Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.
Leasing farmland becoming popular in China
Oct 23, 2009
Leasing land was illegal in China prior to 1984, but a change in government policies has made it possible to lease land rights on farmland. The change in land rights policies from the Chinese government has boosted farm income and productivity over the past 25 years.
China has roughly 20% of the world's population, yet only 7% of the world's arable farmland. Despite the limited amount of farmland, the Chinese want to stay self sustaining in agriculture production.
Chinese farmland is typically owned by village collectives (essentially, the local representatives of the Communist Party leadership) according to a recent article from the Wall Street Journal. Local farmers have rights to farm certain plots. Up until 1984, farmland rights could not be subleased or transferred to any other farmers, but now the Chinese government is promoting leases and transfers.
Since the change in laws, land rights have been easily leased or transferred through contracts. According to the Rural Development Institution (RDI), contracts for land rights used to be short in duration, but are becoming longer to provide stability to farmers. Rent on farmland has increased dramatically as well; doubling since 2005.
As the Chinese government has encouraged the leasing and transferring of land rights, land owners can go to work doing something else, while still receiving income from their farmland. Some farmers will even farm half of the year, while renting out their land the other half. 48-year-old farmer, Zhang Deping explains, "It's really a good deal to rent out the land for half of each year. We can make more money than planting on our own."
A RDI survey found that 58% of farmers that have land rights have an actual certificate proving it. The RDI would like to see that number grow even more.
Read more about farmland and agriculture at: farmlandforecast.colvin-co.com/.