The second stage was the maturation stage (2012–2017), characterized by a shift in policy support from entity cultivation to the construction of a “new agricultural management system.” The Report to the Eighteenth National Congress of the Communist Party of China in November 2012 first proposed the concept of the new agricultural management system, marking a shift in policy focus from support for individual entities to the overall restructuring of agricultural management institutions. The 2013 No. 1 Central Document, for the first time, defined the scope of new production and management entities, and in the same year, the Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform further proposed “accelerating the construction of a new agricultural management system.” From 2014 to 2017, successive No. 1 Central Documents continued to deploy policies around scale management, the cultivation of business entities, the agricultural socialized service system, and the reform of supply and marketing cooperatives, gradually forming a relatively complete policy framework. In particular, the 2017 Opinions on Accelerating the Establishment of Policy Systems for Fostering New Agricultural Business Entities systematically integrated support policies in such areas as talent, infrastructure, and fiscal and taxation measures, and became an important policy document for the development of new agricultural business entities. The core change in this stage was that policy no longer merely supported the development of several categories of business entities in isolation, but instead treated the new agricultural management system as an integrated whole, thus promoting a transition from fragmented policy support to systematic institutional construction.
The third stage is the deepening stage (2018 onward), characterized by the gradual improvement, under the rural revitalization strategy, of a policy system for agricultural business entities adapted to the features of the new era. The 2018 No. 1 Central Document, namely the Opinions on Implementing the Rural Revitalization Strategy, proposed cultivating new agricultural business entities and emphasized coordinated cultivation and support for smallholders, marking the formal embedding of this policy system within the rural revitalization strategy. The 2019 No. 1 Central Document proposed focusing on family farms and farmers’ cooperatives in cultivating various types of new business entities; the 2020 No. 1 Central Document further proposed cultivating agricultural industrialization consortia and embedding smallholders into agricultural industrial chains through such means as contract farming, shareholding dividends, and trusteeship services; and the 2021 document explicitly proposed implementing a family farm cultivation plan and improving the quality of farmers’ cooperatives.
Policies from 2022 to 2023, while continuing to support family farms, farmers’ cooperatives, and leading enterprises, placed greater emphasis on coordination and upgrading among different entities, for example, by supporting family farms in organizing cooperatives and enabling cooperatives to establish enterprises in accordance with development needs, while also promoting common income growth among smallholders. In the 2024 and 2025 policy documents, policy further emphasized taking smallholders as the foundation, new agricultural business entities as the focus, and socialized services as the support, while accelerating the development of a high-quality contingent of agricultural producers and operators suited to modern agriculture.
The Plan for Comprehensive Rural Revitalization (2024–2027) more explicitly proposes establishing and improving a three-dimensional, compound modern agricultural management system based on household farming, linked through cooperation and association, and supported by socialized services. This shows that the current policy objective regarding China’s new agricultural business entities has evolved from supporting individual types of business entities to forming, on the basis of household farming, a modern agricultural management system that can balance efficiency enhancement and farmers’ income growth through cooperation, association, and the construction of socialized service systems.
INTERACTION MECHANISMS BETWEEN COOPERATIVES AND OTHER NEW AGRICULTURAL BUSINESS ENTITIES
Cooperatives are an important component of China’s new agricultural business entities and a key vehicle linking smallholders with the modern agricultural management system. Compared with agricultural enterprises, family farms, and other agricultural business entities, the distinctiveness of cooperatives lies in their ability to organize dispersed farmers, integrate factors of production, and connect with market demand, thereby embedding large numbers of smallholders into a broader agricultural production system. For this reason, cooperatives serve as important hubs through which new agricultural businesses achieve resource integration, interest linkage, and functional complementarity. Focusing on this feature, this section examines the interaction mechanisms among cooperatives, agricultural enterprises, industry organizations, and government and social forces to reveal the important role of cooperatives within the new agricultural management system.
Interaction mechanisms between cooperatives and agricultural enterprises
Among the various interactions involving cooperatives, the one between cooperatives and agricultural enterprises is the most fundamental. Agricultural enterprises usually control capital, technology, and market channels, whereas cooperatives undertake the functions of organizing farmers, coordinating production, and linking grassroots business entities. Under conditions where smallholders remain the basic unit of agricultural operation, the interaction between cooperatives and agricultural enterprises effectively provides smallholders with a pathway to be embedded in modern agricultural industrial chains. The interaction between cooperatives and agricultural enterprises is manifested in the model of “agricultural enterprise + agricultural cooperative + farmer,” which, depending on differences in dominant position, can be further subdivided into four types: enterprise-led cooperatives, cooperatives jointly organized by farmers and enterprises, cooperatives independently established by farmers and then cooperating with enterprises, and cooperatives independently established by farmers that further set up processing enterprises (Yuan, 2013). The differences among these types are mainly reflected in the allocation of control rights, the composition of farmers’ incomes, and the distribution of risks.
In the enterprise-led cooperative model, the company occupies the dominant position, and the cooperative essentially becomes the enterprise’s raw material base and workshop for primary product production. The company controls production planning, profit distribution, and operational processes, while providing support through inputs, technical guidance, working capital, and product procurement. Farmers mainly participate in production as contracted laborers and are paid on a piece-rate basis. The advantage of this model is that enterprises can effectively control product quality, supply scale, and delivery time, while farmers do not bear sales risks and can enjoy relatively stable income expectations. However, its limitations are equally obvious: the cooperative's organizational functions are significantly weakened, decision-making power and profit distribution are largely controlled by the company, and although farmers are incorporated into the industrial chain, they lack genuine organizational control and bargaining power.
The model in which farmers and companies jointly organize a cooperative reflects a relatively strong feature of interest linkage between the cooperative and the enterprise. Compared with the previous model, its key change lies in the fact that farmers participate in cooperative governance through shareholding and no longer rely solely on wage income but are also able to share part of the production profits. Although the company still plays a leading role in input supply, technical services, financial guarantees, and product procurement, the relationship between the cooperative and the enterprise has shifted from unilateral control to a certain degree of joint governance. This model not only helps enterprises maintain control over quality and supply stability but also expands farmers’ opportunities for profit sharing and participation in decision-making. However, the company’s operational logic, which is oriented toward market and consumer demand, does not always fully coincide with farmers’ goals of maximizing income, and this contradiction may affect the stability of the cooperative relationship.
When farmers independently establish cooperatives and collaborate with companies, the cooperatives begin to reclaim their dominant position and become independent actors representing farmers’ interests in negotiations with enterprises. In this case, the cooperative is no longer a subordinate production department of the enterprise but instead forms an interest-based alliance with the enterprise through commodity contracts. Unlike the long-term contractual relationships in the previous two models, this type of cooperation is often based on annual contracts, and both cooperatives and enterprises retain the flexibility to choose other trading partners. As a result, the cooperative’s voice, bargaining power, and operational autonomy are significantly enhanced, and farmers’ income sources expand from labor remuneration to the full profits derived from agricultural production. At the same time, however, the cooperative must directly confront market fluctuations and uncertainties in production and operation, and the market and production risks borne by farmers increase accordingly.
In the model in which farmers independently establish cooperatives and subsequently set up processing enterprises, the cooperative's dominance is substantially strengthened. The cooperative is no longer confined to cooperation with enterprises; by establishing processing enterprises, it extends from the production link into the processing link, replaces functions previously performed by enterprises, and forms a more complete chain from production to processing and then to sales. Cooperative member households participate in establishing processing enterprises through investment, thereby assuming dual identities as producers and investors. Their income sources also expand from returns on primary products to broader production and processing profits. This model helps break enterprises’ monopolies over gains from processing agricultural products and promotes farmers’ production toward greater specialization, standardization, and scale. However, realizing this model requires relatively high levels of organizational capacity and capital accumulation on the part of cooperatives; it represents a potential evolutionary direction for cooperatives rather than the mainstream pattern at present.
Interaction mechanisms between cooperatives and industry organizations
As ties between cooperatives and agricultural enterprises deepen, the pursuit of profit maximization by both parties may also give rise to problems such as higher transaction costs, aggravated information asymmetry, and declining market efficiency. Against this background, industry organizations have begun to intervene as third-party coordinators, giving rise to the organizational model of “industry association + agricultural enterprise + agricultural cooperative + farmer” (Yang, Shang, & Hu, 2015). In this model, industry organizations do not directly participate in production and operation; rather, they improve the conditions of interaction among cooperatives, enterprises, and farmers by providing information and coordinating relationships. Industry associations mainly provide technical guidance and policy consultation to enterprises and cooperatives, conduct market research, regulate business behavior, coordinate prices, and play an important role in resolving disputes of interest between the two sides. The advantages of this model are mainly reflected in three aspects. First, industry organizations help reduce transaction costs by accelerating the circulation of information and lowering both information search costs and overall transaction costs. Second, they help standardize agricultural product markets by formulating product quality standards and safeguarding product quality and safety, thereby promoting more orderly market operation. Third, they facilitate the realization of agricultural industrialization. With the support of industry associations, agricultural industrial chains become further integrated, enterprises and cooperatives can develop more robustly, and farmers can share in the added value of products through relatively fair distribution mechanisms, thereby increasing their incomes.
Interaction mechanisms between cooperatives and government
The participation of government, markets, and social forces means that interactions between cooperatives and other new agricultural business entities are no longer limited to economic cooperation among enterprises. In some rural areas, poverty alleviation, rather than income growth alone, has been the most urgent task. In industrial development practices aimed at poverty alleviation, exploring sound interaction models among government, social forces, and cooperatives helps optimize resource allocation and becomes key to overcoming the difficulties of industrial poverty alleviation. In practice, a representative model is the “industrial fund + leading agricultural enterprise + resources of impoverished areas + cooperative” model (Liu, Feng, & Leng, 2021). This model reflects an interaction in which the government coordinates markets and cooperatives. Specifically, by injecting poverty alleviation funds into leading agricultural enterprises with development potential, and on the basis of cooperatives organizing local poor farmers, the model promotes industrial development in impoverished areas through cooperation between cooperatives and leading agricultural enterprises, thereby making full use of local resources and industrial capital. Compared with approaches that rely solely on administrative promotion, this model incorporates market mechanisms and aims to address the problem of weak sustainability in industrial development in poor regions. The major participating actors in this model include fund management companies, the government, leading agricultural enterprises, and cooperatives.
From the perspective of its operating mechanism, the government mainly provides institutional guarantees in this model through information supply, policy support, and outcome evaluation. Specifically, at the project selection stage, government provides fund management companies with relevant assessment information on leading agricultural enterprises with development potential. During project implementation, the government offers tax preferences and policy support for industrial poverty alleviation funds while also providing cooperatives with services such as funding and information. At the stage of project benefit assessment, the government is also responsible for certifying farmers’ income conditions so as to evaluate the implementation effects of industrial poverty alleviation funds. Fund management companies mainly undertake three responsibilities: capital allocation, enterprise training, and process supervision. First, after evaluating candidate enterprises, fund management companies invest government industrial poverty alleviation funds in leading enterprises with development potential in poor areas. Second, they improve the management capacity of invested leading enterprises by providing professional training. Finally, they supervise the use of funds and the extent to which leading enterprises invest drive farmers’ income growth, but do not directly interfere in enterprises’ day-to-day operations. Leading enterprises are the core carriers in this model. On the one hand, enterprises use poverty alleviation funds to expand production scale and regularly report their operations to fund management companies. On the other hand, they must explore appropriate ways to cooperate with cooperatives and, through them, provide poor local farmers with employment opportunities and shareholding dividends, thereby helping them escape poverty. Cooperatives are the direct implementing objects of industrial poverty alleviation funds. They are responsible for providing farmers with means of production and production technologies, enabling them to earn income by participating in production activities organized by cooperatives, thereby increasing household wage income.
Overall, the main features of the “industrial fund + leading enterprise + resources of impoverished areas + cooperative” model are as follows: the government plays a guiding role in the process of industrial poverty alleviation; fund management companies assume responsibility for operation and supervision; leading enterprises play receiving and driving roles; and cooperatives organize farmers to participate through labor so as to achieve income growth. This model not only improves the efficiency with which industrial poverty alleviation funds are used but also enhances the sustainability of industrial poverty alleviation.
CONCLUSION
Against the backdrop of China's rural revitalization strategy, this paper examines the institutional and policy evolution of China’s new agricultural management system and the interaction mechanisms between cooperatives and other new agricultural business entities. From the perspective of the institutional evolution of China’s agricultural business entities and farmers’ cooperatives, China’s new agricultural management system did not form only after the proposal of the rural revitalization strategy; rather, it gradually developed over the long-term evolution of agricultural management institutions. In this process, actors such as farmers’ cooperatives, family farms, leading agricultural enterprises, and agricultural socialized service organizations have continuously developed and together constitute an important organizational foundation of the modern agricultural management system. From the perspective of policy development for new agricultural business entities, policy evolution has shown a clear stage-based pattern: from early entity cultivation to mid-stage construction of the new agricultural management system, and then to multi-actor coordination and quality enhancement in the context of rural revitalization. The focus of policy has shifted from supporting single business entities to shaping collaborative relationships among multiple actors. It emphasizes household farming as the foundation and seeks, through linkages among cooperatives, family farms, leading enterprises, and agricultural socialized service organizations, to more effectively incorporate smallholders into the modern agricultural management system. On this basis, the system has gradually been embedded within the rural revitalization strategy to establish a three-dimensional, compound modern agricultural management system.
From the perspective of the interaction mechanisms between cooperatives and other types of new agricultural business entities, first, the interaction between cooperatives and agricultural enterprises is manifested in the model integrated with “agricultural enterprise, agricultural cooperative and farmer,” which can be further subdivided into different cooperative models according to differences in dominant position. Second, interactions between cooperatives and industry organizations are mainly embodied in the model integrated with “industry association, agricultural enterprise, agricultural cooperative and farmer.” Through information dissemination, standard-setting, technical training, and similar means, industry organizations provide important external support for cooperatives. This not only enhances the organizational and regulatory capacity of cooperatives but also, to some extent, reduces transaction costs between cooperatives, farmers, and enterprises, thereby strengthening cooperatives’ adaptability to markets. Finally, in the interaction between cooperatives and government, their relationship is mainly reflected in government-led poverty alleviation projects, in which cooperatives assume multiple functions, including organizing farmers, implementing projects, transmitting policies, and promoting income growth. It can thus be seen that cooperatives are not isolated business entities; rather, they occupy a key nodal position among enterprises, industry organizations, government, and farmers, and through interaction with multiple actors, they jointly promote the operation and development of the modern agricultural management system.
Overall, the formation and improvement of China’s new agricultural management system is, in essence, a process of moving from the cultivation of single actors to multi-actor coordination, and from dispersed operation to systematic integration. The interaction between cooperatives and other new agricultural business entities is an important manifestation of this system's operating mechanism and also reflects that, in the context of rural revitalization, China’s agricultural management system is moving in a more coordinated and more fully developed direction.
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Institutional-Policy Evolution of China’s New Agricultural Management System and the Interaction Mechanisms of Cooperatives in the Context of Rural Revitalization
ABSTRACT
Against the backdrop of rural revitalization, China’s new agricultural management system has developed rapidly, making its institutional and policy evolution, as well as its mechanisms for actor interaction, important issues worthy of close attention. This paper examines the institutional and policy evolution of China’s new agricultural management system and the mechanisms of interaction with cooperatives. The study finds that China’s new agricultural management system has gradually taken shape through the long-term transformation of agricultural management institutions, and that its policy evolution has been characterized by a shift from the cultivation of single actors to multi-actor coordination and systematic institutional development. Meanwhile, cooperatives play an important role within the new agricultural management system. They are not only a key organizational vehicle linking smallholders with modern agriculture but also develop multi-level and multi-form collaborative mechanisms through interactions with agricultural enterprises, industry organizations, and government, thereby jointly promoting the operation and improvement of the modern agricultural management system. This paper contributes to understanding the developmental logic of China’s new agricultural management system from the dual perspectives of institutional evolution and actor interaction and provides a reference for further improving the agricultural management system in the context of rural revitalization.
Keywords: rural revitalization; new agricultural management system; farmers’ cooperatives; institutional-policy evolution; interaction mechanisms
INTRODUCTION
The rural revitalization strategy represents an institutional summation of China’s long-term exploration of agricultural and rural development. China’s exploration of rural revitalization can be broadly divided into three stages. After the founding of the People’s Republic of China, rural areas assumed the important function of supporting urban industrial accumulation in service of the overall strategy of prioritizing industrial development. Following the implementation of the Household Responsibility System in 1978, agricultural productivity improved significantly, and surplus rural labor began to move into cities and non-agricultural sectors. After 2005, the construction of the “new socialist countryside” further prompted the state to pay greater attention to rural underdevelopment and to improving farmers’ living conditions. These explorations, at different stages, respectively emphasized industrial accumulation, improvements in production efficiency, and the enhancement of rural conditions, but they did not fundamentally resolve the problems of unbalanced and inadequate agricultural and rural development.
The Nineteenth National Congress of the Communist Party of China stated that the principal contradiction facing Chinese society had been transformed into that between unbalanced and inadequate development and the people’s ever-growing needs for a better life. Accordingly, agricultural and rural development shifted from an emphasis on aggregate expansion to greater attention to structural optimization, quality improvement, and balanced development. It was in this context that the rural revitalization strategy was formally proposed and became the overarching guideline for advancing agricultural and rural modernization in the new era.
Against the backdrop of the comprehensive advancement of the rural revitalization strategy, building an agricultural management system that meets the requirements of development in the new era has become an important issue in promoting agricultural and rural modernization. For a long time, smallholder family farming has been the basic form of agricultural operation in China. The Opinions on Promoting the Organic Linkage between Small Farmers and Modern Agricultural Development clearly state that smallholder family farming will continue to exist for a relatively long period of time. Therefore, the key to achieving agricultural and rural modernization is not to simply replace smallholder farming with large-scale operations, but to promote the effective integration of small farmers into modern agricultural development through new organizational forms and service systems. The challenge of integrating smallholders into modern agriculture is closely connected to a broader transformation in China’s agricultural development goals. With the further implementation of the rural revitalization strategy, the goals of agricultural development have expanded beyond output growth to include improving the quality of agricultural products, enhancing production efficiency, promoting industrial integration, and increasing farmers’ incomes. This shift requires the traditional model of fragmented agricultural operation to gradually transform toward a more organized, specialized, and moderately scaled form of operation. Taken together, these two developments explain why new agricultural business entities have become increasingly important. On the one hand, they provide institutional and organizational mechanisms through which dispersed smallholders can be connected to modern agriculture. On the other hand, they respond to the growing demand for more specialized, organized, and moderately scaled forms of agricultural operation.
Within this context, the cultivation of new agricultural business entities has been positioned as a key approach to restructuring China’s agricultural operation system The Opinions on Accelerating the Establishment of a Policy System to Foster New Agricultural Business Entities, issued in 2017, proposed accelerating the formation of a three-dimensional and composite modern agricultural management system based on household farming, linked by cooperation and association, and supported by socialized services. The Strategic Plan for Rural Revitalization (2018–2022) further emphasized the need to uphold the foundational position of household farming in agriculture and to promote the coordinated development of household operations, collective operations, cooperative operations, and enterprise-based operations. Taken together, these policy arrangements indicate that the rise of new agricultural business entities represents an important pathway for overcoming the limitations of smallholder farming and enhancing the competitiveness of the agricultural industry under the rural revitalization strategy.
Among various types of new agricultural business entities, farmers’ cooperatives occupy a distinctive position. First, cooperatives are characterized by voluntary association, democratic management, and mutual assistance among members. These features are highly compatible with the reality of China’s smallholder-based household contract farming system. Through cooperatives, dispersed small farmers can be effectively organized, thereby strengthening their ability to enter the market, participate in the division of labor in modern agriculture, and share in the value-added benefits of agricultural industrial development. Second, within a development pattern in which family farms, leading agribusiness enterprises, socialized service organizations, and other actors coexist, cooperatives also play an important connecting role. They link production with the market, and they also connect ordinary farmers with other new agricultural business entities. In this sense, cooperatives serve as an important bridging actor within the new agricultural management system. Against this background, this paper takes the rural revitalization strategy as its historical context. Based on a review of the institutional transformation and policy evolution of China’s new agricultural management system, this paper further examines the interaction mechanisms between cooperatives and other new agricultural business entities to better understand the institutional value and practical role of these entities in China’s agricultural modernization.
INSTITUTIONAL EVOLUTION OF CHINA’S AGRICULTURAL BUSINESS ENTITIES AND FARMERS’ COOPERATIVES
Evolution of China’s agricultural business entities
The evolution of China’s agricultural business entities can be roughly divided into three stages: the pre-reform period (1949–1978), the post-reform period (1978–2012), and the new era (2013–present).
From the founding of the People’s Republic of China to the early stage before reform and opening, the core objective of rural governance was to carry out socialist transformation in the countryside and incorporate rural China into the national modernization system. Under the planned economy, agricultural business entities evolved from smallholder households based on private landownership, to agricultural producers’ cooperatives based on collective ownership, and then to the people’s commune.
The land reform of 1950–1953 transformed land ownership from feudal landlord ownership to individual peasant ownership, and dispersed peasant households based on private ownership of the means of production became the most fundamental units of agricultural production and operation (Zhang, Tsai, & Chung, 2024). The agricultural collectivization movement of the 1950s marked another major transformation of the basic rural management system after land reform (Sreedhar, 1969). By the end of 1956, the socialist transformation of agriculture had been basically completed. In this process, the organizational form of agricultural operations shifted from privatized, dispersed smallholder households to mutual-aid teams, elementary cooperatives, and advanced cooperatives. Through the collectivization movement, the previous household-based management model was transformed into a cooperative collective management model (Shen, 2014). Although socialist cooperatives were, to some extent, compatible with the level of agricultural productive forces at the time, they could not meet the strategic needs of national industrialization. To realize this developmental objective, the movement to establish people’s communes was launched nationwide in 1958. Production teams, as micro-level economic organizations within the people’s commune system, became the most fundamental and principal entities of agricultural production and operation under that system (Xin, 2012).
Although the people’s commune system initially laid an industrial foundation through agricultural accumulation, it could not conceal the low efficiency of resource utilization and poor organizational economic performance under the system. Production and management activities relied on coercive administrative and political means; farmers lost autonomous decision-making power in production and management, and their enthusiasm for production was seriously undermined.
After reform and opening up, with the implementation of the Household Responsibility System, the people’s commune system gradually disintegrated. In the subsequent period, agricultural business entities evolved from household farming based on the “separation of two rights” and the “dual-layer management” system under the Household Responsibility System into a pattern characterized by the coexistence of multiple actors under agricultural industrialization. The institutional core of the Household Responsibility System lies in the land rights arrangement of the “separation of two rights” and the “dual-layer management” system combining unified and decentralized operations (Liu, 2019). The “separation of two rights” refers to the separation of collective land ownership from household land contract and management rights: land ownership belongs to the collective, while rural households possess contractual management rights and may contract collectively owned land on a household basis.
The establishment of the Household Responsibility System once again made independently operating farm households the most fundamental entities of agricultural production and operation in China. The “dual-layer management” system comprises two levels: unified collective management and decentralized household management. While farming is conducted at the household level, collective economic organizations mainly large-scale agricultural infrastructure, thereby coordinating individual and collective interests (Yi, 2023). This reform not only greatly expanded farmers’ autonomy but also liberated and developed rural productive forces, promoted substantial increases in agricultural output, and improved farmers’ living standards (Feng, Ren, & Zhang, 2019). The Household Responsibility System significantly increased farmers’ incentives to produce. However, with the development of agricultural production and the advance of rural marketization, the organizational form of household farming came to face increasing challenges, especially in establishing effective market linkages (Xu, 2008).
In 1997, the Fifteenth National Congress of the Communist Party of China emphasized the need to actively promote agricultural industrialization and the formation of an agricultural industrial system, so as to realize the transformation of agricultural organizational forms from traditional to modern ones. Thereafter, agricultural industrialization was promoted nationwide. Market-oriented agricultural industrialization became the direction for improving and further developing the Household Responsibility System.
As agricultural operations became increasingly marketized and socialized, linkages among different economic organizations grew closer, and various agricultural industrialization organizations emerged, gradually becoming the principal organizational forms of rural agricultural production and management. Agricultural industrialization mainly took four basic organizational forms: the leading-enterprise-driven model, the intermediary-organization-driven model represented by cooperative economies, the market-driven model, and other forms (Niu, 2002). Agricultural production and management institutions explored and innovated around the contradiction between small-scale household production and the large market. Agricultural industrialization became an effective pathway: by linking household farming with modern operations through various benefit-linkage mechanisms, it overcame the disadvantages of dispersed, small-scale household farming while also leveraging the advantages of socialized and industrialized agricultural production. This represented an innovation and development in agricultural management institutions.
Since the Nineteenth National Congress of the Communist Party of China, China has entered a new era of socialism with Chinese characteristics. As the principal contradiction in society changed, unbalanced urban-rural development and inadequate rural development became major issues. Since the beginning of the twenty-first century, the processes of industrialization and urbanization have accelerated, and large numbers of rural laborers have left the countryside. Along with the “hollowing out” of the rural population came the multiple “hollowing out” of rural population, land, and industries. As a result, the questions of “who will farm” and “how farming will be carried out” have become increasingly salient. Cultivating new agricultural business entities has therefore become an important policy orientation for advancing agricultural modernization and laying the economic foundation for rural revitalization.
At the 2013 Central Rural Work Conference and in the 2013 No. 1 Central Document, new agricultural business entities were emphasized and systematically deployed, and the term “new agricultural business entities” appeared in an official document for the first time. Thereafter, such entities gradually became the most important agricultural production and operation organizations in rural areas. Farmers’ cooperatives, leading agricultural enterprises, family farms, and specialized large households are the most basic and important types of new agricultural business entities (Zhong, 2018). These entities are capable not only of realizing integrated development among organizations within the same industry, but also of facilitating integration across different industries. Organizational forms built upon the basic model of “agricultural enterprise + farmer,” such as “agricultural enterprise + farmers’ cooperative + farmer,” “agricultural enterprise + family farm,” and “agricultural enterprise + base + farmer,” represent optimized innovations that have promoted the integration of different agricultural organizations within agricultural industries (Lai, Du, & Hao, 2021).
Evolution of farmers’ cooperatives
Since the reform and opening-up, China has attached great importance to the development of cooperatives. Cooperatives are important actors in the rural revitalization strategy. Since the beginning of this century, a series of meetings and policy documents on agriculture, rural areas, and farmers have discussed the development of farmers’ cooperatives and set out relevant policy requirements, all of which are reflected in successive No. 1 Central Documents. The policy evolution of Chinese farmers’ cooperatives can be roughly divided into three stages (Liu, Zhang, & Wang, 2020).
The first stage, from 1949 to 1978, saw cooperatives transformed from production and management organizations into instruments of national strategy. In the early years of the People’s Republic of China, agricultural productivity was extremely low. In order to develop agriculture and improve production efficiency, the state launched the agricultural collectivization movement, during which supply and marketing cooperatives, as well as credit cooperatives, developed rapidly. However, in the later part of this stage, with the establishment of policies of “unified production, unified procurement, and unified sales” for agricultural products and agricultural inputs, supply and marketing cooperatives and credit cooperatives became policy tools serving the state’s industrialization strategy. Ultimately, the establishment of the people’s commune marked the end of agricultural cooperation in its earlier form. During this period, the main function of cooperatives was to support the development of the collective economy and to provide grain and financial support for the state’s heavy industry.
The second stage, from 1979 to 2006, witnessed a transition from the restoration of commercial functions to comprehensive market-oriented services. The Household Responsibility System brought the people’s commune system to an end and marked the beginning of rural reform. In 1982, China’s first No. 1 Central Document restored the commercial service functions of rural supply and marketing cooperatives. In the subsequent No. 1 Central Documents from 1983 to 1986, cooperatives were redefined as “regional cooperative economic organizations.” Thereafter, cooperatives entered a period of self-exploration and development, gradually transforming toward marketization. The policy of a “30-year land contract period” and policies promoting agricultural industrialization spurred the emergence of various specialized cooperatives. During this stage, cooperatives served household farming and the rural economy through market-oriented mechanisms, increased farmers’ incomes, and promoted the development of diverse cooperative forms. At the same time, however, cooperative development also faced a range of problems, including a lack of legal constraints, weak internal management, and irregular operations.
The third stage, from 2007 to the present, has seen cooperatives evolve from specialized farmers’ cooperative organizations into new agricultural business entities. The promulgation of the Farmers’ Specialized Cooperatives Law in 2007 marked the beginning of the government’s use of legal means to regulate and supervise the operation of farmers’ specialized cooperatives. The Law on Farmers’ Cooperatives specifies matters such as methods of capital contribution and the rights and obligations of members, thereby standardizing cooperative operations and management. The 2014 No. 1 Central Document positioned cooperatives as “new agricultural business entities,” and in 2016 they were further designated as “new agricultural service entities,” thereby confirming their dual functions in both operation and service provision. The revised Law on Farmers’ Cooperatives promulgated in 2018 highlighted the necessity of building standardized cooperatives and establishing cooperative unions, so as to promote the linkage between new agricultural business entities and modern agriculture and extend agricultural industrial and value chains. At this stage, the major functions of cooperatives lie in linking smallholders with modern agriculture, promoting moderately scaled agricultural operations, facilitating industrial integration, and developing modern agriculture.
POLICY SYSTEM OF CHINA’S NEW AGRICULTURAL BUSINESS ENTITIES
China’s policy system for new agricultural business entities has gradually taken shape and continuously improved amid sustained agricultural modernization and the comprehensive implementation of the rural revitalization strategy. The earliest official documents concerning modern agricultural business entities in China date back to the 2007 No. 1 Central Document, and policy support for the development of new agricultural business entities has continued through 2025. The formation of China’s policy system for new agricultural business entities can be roughly divided into three stages.
The first stage was the initial stage (2007–2012), in which policy focused on fostering different types of agricultural business entities to meet the needs of modern agricultural development. The 2007 No. 1 Central Document explicitly proposed the development and cultivation of modern agricultural business entities and encouraged the development of specialized farming and breeding households, farmers specialized cooperative organizations, leading enterprises, and collective economic organizations. In the same year, the Law of the People’s Republic of China on Farmers’ Specialized Cooperatives was promulgated, providing legal protection for the development of cooperatives. Thereafter, the Report to the Seventeenth National Congress of the Communist Party of China, along with the 2008 and 2010 No. 1 Central Documents, continued to emphasize agricultural industrialization, the construction of cooperative organizations, and the enhancement of the level of organization in agricultural production and operation. By 2012, the No. 1 Central Document further proposed promoting the organizational and specialized development of agricultural business entities by establishing demonstration cooperatives, encouraging cooperatives to establish processing enterprises or take shares in leading enterprises, and fostering specialized farming households and major agricultural machinery operators. During this period, although the concept of a “new agricultural management system” had not yet been fully articulated at the policy level, institutional groundwork had already been laid around such new business entities as cooperatives, specialized large households, and leading enterprises, thereby paving the way for the subsequent systematic construction of the new system.
The second stage was the maturation stage (2012–2017), characterized by a shift in policy support from entity cultivation to the construction of a “new agricultural management system.” The Report to the Eighteenth National Congress of the Communist Party of China in November 2012 first proposed the concept of the new agricultural management system, marking a shift in policy focus from support for individual entities to the overall restructuring of agricultural management institutions. The 2013 No. 1 Central Document, for the first time, defined the scope of new production and management entities, and in the same year, the Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform further proposed “accelerating the construction of a new agricultural management system.” From 2014 to 2017, successive No. 1 Central Documents continued to deploy policies around scale management, the cultivation of business entities, the agricultural socialized service system, and the reform of supply and marketing cooperatives, gradually forming a relatively complete policy framework. In particular, the 2017 Opinions on Accelerating the Establishment of Policy Systems for Fostering New Agricultural Business Entities systematically integrated support policies in such areas as talent, infrastructure, and fiscal and taxation measures, and became an important policy document for the development of new agricultural business entities. The core change in this stage was that policy no longer merely supported the development of several categories of business entities in isolation, but instead treated the new agricultural management system as an integrated whole, thus promoting a transition from fragmented policy support to systematic institutional construction.
The third stage is the deepening stage (2018 onward), characterized by the gradual improvement, under the rural revitalization strategy, of a policy system for agricultural business entities adapted to the features of the new era. The 2018 No. 1 Central Document, namely the Opinions on Implementing the Rural Revitalization Strategy, proposed cultivating new agricultural business entities and emphasized coordinated cultivation and support for smallholders, marking the formal embedding of this policy system within the rural revitalization strategy. The 2019 No. 1 Central Document proposed focusing on family farms and farmers’ cooperatives in cultivating various types of new business entities; the 2020 No. 1 Central Document further proposed cultivating agricultural industrialization consortia and embedding smallholders into agricultural industrial chains through such means as contract farming, shareholding dividends, and trusteeship services; and the 2021 document explicitly proposed implementing a family farm cultivation plan and improving the quality of farmers’ cooperatives.
Policies from 2022 to 2023, while continuing to support family farms, farmers’ cooperatives, and leading enterprises, placed greater emphasis on coordination and upgrading among different entities, for example, by supporting family farms in organizing cooperatives and enabling cooperatives to establish enterprises in accordance with development needs, while also promoting common income growth among smallholders. In the 2024 and 2025 policy documents, policy further emphasized taking smallholders as the foundation, new agricultural business entities as the focus, and socialized services as the support, while accelerating the development of a high-quality contingent of agricultural producers and operators suited to modern agriculture.
The Plan for Comprehensive Rural Revitalization (2024–2027) more explicitly proposes establishing and improving a three-dimensional, compound modern agricultural management system based on household farming, linked through cooperation and association, and supported by socialized services. This shows that the current policy objective regarding China’s new agricultural business entities has evolved from supporting individual types of business entities to forming, on the basis of household farming, a modern agricultural management system that can balance efficiency enhancement and farmers’ income growth through cooperation, association, and the construction of socialized service systems.
INTERACTION MECHANISMS BETWEEN COOPERATIVES AND OTHER NEW AGRICULTURAL BUSINESS ENTITIES
Cooperatives are an important component of China’s new agricultural business entities and a key vehicle linking smallholders with the modern agricultural management system. Compared with agricultural enterprises, family farms, and other agricultural business entities, the distinctiveness of cooperatives lies in their ability to organize dispersed farmers, integrate factors of production, and connect with market demand, thereby embedding large numbers of smallholders into a broader agricultural production system. For this reason, cooperatives serve as important hubs through which new agricultural businesses achieve resource integration, interest linkage, and functional complementarity. Focusing on this feature, this section examines the interaction mechanisms among cooperatives, agricultural enterprises, industry organizations, and government and social forces to reveal the important role of cooperatives within the new agricultural management system.
Interaction mechanisms between cooperatives and agricultural enterprises
Among the various interactions involving cooperatives, the one between cooperatives and agricultural enterprises is the most fundamental. Agricultural enterprises usually control capital, technology, and market channels, whereas cooperatives undertake the functions of organizing farmers, coordinating production, and linking grassroots business entities. Under conditions where smallholders remain the basic unit of agricultural operation, the interaction between cooperatives and agricultural enterprises effectively provides smallholders with a pathway to be embedded in modern agricultural industrial chains. The interaction between cooperatives and agricultural enterprises is manifested in the model of “agricultural enterprise + agricultural cooperative + farmer,” which, depending on differences in dominant position, can be further subdivided into four types: enterprise-led cooperatives, cooperatives jointly organized by farmers and enterprises, cooperatives independently established by farmers and then cooperating with enterprises, and cooperatives independently established by farmers that further set up processing enterprises (Yuan, 2013). The differences among these types are mainly reflected in the allocation of control rights, the composition of farmers’ incomes, and the distribution of risks.
In the enterprise-led cooperative model, the company occupies the dominant position, and the cooperative essentially becomes the enterprise’s raw material base and workshop for primary product production. The company controls production planning, profit distribution, and operational processes, while providing support through inputs, technical guidance, working capital, and product procurement. Farmers mainly participate in production as contracted laborers and are paid on a piece-rate basis. The advantage of this model is that enterprises can effectively control product quality, supply scale, and delivery time, while farmers do not bear sales risks and can enjoy relatively stable income expectations. However, its limitations are equally obvious: the cooperative's organizational functions are significantly weakened, decision-making power and profit distribution are largely controlled by the company, and although farmers are incorporated into the industrial chain, they lack genuine organizational control and bargaining power.
The model in which farmers and companies jointly organize a cooperative reflects a relatively strong feature of interest linkage between the cooperative and the enterprise. Compared with the previous model, its key change lies in the fact that farmers participate in cooperative governance through shareholding and no longer rely solely on wage income but are also able to share part of the production profits. Although the company still plays a leading role in input supply, technical services, financial guarantees, and product procurement, the relationship between the cooperative and the enterprise has shifted from unilateral control to a certain degree of joint governance. This model not only helps enterprises maintain control over quality and supply stability but also expands farmers’ opportunities for profit sharing and participation in decision-making. However, the company’s operational logic, which is oriented toward market and consumer demand, does not always fully coincide with farmers’ goals of maximizing income, and this contradiction may affect the stability of the cooperative relationship.
When farmers independently establish cooperatives and collaborate with companies, the cooperatives begin to reclaim their dominant position and become independent actors representing farmers’ interests in negotiations with enterprises. In this case, the cooperative is no longer a subordinate production department of the enterprise but instead forms an interest-based alliance with the enterprise through commodity contracts. Unlike the long-term contractual relationships in the previous two models, this type of cooperation is often based on annual contracts, and both cooperatives and enterprises retain the flexibility to choose other trading partners. As a result, the cooperative’s voice, bargaining power, and operational autonomy are significantly enhanced, and farmers’ income sources expand from labor remuneration to the full profits derived from agricultural production. At the same time, however, the cooperative must directly confront market fluctuations and uncertainties in production and operation, and the market and production risks borne by farmers increase accordingly.
In the model in which farmers independently establish cooperatives and subsequently set up processing enterprises, the cooperative's dominance is substantially strengthened. The cooperative is no longer confined to cooperation with enterprises; by establishing processing enterprises, it extends from the production link into the processing link, replaces functions previously performed by enterprises, and forms a more complete chain from production to processing and then to sales. Cooperative member households participate in establishing processing enterprises through investment, thereby assuming dual identities as producers and investors. Their income sources also expand from returns on primary products to broader production and processing profits. This model helps break enterprises’ monopolies over gains from processing agricultural products and promotes farmers’ production toward greater specialization, standardization, and scale. However, realizing this model requires relatively high levels of organizational capacity and capital accumulation on the part of cooperatives; it represents a potential evolutionary direction for cooperatives rather than the mainstream pattern at present.
Interaction mechanisms between cooperatives and industry organizations
As ties between cooperatives and agricultural enterprises deepen, the pursuit of profit maximization by both parties may also give rise to problems such as higher transaction costs, aggravated information asymmetry, and declining market efficiency. Against this background, industry organizations have begun to intervene as third-party coordinators, giving rise to the organizational model of “industry association + agricultural enterprise + agricultural cooperative + farmer” (Yang, Shang, & Hu, 2015). In this model, industry organizations do not directly participate in production and operation; rather, they improve the conditions of interaction among cooperatives, enterprises, and farmers by providing information and coordinating relationships. Industry associations mainly provide technical guidance and policy consultation to enterprises and cooperatives, conduct market research, regulate business behavior, coordinate prices, and play an important role in resolving disputes of interest between the two sides. The advantages of this model are mainly reflected in three aspects. First, industry organizations help reduce transaction costs by accelerating the circulation of information and lowering both information search costs and overall transaction costs. Second, they help standardize agricultural product markets by formulating product quality standards and safeguarding product quality and safety, thereby promoting more orderly market operation. Third, they facilitate the realization of agricultural industrialization. With the support of industry associations, agricultural industrial chains become further integrated, enterprises and cooperatives can develop more robustly, and farmers can share in the added value of products through relatively fair distribution mechanisms, thereby increasing their incomes.
Interaction mechanisms between cooperatives and government
The participation of government, markets, and social forces means that interactions between cooperatives and other new agricultural business entities are no longer limited to economic cooperation among enterprises. In some rural areas, poverty alleviation, rather than income growth alone, has been the most urgent task. In industrial development practices aimed at poverty alleviation, exploring sound interaction models among government, social forces, and cooperatives helps optimize resource allocation and becomes key to overcoming the difficulties of industrial poverty alleviation. In practice, a representative model is the “industrial fund + leading agricultural enterprise + resources of impoverished areas + cooperative” model (Liu, Feng, & Leng, 2021). This model reflects an interaction in which the government coordinates markets and cooperatives. Specifically, by injecting poverty alleviation funds into leading agricultural enterprises with development potential, and on the basis of cooperatives organizing local poor farmers, the model promotes industrial development in impoverished areas through cooperation between cooperatives and leading agricultural enterprises, thereby making full use of local resources and industrial capital. Compared with approaches that rely solely on administrative promotion, this model incorporates market mechanisms and aims to address the problem of weak sustainability in industrial development in poor regions. The major participating actors in this model include fund management companies, the government, leading agricultural enterprises, and cooperatives.
From the perspective of its operating mechanism, the government mainly provides institutional guarantees in this model through information supply, policy support, and outcome evaluation. Specifically, at the project selection stage, government provides fund management companies with relevant assessment information on leading agricultural enterprises with development potential. During project implementation, the government offers tax preferences and policy support for industrial poverty alleviation funds while also providing cooperatives with services such as funding and information. At the stage of project benefit assessment, the government is also responsible for certifying farmers’ income conditions so as to evaluate the implementation effects of industrial poverty alleviation funds. Fund management companies mainly undertake three responsibilities: capital allocation, enterprise training, and process supervision. First, after evaluating candidate enterprises, fund management companies invest government industrial poverty alleviation funds in leading enterprises with development potential in poor areas. Second, they improve the management capacity of invested leading enterprises by providing professional training. Finally, they supervise the use of funds and the extent to which leading enterprises invest drive farmers’ income growth, but do not directly interfere in enterprises’ day-to-day operations. Leading enterprises are the core carriers in this model. On the one hand, enterprises use poverty alleviation funds to expand production scale and regularly report their operations to fund management companies. On the other hand, they must explore appropriate ways to cooperate with cooperatives and, through them, provide poor local farmers with employment opportunities and shareholding dividends, thereby helping them escape poverty. Cooperatives are the direct implementing objects of industrial poverty alleviation funds. They are responsible for providing farmers with means of production and production technologies, enabling them to earn income by participating in production activities organized by cooperatives, thereby increasing household wage income.
Overall, the main features of the “industrial fund + leading enterprise + resources of impoverished areas + cooperative” model are as follows: the government plays a guiding role in the process of industrial poverty alleviation; fund management companies assume responsibility for operation and supervision; leading enterprises play receiving and driving roles; and cooperatives organize farmers to participate through labor so as to achieve income growth. This model not only improves the efficiency with which industrial poverty alleviation funds are used but also enhances the sustainability of industrial poverty alleviation.
CONCLUSION
Against the backdrop of China's rural revitalization strategy, this paper examines the institutional and policy evolution of China’s new agricultural management system and the interaction mechanisms between cooperatives and other new agricultural business entities. From the perspective of the institutional evolution of China’s agricultural business entities and farmers’ cooperatives, China’s new agricultural management system did not form only after the proposal of the rural revitalization strategy; rather, it gradually developed over the long-term evolution of agricultural management institutions. In this process, actors such as farmers’ cooperatives, family farms, leading agricultural enterprises, and agricultural socialized service organizations have continuously developed and together constitute an important organizational foundation of the modern agricultural management system. From the perspective of policy development for new agricultural business entities, policy evolution has shown a clear stage-based pattern: from early entity cultivation to mid-stage construction of the new agricultural management system, and then to multi-actor coordination and quality enhancement in the context of rural revitalization. The focus of policy has shifted from supporting single business entities to shaping collaborative relationships among multiple actors. It emphasizes household farming as the foundation and seeks, through linkages among cooperatives, family farms, leading enterprises, and agricultural socialized service organizations, to more effectively incorporate smallholders into the modern agricultural management system. On this basis, the system has gradually been embedded within the rural revitalization strategy to establish a three-dimensional, compound modern agricultural management system.
From the perspective of the interaction mechanisms between cooperatives and other types of new agricultural business entities, first, the interaction between cooperatives and agricultural enterprises is manifested in the model integrated with “agricultural enterprise, agricultural cooperative and farmer,” which can be further subdivided into different cooperative models according to differences in dominant position. Second, interactions between cooperatives and industry organizations are mainly embodied in the model integrated with “industry association, agricultural enterprise, agricultural cooperative and farmer.” Through information dissemination, standard-setting, technical training, and similar means, industry organizations provide important external support for cooperatives. This not only enhances the organizational and regulatory capacity of cooperatives but also, to some extent, reduces transaction costs between cooperatives, farmers, and enterprises, thereby strengthening cooperatives’ adaptability to markets. Finally, in the interaction between cooperatives and government, their relationship is mainly reflected in government-led poverty alleviation projects, in which cooperatives assume multiple functions, including organizing farmers, implementing projects, transmitting policies, and promoting income growth. It can thus be seen that cooperatives are not isolated business entities; rather, they occupy a key nodal position among enterprises, industry organizations, government, and farmers, and through interaction with multiple actors, they jointly promote the operation and development of the modern agricultural management system.
Overall, the formation and improvement of China’s new agricultural management system is, in essence, a process of moving from the cultivation of single actors to multi-actor coordination, and from dispersed operation to systematic integration. The interaction between cooperatives and other new agricultural business entities is an important manifestation of this system's operating mechanism and also reflects that, in the context of rural revitalization, China’s agricultural management system is moving in a more coordinated and more fully developed direction.
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