The Institutional Logic of Farmers' Cooperative

I. the logical starting point of farmers' cooperatives

From the perspective of international experience, agricultural modernization is not necessarily related to land concentration and land scale management, and agricultural modernization does not need to be conditional on the elimination of small-scale agriculture. On the contrary, all the major developed countries have realized agricultural modernization under the condition of a large number of small farmers, and some countries even have small farmers everywhere. In this process, the major developed countries mainly transform family small-scale agriculture through the model of "land household management + farmers' cooperatives + perfect agricultural socialization service system", among which, farmers' cooperatives are the bridge to agricultural industrialization and modernization (Li Shangyong, 1998). At present, all countries and regions that have or generally realized agricultural modernization have realized agricultural industrialization through the promotion of farmers' cooperatives and the establishment of a perfect agricultural socialized service system. The docking of "small agriculture and modern big market" has been realized.

Why do so many countries and regions in the world (including Taiwan) adopt the form of farmers' cooperatives to realize agricultural industrialization and agricultural modernization? This is determined by the economic development process of these countries (regions).

In the initial stage of a country's economic development, that is, the early stage of industrialization, the accumulation of the industrial sector itself is limited, and it is difficult to achieve rapid development by relying on this accumulation. Therefore, the whole society will transfer the value surplus of the agricultural sector to the industrial sector in a violent or peaceful, open or covert way. During this period, the agricultural sector shrank relatively because of the loss of surplus accumulation of value. In the second stage of economic development, the value surplus of the industrial sector has increased significantly, and they can gradually rely on their own accumulation for rapid development, so they no longer need agricultural surplus, and the two sectors develop in parallel. However, due to long-term "blood loss", the development level and speed of the agricultural sector are much lower than that of the industrial sector, and the rural economy lags far behind the urban economy, forming the so-called "urban-rural dual structure". In the third stage of economic development, industry "feeds" agriculture, while cities "feed" rural areas. At this stage, industrialization not only prepared the economic conditions for agricultural modernization, but also prepared the technical conditions. This is the starting point of agricultural modernization in history and time. At this starting point, people need to think about how to use modern science and technology, advanced means of production and scientific management methods to transform traditional agriculture.

The nature of traditional agriculture is a self-sufficient natural economy, while small and medium-sized farmers who take the form of family management have small production scale, weak economic strength, low degree of specialization, backward management, lack of market information and low ability of self-organization. therefore, they can only sell low-priced primary agricultural products and bear the exploitation of middlemen. In the face of the increasingly fierce competition in the market economy, more and more small and medium-sized farmers have been "marginalized" because of their low operating efficiency. This is the fundamental reason for the general formation of the "dual structure" of agriculture and industry, rural and urban areas in the middle stage of a country's economic development.

In theory, there are two ways to transform the family management form of traditional agriculture. The first way is to "deprive small farmers" of small farmers by means of violence or mild, paid or free, to realize large-scale operation of land, and on this basis to transform the production, technology and management of traditional agriculture and gradually move towards agricultural industrialization. The essence of this road is the large-scale influx of excess capital from non-agricultural industries into agriculture, leading to the agricultural industrial revolution, thus eliminating the backward mode of production of agriculture. This road has been widely popular and made great progress in the modern history of the world, but its violent plunder, bloody and dirty characteristics, and the consequences of bankruptcy and displacement of a large number of small farmers have been cursed and criticized from the very beginning. After entering modern history, bloody violence "depriving small farmers" is only an exception.

Another way of "depriving small farmers" is the "collectivization movement" such as the "collective farm" of the former Soviet Union and the "people's commune" of our country. These "collectivization" are realized through some specious "cooperatives". The biggest difference between these so-called "cooperatives" and classic international cooperatives is that small farmers are deprived of their land and other means of production, and family management, together with the independence of small farmers, is eliminated by "collective organizations". History and practice have proved that the "collectivization" attempts of countries in the Soviet Union and Eastern Europe and China have failed, and the agricultural production efficiency has been greatly reduced after collectivization, so it is impossible to embark on the road of agricultural industrialization.

The second way is the model of "land family management + farmers' cooperatives + perfect agricultural socialization service system", that is, on the basis of affirming the rationality of family management ① and maintaining the independence of small farmers, we can help farmers to establish cooperatives and establish a perfect agricultural socialization service system to realize the transformation of traditional agriculture and family management forms. Its main feature is that the land property rights and other means of production of small farmers are private, and the land is still in the form of family management, but at this time the family management is organized, and the whole production has been industrialized and socialized. Operation and management has also been commercialized, and the intermediate bridge is farmers' cooperatives. The practice of agricultural modernization in major developed countries and moderately developed countries has proved that this is an effective way to agricultural industrialization and modernization that can be accepted and widely implemented by modern society and market economy.

In the second way of reforming the traditional agricultural family management form, farmers' cooperatives have solved two problems: one is to realize agricultural industrialization. Farmers' cooperatives organize scattered small farmers who produce and operate similar agricultural products, or sell them uniformly, or process and sell them uniformly, in order to seek more benefits. In order to improve and unify the quality of agricultural products, under normal circumstances, farmers' cooperatives will carry out unified production quality management, such as unified use of fine varieties, unified use of fertilizers and drugs, unified use of advanced techniques in farming, and so on. Under the condition that the agricultural socialization service system is relatively perfect, small farmers who maintain family management can receive paid services from agricultural service departments before and after production through cooperatives, for example, unified farming in the same area, unified field management, unified harvesting and so on. When this mode of operation of farmers' cooperatives develops to a certain extent, it naturally forms and realizes the regional layout, specialized production and serialized processing of agriculture, thus realizing the goal of agricultural industrialization.

Second, it has raised the income level of farmers. Under the conditions of traditional agriculture and household management, scattered farmers can only sell primary agricultural products. All processing and circulation profits from primary agricultural processing to wholesale and retail are far away from farmers and are earned by processing enterprises, middlemen and retailers. Due to the unique price relationship of the market economy, the prices of primary agricultural products are on the low side, while the profits from processing to wholesale and retail are relatively rich. Farmers' cooperatives can "get" back the profits of middlemen through unified sales, and they can also "get" part of the processing and circulation profits through unified processing and marketing. Through its unique benefit-sharing mechanism, farmers' cooperatives let all members share all the profits of the cooperatives, thus improving the income level of farmers.

Take Biluochun tea in Taihu Lake as an example. Biluochun is one of the top ten famous teas in China, with its origin in the east and west mountains of Taihu Lake. Before 2004, tea farmers can only sell fresh tea leaves to foreign merchants, only about 80 yuan per jin of fresh leaves. About 4 jin of fresh leaves can make 1 jin of finished tea, and its price is 800 to 1000 yuan ∕ jin. The profit of 480,680 yuan per jin of finished tea is outside the tea farmers. In 2004, local tea farmers set up a "Biluochun Tea Cooperative". After standardized production and brand management, the cooperative purchased fresh leaves of its members at a price of 250,260 yuan ∕ jin, and the price of finished tea was as high as 2600 yuan ∕ jin (Han Jun et al., 2006). That is to say, while improving the quality of tea, farmers' cooperatives "get" back all the profits from tea planting and processing and most of the profits from circulation.

It can be seen that for the process of agricultural modernization, the logical starting point of farmers' cooperatives is to enter the field of processing and circulation of agricultural products through a certain way to "take" back part or most of the profits from the processing and circulation of agricultural products, in order to raise the income level of the broad masses of farmers.

Obviously, the historical role of farmers' cooperatives in the third stage of a country's economic development is to raise the income level of the broad masses of farmers to the social average level by raising the traditional agricultural household management to the level of agricultural industrialization. in order to help the most backward part of the social economy to keep up with the pace of the whole social economy, so as to enhance the economic development level of the whole society.

II. Institutional logic and institutional requirements of farmers' cooperatives

The second way to transform the traditional agricultural family business form has a basic premise, that is, not to deprive small farmers, and to keep their family business form unchanged. This requires to maintain the independence of small farmers, that is, to maintain the privacy of their land property rights and other means of production, and to maintain the autonomy of family management of their land. This means that small farmers produce agricultural products on their own land in accordance with the production and technical requirements of the cooperatives, sell them to the cooperatives, get their sales prices, and finally share the profits returned by the cooperatives after unified sales or processing sales.

Under this premise, it is obvious that small farmers cannot be eliminated through the "survival of the fittest" mechanism of the market economy, otherwise, it is tantamount to depriving small farmers in another form. In fact, the original intention of adopting the peasant cooperative system is to help small farmers increase their income, not to eliminate, deprive or eliminate small farmers.

In order to meet the above conditions, farmers' cooperatives can only implement the "GSP", that is, within the cooperatives, all members share the profits of the cooperatives equally (but not equally). What is embodied here is the principle of "equality and fairness" of the cooperative economy, rather than the "efficiency" principle of the market economy. The efficiency mechanism of market economy is partially ineffective here. The principle of cooperative economy determines the basic function of farmers' cooperatives, that is, "make profits for all members and let all members share".

In order to ensure the realization of the basic functions of farmers' cooperatives, the following series of institutional arrangements are needed internally.

(1) benefit sharing

The benefits that ordinary members can enjoy in farmers' cooperatives include: (1) cooperatives provide all kinds of paid services before, during and after production, such as credit services, procurement of means of production, production technical guidance and processing and marketing of agricultural products, and so on. Through these services, ordinary members enjoy the high efficiency of agricultural industrialization, reduce production costs (get cheap funds and means of production), and obtain the first income of agricultural products (that is, ordinary members sell agricultural products to their own cooperatives and obtain sales proceeds). (2) to share the operating profits of the cooperative. Here, most of the profits are returned to members according to the proportion of transactions between members and cooperatives (referred to as "secondary rebate" or "patronage return"), and the rest of the profits are distributed according to the head of the members and the share of capital.

In the benefit-sharing system, the most significant is the "secondary rebate", which is the main form for ordinary members to join cooperatives and share processing and circulation profits.

In history, the success of the cooperative system is closely related to the system design of "secondary rebate". Modern cooperative system is the inevitable result of the development of commodity economy. As early as the end of the 18th century and the beginning of the 19th century, with the rise of the British Industrial Revolution, production became increasingly socialized, competition became increasingly fierce, and a large number of vulnerable groups emerged. In order to survive, the weak are forced to organize themselves to keep warm together. As a result, cooperatives of mutual assistance and cooperation came into being. However, most of the early cooperatives failed, including the penny capitalist cooperatives in Ernshire, Scotland, in 1769, the commercial cooperatives of watchmakers in Vienna, Austria in 1794, and the Fourier-type cooperatives of utopian socialism in France around the 1790s.

The first successful cooperative in human history appeared in 1844. It was organized by 28 textile workers in the small town of Roxdale, England. A series of excellent institutional designs of the cooperative, including freedom of joining the society, democratic management, moderate capital reward, secondary rebate and so on, are known by later generations as the "Roxdale principle". These principles eventually became universally recognized cooperative principles (Zhao Kai, 2004). Among them, "secondary rebate" is the core of the interests of the modern cooperative system, and it is the core principle of whether cooperatives can be successful, accepted by members and sustainable development.

(2) Limited accumulation

In order to realize the "secondary rebate" of practical significance (it is shown as a large proportion), it is necessary to limit the profit accumulation of cooperatives, that is, to limit the level of profit capitalization. Although the accumulation of profits can form "long-term interests", it is indeed too "far away" for farmers who are in financial distress. Farmers' cooperative is designed to solve practical problems, and its realistic goal is to solve the current problem of increasing farmers' income. As a form of enterprise, farmers' cooperative is designed for "current interests".

Of course, farmers' cooperatives also need a certain amount of profit accumulation for the development of cooperatives, but the proportion of profit accumulation is strictly limited. Generally speaking, most of the after-tax profits of farmers' cooperatives are distributed to all members in the same year.

For example, Article 37 of China's Law on Farmers' Professional Cooperatives stipulates that the surplus of farmers' cooperatives in the current year forms a distributable surplus after making up for losses and withdrawing the provident fund; more than 60% of the distributable surplus is used for "secondary rebate"; the rest is distributed according to the contribution of members and the share of the provident fund (NPC standing Committee, 2006). If calculated according to the proportion of 10% of the statutory provident fund for ordinary enterprises in China, the distributable surplus of farmers' cooperatives can account for 90% of the current year's surplus, of which the proportion of "secondary rebate" is more than 54%.

On the face of it, the law of our country does not stipulate the proportion of provident fund withdrawal of farmers' cooperatives, so it is not illegal for managers to withdraw a large proportion of provident funds, but the decision-making system of "one person, one vote" of farmers' cooperatives can restrain this "accumulation impulse" so as to prevent it from deviating from the purpose of the cooperative system and harming the interests of all members.

(3) to restrict the dividends of shares

The principle of GSP determines that farmers' cooperatives cannot distribute profits according to the proportion of capital shares as ordinary industrial and commercial enterprises do, so farmers' cooperatives adhere to the principle of "limited capital reward". That is, cooperative shares can only receive interest but not dividends, or dividends can only be paid in the way of average shares, and neither interest nor dividend can exceed the level of market interest rate.

In the statement on the characteristics of cooperatives adopted by the General Assembly of the International Cooperative Union in 1995, the principle of "limited remuneration for capital" is stated as follows: "for membership qualification shares, if there is a surplus, members generally receive limited compensation" (International Cooperative Union, 1995).

The purpose of limiting stock dividends is to limit and avoid the expansion of capital in cooperatives and to avoid harming the interests of ordinary members by enjoying too many benefits of capital. Because the share bonus is too much, it will reduce the proportion of "secondary rebate" according to the proportion of the transaction.

(4) restrictions on major shareholders

In the statement on the characteristics of cooperatives, restrictions on major shareholders are expressed as: members contribute fairly. two

The purpose of restricting major shareholders is to prevent major shareholders from turning cooperatives into their own profit-making tools, thus harming the interests of ordinary members. In places where the economic capacity of small farmers is weaker, it is more necessary to restrict (but not completely prevent) large shareholders from joining the society, especially to prohibit and try their best to prevent large shareholders from controlling cooperatives. For example, article 17 of the Taiwan Cooperative Law stipulates that the amount of shares subscribed by members shall not exceed 20% of the total amount of shares (Taiwan Cooperative Law, 2002). In addition, in order to prevent the transfer of members' shares from becoming major shareholders, farmers' cooperatives generally stipulate that "cooperative shares cannot be transferred or can only be transferred to their own members."

Of course, the decision-making mechanism of "one person, one vote" in farmers' cooperatives also plays a role in restricting the membership of major shareholders. For example, China's Law on Farmers' Professional Cooperatives stipulates that every major shareholder who has the condition to enter a peasant cooperative can also enjoy "additional voting rights" in addition to one basic voting right, but at the same time, it also stipulates that "the total number of additional voting rights of this cooperative shall not exceed 20% of the total number of basic voting rights of its members", and "the articles of association may limit the scope of the exercise of additional voting rights". That is to say, under any circumstances, the voting rights of major shareholders are in an "absolute minority" and it is impossible to influence the election and voting results of cooperatives. In the case of running the cooperative in strict accordance with the rules and regulations, it is not only impossible for the major shareholders to control the cooperative for their own profits, on the contrary, their interests may also be damaged. Because in the income composition of cooperative members (enjoyment of services, sale of agricultural products, second rebate according to transaction proportion, distribution according to capital proportion, distribution according to head), ordinary members tend to take a smaller proportion of profits "distributed in proportion to capital".

For the farmers' cooperatives in the early days, the author advocates "general average share capital" or "general average share capital of similar members". First, it is easy to operate, second, it can avoid unnecessary capital friction, and third, it can effectively avoid the formation of major shareholder forces.

(5) the democratic management system of "one person, one vote"

The democratic management system of farmers' cooperatives is the basic guarantee to realize the basic functions of cooperatives and safeguard the rights and interests of members. It includes democratic election, democratic decision-making and democratic supervision, and its core is the election decision-making mechanism of "one person, one vote".

This is very different from the "one share, one vote" election decision-making mechanism of ordinary industrial and commercial enterprises (joint-stock enterprises). "one share, one vote" emphasizes the right of capital, embodies the principle of efficiency, and its purpose is to ensure the maximization of capital income, while "one person, one vote" emphasizes the rights of members and embodies the principle of fairness. its purpose is to maximize the income of members.

The reason for this is that farmers' cooperatives are a cooperative association of vulnerable groups, which determines the equality of the rights and status of cooperative members, and every member has the right to enjoy all kinds of services provided by cooperatives equally. have the right to share the operating profits of the cooperative equally (but not equally).

By the same token, the supervision mechanism of farmers' cooperatives also requires that the specific supervision system can facilitate and facilitate ordinary members to supervise the operation and management of cooperatives. For example, Article 33 of China's Law on Farmers' specialized Cooperatives stipulates that before 15 days of the annual general meeting of members, the management organization of farmers' specialized cooperatives shall prepare annual business reports, surplus distribution plans, loss treatment plans and financial and accounting reports, which can be placed in the office for members to consult. In practice, some farmers' cooperatives further stipulate that members have the right to know about the operation, management and financial revenue and expenditure of the cooperatives. if in doubt, they can consult the cooperative's accounting affairs at any time.

III. The major differences between farmers' cooperatives and ordinary industrial and commercial enterprises

In order to ensure the realization of the basic functions of farmers' cooperatives, it is necessary for farmers' cooperatives to compete with ordinary industrial and commercial enterprises in the same industry and make profits in the modern market. However, without the support of the government, farmers' cooperatives themselves cannot do this. This is because farmers' cooperatives are very different from ordinary industrial and commercial enterprises.

First of all, there are great differences in function and nature between the two.

Market economy is born for ordinary industrial and commercial enterprises, while ordinary industrial and commercial enterprises are born for capital. Ordinary industrial and commercial enterprises take the form of shareholding system and are organized according to the "efficiency" principle of market economy, which is essentially the personification of capital, pursuing the maximization of capital profits, and determining rights and interests according to the size of share capital.

Farmers' cooperatives are designed to solve the problems of agriculture, rural areas and farmers, and its institutional value and historical mission are to promote agricultural industrialization and "take back" most of the profits from the processing and circulation of agricultural products in the third stage of a country's economic development. raise the income level of farmers to the social average level. Farmers' cooperatives are organized according to the principle of "equality and fairness" of cooperative economy, which is essentially a cooperative economic association of vulnerable groups to keep warm. Farmers' cooperatives themselves do not need to maximize profits, but they seek to maximize the interests of their members. To this end, it pursues profit maximization for all its members externally, and distributes profits internally according to the principle of "equality and fairness". Therefore, countries all over the world define the nature of farmers' cooperatives as "non-profit organizations for the purpose of profit", and take it as the basic basis for them to enjoy preferential government policies.

Secondly, there are significant differences in the internal institutional arrangements between the two.

Under the condition of market economy, efficiency and fairness often contradict each other in a certain economic form or economy. The realistic solution is generally to maintain the "efficiency" of the market economy and to implement "fairness" by other means at the same time. The same is true of solutions to agricultural industrialization and modernization. When a country's economic development enters the "third stage", it objectively needs two types of enterprises to meet the different requirements of social and economic development: one is ordinary industrial and commercial enterprises, which meet the "efficiency" requirements of the market economy in accordance with joint-stock organizations; the other is farmers' cooperatives, which meet the requirements of social and economic "fairness" in accordance with cooperative organizations, in order to make up for the shortcomings of the market economy.

As a result of the above-mentioned "division of labor", the peasant cooperative system is inherently inadequate in terms of "efficiency":

(1) "secondary rebate" and "limited accumulation" will inevitably lead to insufficient accumulation of cooperatives themselves, "limiting share dividends" is obviously not conducive to cooperatives to absorb members' investment, and "restricting major shareholders" is not conducive to cooperatives to attract investment.

(2) the management system of cooperatives lacks incentive mechanism because managers do not have the right of residual claim. This will inevitably reduce its enthusiasm for improving management and efficiency, and at the same time, it may also induce managers to shirk their responsibilities or turn to seek hidden profits.

(3) in order to increase the opportunistic cost of managers, farmers' cooperatives implement a supervision system that is convenient for members, such as preparing operating financial reports, making it convenient for members to consult, allowing members to audit accounts, etc., which will inevitably increase the cost of supervision.

(4) in order to protect the rights and interests of members, cooperatives set up a more democratic decision-making procedure, which inevitably reduces the efficiency of decision-making and increases the cost of decision-making. For example, China's Law on Farmers' specialized Cooperatives stipulates that a general meeting of members should be held to vote on major issues in production and management activities, and the number of participants should be more than 2 ∕ 3 of the total number of members, and the total number of voting rights of members should be more than half.

Obviously, the lack of "efficiency" of the peasant cooperative system is the premise for the peasant cooperative to fulfill the mission of "fairness", and it is also the price that must be paid for its effective operation, all of which is determined by the historical mission of the peasant cooperative.

For the market economy, farmers' cooperatives lack "efficiency" and lose to ordinary industrial and commercial enterprises in the same industry at the starting point of competition, so it is impossible to "compete equally" with them. Therefore, farmers' cooperatives need the support of external economic forces in order to survive and participate in competition under the conditions of market economy. This external economic force mainly comes from two aspects, one is government support, the other is social donation. What is significant for the survival of farmers' cooperatives is the support of the government, including legislative support, preferential fiscal and tax policies, credit and financial support, organized promotion by the government, and so on.

IV. The problem of shortage of funds in cooperatives and its solution

(1) the government's solution-- the responsibility and obligation of the government

As mentioned earlier, a series of institutional arrangements for farmers' cooperatives, including secondary rebates, limited accumulation, restrictions on share dividends, restrictions on major shareholders, and so on, will inevitably lead to the shortage of funds in the cooperatives.

In the development of farmers' cooperatives, some people think that the shortage of funds in farmers' cooperatives can be solved by attracting major shareholders to join the cooperatives. However, this will face a dilemma: if we adhere to the decision-making mechanism of "one person, one vote", it is very difficult to attract major shareholders to join the club, and even if we implement the "additional vote system", it is impossible to change this situation (in our country, major shareholders can get up to 20% of the total number of basic voting votes). On the contrary, if we actually abandon the decision-making system of "one person, one vote" and acquiesce that major shareholders control cooperatives (which can attract major shareholders to join or run cooperatives), then the basic principles of peasant cooperatives will be undermined. Its basic functions (profit for all members and shared by all members) will be difficult to achieve, and peasant cooperatives will exist in name only.

In fact, the basic function of farmers' cooperatives determines that they will repel and discriminate against major shareholders. therefore, it is unpractical and unwise to hope to solve the problem of fund shortage of farmers' cooperatives by attracting major shareholders to join them. Moreover, this also confuses the difference between farmers' cooperatives and ordinary industrial and commercial enterprises, and ignores the different functions of the two types of enterprises. It is very harmful in practice.

According to the institutional logic of farmers' cooperatives, the shortage of funds in cooperatives should be solved by the government, which includes: (1) the government provides financial support, but this must be very limited. (2) the government provides credit support, including encouraging commercial banks and rural credit cooperatives to issue agricultural credit, providing special credit funds, interest discount and interest exemption, etc., but this is also limited. (3) the government provides financial support from the institutional level, which is mainly to open up restrictions on cooperative financial activities, such as allowing the establishment of "farmers' credit cooperatives" (to replace and standardize non-standard credit cooperative organizations such as "capital mutual cooperatives in poor villages"), allowing farmers' cooperatives to engage in cooperative financial activities, and so on. This is the fundamental and long-term solution to the shortage of funds in farmers' cooperatives. we can not only use rural funds to solve the problem of shortage of funds in farmers' cooperatives, but also fundamentally solve the long-standing problem of net outflow of rural funds "hurting farmers".

(II) Establishment of preferred shares

This practice is to establish preferred shares in addition to the common stock funds of cooperatives. Ordinary shares represent the identity of members, according to which members enjoy rights, undertake obligations and share benefits in cooperatives. Preferred stock attracts investment by preferential dividends, which represents members' investments outside the common stock. Investment preferred shares can enjoy fixed income higher than common shares, and have priority in distribution and settlement of the remaining property of cooperatives, but they do not have the right to vote and have no right to participate in cooperative management and decision-making. Generally speaking, each member has only one common share, but can subscribe for a number of preferred shares.

As the scope of issuance of preferred shares is limited to members of the club, and its financing scale is limited, it can only be used as an auxiliary means for cooperatives to solve the problem of shortage of funds.

(3) to establish a "new generation of cooperatives"

The shortage of funds of "classic cooperatives" is generally solved through the cooperative financial activities of farmers' credit cooperatives and farmers' cooperatives. However, if the agricultural product processing adopts the enterprise operation mode of high added value and deep processing, then these usual financing methods are obviously insufficient, so other forms need to be taken to solve the capital problem. The "new generation of cooperatives", which first appeared in the United States and then sprung up in countries such as Canada, emerged in response to this need.

North Dakota in the northern United States, which is dominated by agriculture, has the lowest per capita income among the 50 states in the United States. In 1989, it was suggested that the state was unfit for human habitation and that the population should be moved out and the land restored to its original buffalo habitat. In the early 1990s, a group of new farmers' cooperatives, known as "new generation cooperatives", were organized by some economic experts, local government agencies, rural financial institutions and local farmers from the perspective of high value-added and deep processing of agricultural products. In just a few years, these "new generation cooperatives" have successfully raised the per capita income of local rural residents to the national average (Wang Zhenjiang, 2003).

These "new generation cooperatives" adhere to the basic principles of classic cooperatives, such as the stock fund comes from members, the democratic management system of "one person, one vote", the return of profits to members, serving for members, and so on. However, some practices of the shareholding system are used for reference in the management system of stock funds in cooperatives.

(1) cooperatives require members to subscribe for higher equity funds. This is because the high value-added deep processing of agricultural products requires more funds, and the number of cooperative members is often limited. In general, the cooperative stock capital accounts for 40% ~ 50% of the total capital of cooperative processing enterprises, and the amount per share is calculated according to the quota between the processing quantity of agricultural products and the total investment. In the United States, the initial investment is about $5000,000 to $15000. In order to avoid the problem of major shareholders, they also limit the proportion of members.

(2) the capital of cooperatives is relatively stable. On the one hand, this is because the operation of processing enterprises needs stable capital support, on the other hand, stable capital is also conducive to cooperatives to obtain preferential loans from banks. The new generation of cooperatives adopts a closed membership system to ensure the capital stability of cooperatives by restricting the withdrawal of members from the society. Under normal circumstances, members cannot withdraw at will, and co-operatives do not easily accept new members. The closed membership system is obviously very different from the open membership system of classic cooperatives (voluntary membership and freedom of withdrawal).

(3) members shall have the right of delivery equal to the amount of their shares. This means that members receive services in cooperatives equal to the amount of shares they buy. However, this right of delivery is not only a right, but also an obligation. According to regulations, each member must sell the same amount of agricultural products to the cooperative in that year (the current period) as stipulated in his own right of delivery, and if he pays more or less, he will be compensated according to the size of the losses caused to the cooperative. On the one hand, this institutional arrangement ensures the supply of raw materials (primary agricultural products) for processing enterprises and reduces the adverse impact of raw material fluctuations on the operation of enterprises. On the other hand, it can effectively restrain the opportunistic behavior of the members. Because cooperatives set the current purchase price of agricultural products in advance, with the fluctuation of market price, it is possible to induce opportunistic behavior of members (sell more to cooperatives when the market price is lower than the purchase price, otherwise sell less).

(4) the right of delivery of members can be transferred. There are two situations and two functions. One is the temporary transfer of the right of delivery. When the number of delivery rights of members is greater or less than their own quantity of agricultural products in that year, they need to transfer or purchase delivery rights. The temporary transfer of delivery right solves the problem that members need to "adjust the surplus and shortage" due to the fluctuation of agricultural output, and objectively ensures the stability of raw material supply in processing enterprises.

The other is the permanent transfer of the right of delivery, that is, the transfer of the right of delivery through the transfer of shares, which often needs to be recognized by the cooperative management body (council). This institutional arrangement actually stipulates the withdrawal mechanism of the "new generation of cooperatives". In fact, the renewal of members in and out of cooperatives is inevitable, and cooperatives need to renew their members in order to maintain their vitality. moreover, the open membership system of "voluntary entry and freedom of withdrawal" is also one of the basic principles of cooperatives. Therefore, the "new generation of cooperatives" needs its own exit mechanism to make up for the shortcomings of the closed membership system. Of course, allowing the transfer of shares also provides convenience and possibility for members to adjust their investment and business scale in cooperatives.

In theory, if the expected performance is good or there are undistributed profits, the transaction price of the cooperative stock (together with the right of delivery) will be higher than its face value or the original price, and the transferor will get a premium. At the same time, the transfer of stock funds also means the transfer of operational and investment risks. These are obviously different from the provisions that the shares of classic cooperatives cannot be transferred or can only be transferred to members of the cooperative.

(5) "secondary rebate" and "share dividend" are merged into one. The "secondary rebate" of the "new generation cooperative" is also carried out according to the transaction ratio between the member and the cooperative, but because the members' right of delivery is equal to their share capital, therefore, the "secondary rebate" of the "new generation cooperative" and the "share dividend" are merged into one. This situation can obviously effectively avoid the friction between rebates according to transactions and dividends.

V. the problems existing in the development of farmers' cooperatives in China

Internationally, promoting agricultural industrialization and modernization through farmers' cooperatives has achieved large-scale successful experience in developed and moderately developed countries. After an in-depth analysis of the nature and function of farmers' cooperatives, it can even be said that so far, no system at all times, at home and abroad, can generally guide ordinary farmers to prosperity, extensively realize agricultural industrialization, and then guide the whole countryside to agricultural modernization.

In China, we began to try to establish farmers' professional cooperatives in the mid-1990s. however, due to the lack of a deep understanding of the nature and function of farmers' cooperatives in the mainstream society, even after the promulgation of the Farmers' specialized Cooperatives Law in 2006, the development of farmers' cooperatives in China is still difficult and there are many problems.

In September 2009, the author was invited to participate in the mid-term report meeting of the key research projects of the Chengdu Branch of the people's Bank of China (Sichuan Branch), and served as a subject evaluation expert. Their research topics involve farmers' cooperatives, land transfer and related financial support and other issues. The research scope of these topics involves thousands of "cooperatives" in Sichuan Province, but from the point of view of the investigation, it is rare to set up cooperatives in accordance with the Law on Farmers' specialized Cooperatives. These situations are basically consistent with what the author has learned in recent years. The author sighs that in reality, most of the "cooperatives" are not satisfactory, which are far from the basic principles of cooperatives, and some are even quite different from the original intention of setting up farmers' cooperative system.

To sum up, the main problems in the development of farmers' cooperatives in China are as follows:

(1) it is difficult for ordinary farmers to set up cooperatives

International experience shows that the popularization and promotion of farmers' cooperatives in various countries is realized through the organized promotion of government agencies. The usual practice of governments is that, through their own relevant institutions (such as various agriculture-related institutions of grass-roots governments), on the one hand, local governments carry out education and training of cooperatives to train professionals and backbone farmers for farmers' cooperatives; on the other hand, they send staff to directly help and guide farmers to establish and manage cooperatives ③.

For example, the Canadian grass-roots government sent staff to participate in the whole process of the establishment of farmers' cooperatives. Before the establishment of cooperatives, help farmers organize meetings, guide and help cooperatives reach an agreement, decide on the types of business activities, and so on. After the establishment of the cooperative, guide and help identify members, make plans, seek resources, conduct industry analysis, and so on. Through the direct support of the government, it can significantly improve the participation of farmers, but also help to improve the internal operating mechanism of cooperatives in accordance with the law (Han Jun et al., 2006). In France, the Ministry of Labour and Social Affairs of the Ministry of Agriculture and relevant associations actively create conditions and facilitate the establishment of farmers' cooperatives, including economic subsidies, technical guidance, personnel training, etc. (Huang Bujun, 2003). In the United States, the initiation and establishment of "new generation cooperatives" are mostly fully demonstrated by relevant experts and are highly scientific, so the cooperatives are more likely to succeed and have great potential for development (Wang Zhenjiang, 2003).

In China, due to the lack of organized promotion from the grass-roots government, farmers' cooperatives are in a situation of survival and extinction. Although the number of ordinary farmers (that is, simple growers or farmers) is large and have a strong willingness to cooperate (Li Shangyong, 2008), they often lack funds, knowledge and management ability. coupled with the limited activity and organizational capacity, it is difficult to initiate and organize farmers' cooperatives on their own. Most of them still can only sell primary agricultural products and can hardly share the profits of processing and circulation of agricultural products.

On the other hand, our grass-roots cadres (including city, district, county and township cadres) generally lack the basic knowledge of farmers' cooperatives and have little ability to correctly guide local farmers to establish relatively standardized farmers' specialized cooperatives in accordance with the law (Li Shangyong, 2008).

(2) large shareholders control cooperatives, thus harming the interests of ordinary members

As it is difficult for vulnerable small farmers to establish farmers' cooperatives in rural areas, especially in relatively poor remote mountainous areas, cooperatives often need to be initiated by rich and capable people, large farmers or village group cadres when they are started. These "capable people" formulate operating rules for cooperatives, select production and operation projects, provide start-up funds, organize agricultural product marketing, and manage cooperatives. Objectively speaking, without the active organization and participation of these capable people, large households and major shareholders, it is difficult to imagine that farmers' cooperatives can be established and run effectively in poor mountainous areas and rural areas.

The problems arising from the establishment of co-operatives can be divided into two situations.

One situation is that cooperative managers are selfless but unsustainable. This is mainly because the operation and management of some farmers' cooperatives mainly rely on the support of capable people and large families, who contribute freely, regardless of salary, if cooperatives can get out of the trough of start-up and earn profits in a short period of time, and have the ability to pay the salaries of the managers of these capable people, then the cooperative will step into the track of healthy development. On the other hand, if cooperatives can not get out of the trough and have no profits to pay the salaries of these capable managers for a long time, then the selfless dedication enthusiasm of these managers will not be sustainable. The resulting institutional pattern of "hitchhiking" within cooperatives will eventually lead to the disintegration of such cooperatives. In reality, it is more about the latter.

Another situation is that large shareholders control cooperatives, harming the interests of ordinary peasant household members. At present, a considerable number of cooperatives are led by rural rich and capable people, large operators or all kinds of brokers, whose shareholding funds often account for the absolute majority of the cooperative shares, and some even have a dominant shareholder. become the major shareholder of the cooperative. Accordingly, these major shareholders naturally become the main members of the cooperative organization and management organization, and those who hold the most shares often become the legal representative chairman of the cooperative.

If the democratic management and decision-making system of cooperatives can operate normally, this kind of "capable major shareholder organization" may also be able to perform its management and management functions properly. it can bring practical benefits to ordinary members of cooperatives as stipulated in the Farmers' Professional Cooperatives Law. However, the problem is precisely that cooperatives led by "capable big shareholders" often lack the basis of democracy (ordinary farmers need to rely on "capable big shareholders" to make profits, their status is low, and there is no basis for fighting for democratic rights). The democratic management and decision-making systems of these cooperatives are difficult to operate and play a role. In most cases, the legal management body of the cooperative becomes the decoration, and the major matters such as the management affairs, business activities and benefit distribution of the cooperative are basically decided by the "capable big shareholder". In the vast majority of cases, the supervisory body (supervisor or board of supervisors) of the cooperative does not work. There are few opportunities for ordinary peasant household members of cooperatives to really participate in democratic management and democratic decision-making, and the more decisions related to major interests, the more ordinary members often have no opportunity to participate in substance.

In terms of profit distribution, it is rare to really carry out "secondary rebate" in accordance with the legal proportion. The most common situation is that the major marketers of cooperatives purchase members' agricultural products at the agreed price or market price, and the subsequent marketing profits have nothing to do with the members. If the purchase price of some cooperatives is slightly higher than the market price, the price difference can be counted as a "second rebate". Some cooperatives have partial or symbolic "secondary rebates", but they are far from reaching the legal standard of "60% of distributable surplus".

In essence, these "cooperatives" are only enterprises with "capable major shareholders" (most of them should be registered as ordinary industrial and commercial enterprises), rather than farmers' cooperatives in the original sense. It is impossible for them to undertake the historical task of "raising the income level of the broad masses of farmers to the social average level".

(3) Agriculture-related enterprises obtain preferential policies under the guise of cooperatives

In recent years, the form of "company + peasant household" has been mistaken for cooperative economy by some people. In fact, "company + peasant household" is essentially a kind of enterprise behavior, not a form of cooperative economy. Those companies (enterprises) engaged in agricultural products processing trade set up raw material bases of agricultural products in the form of "companies + farmers" to avoid adverse effects on their operation caused by abnormal supply and demand and price fluctuations of agricultural products. Their usual practice is to establish a stable supply and marketing relationship with farmers through orders (signing contracts for the sale of agricultural products with farmers in advance).

"company + peasant household" is objectively beneficial for farmers to sell agricultural products, but because the profit distribution of the company has nothing to do with farmers, there is a lack of common interest basis between companies and farmers, so it is difficult to establish a long-term and stable purchase and sale relationship. In reality, both parties may default because the market price exceeds expectations, and the company defaults more than the farmers.

After the implementation of the Law on Farmers' specialized Cooperatives in China, some agriculture-related enterprises have taken a fancy to the government's preferential policies for cooperatives, so they have changed "companies + farmers" into the form of "companies (cooperatives) + farmers". Among them, the situation of establishing cooperatives by absorbing farmers' land into shares is more typical. They generally follow the following pattern:

(1) this kind of cooperative is generally initiated by some agriculture-related enterprises or large farmers, who are registered as farmers' professional cooperatives after accepting farmers' land as shares. The capital investment and land management of cooperatives are entirely decided by enterprises or large farmers.

(2) Farmers take shares in cooperatives with the right to manage their own contracted land, but do not engage in business activities such as farming on their own land, participate in the operation and management of cooperatives, and do not bear any operating expenses of cooperatives. Farmers can work in the land management of cooperatives (such as farming) and get paid for the work.

(3) the annual income composition of farmers' land ownership = land rent + year-end dividend of cooperatives + remuneration for migrant workers. For example, in Ya'an City, Sichuan Province, the annual income of farmers is 450-660 jin per mu of land rent, 200 yuan per household in year-end dividend, and 30 yuan per day for migrant workers. However, farmers can only have the opportunity to work in these cooperatives during the busy period of farming or when the cooperatives are short of labor, so the annual pay for working in these cooperatives is not much.

Judging from the nature of peasant cooperatives, the biggest problem with this kind of so-called "cooperatives" is that they completely filter out farmers: (1) farmers have lost the second aspect of peasant household independence in this kind of cooperatives, that is, they have completely lost the autonomy of household management of their own land. (2) Farmers do not have their own agricultural products, so they cannot trade with cooperatives, the principle of "secondary rebate" is destroyed, and the main ways for farmers to participate in cooperatives to share the profits of agricultural products processing and circulation are destroyed. (3) as farmers have lost their qualification to participate in the production and management activities of cooperatives, the principles stipulated by law, such as "taking farmers as the main body", "serving members as the purpose", "democratic management" and "democratic decision-making", also have no foundation.

In fact, according to its mode of operation, this kind of "cooperative" is essentially a common "land lease operation" in the agricultural economy (its business model is beyond reproach), but it improperly takes the form of "farmers' professional cooperative". According to the relevant laws of our country, the industry and commerce department should register it as an ordinary industrial and commercial legal person, not a cooperative legal person.

Agriculture-related enterprises take the form of cooperatives mainly to take advantage of the government's preferential policies for cooperatives. However, this not only undermines the fair implementation of the preferential policies of cooperatives, but also infringes on the legitimate rights and interests of real farmers' cooperatives. Because these policy resources (such as financial support) are always limited.

In addition, such so-called "cooperatives" are actually "wiping out" small farmers, which runs counter to the purpose of farmers' cooperatives to protect and transform small farmers. China is a country with a large population, and the employment problem is prominent, so it is absolutely impossible to realize agricultural modernization by "eliminating" small farmers.

VI. Basic ideas for solving problems

Obviously, there are two extremes in the development of farmers' cooperatives in China, one is that it is difficult for ordinary farmers to establish cooperatives, and the other is the deformation of a large number of "cooperatives", which seriously deviates from the requirements of the system of farmers' cooperatives. There are two reasons for the above problems, one is the absence of the government and the lack of promotion, and the other is the lack of government supervision. Behind these two reasons are more profound understanding and concept problems, and behind these understanding and concept problems is the reality that China's rural economic system seriously lags behind the development of rural economy.

In the early days of reform and opening up, in order to solve the problem of food, through the bottom-up process, the current rural economic system of our country was formed. As a negation of the people's commune system, it is undoubtedly successful, but because it is not divorced from the background of the planned economy at that time, nor has it been carefully considered in theory in advance, the current so-called "two-tier management system" has great historical limitations.

With the gradual establishment of China's market economic system and the deepening of the new rural construction, the majority of farmers will inevitably choose to organize farmers' cooperatives to share the profits of agricultural products processing and circulation, and thus promote the evolution of China's rural economic system. In this context, adopting the model of "family management of land + farmers' cooperatives + perfect agricultural socialized service system" to promote agricultural industrialization and modernization will become a realistic choice.

Therefore, on the whole, the government should carry out the reform of the rural economic system in accordance with the requirements of the above-mentioned agricultural modernization model, including the reform of the rural collective economic system, the transformation of the functions of township institutions, the transformation of the functions of grass-roots agricultural departments, and so on. All these reforms should aim at building a "perfect agricultural socialization service system" and promoting the healthy development of farmers' cooperatives.