By Allen Liao
To meet the requirement for large-scale production of tobacco and intensive operation of the tobacco industry, the organizational structure of tobacco growers in China have undergone new changes over recent years from the development of tobacco farms, big rural households exclusively engaged in tobacco production and mutual aid groups of tobacco growers to the establishment of tobacco cooperatives. Today, tobacco cooperatives are mushrooming in all tobacco-producing regions across China.
In 2008, the domestic tobacco industry launched 135 pilot projects nationwide for the development of modern tobacco agriculture. In the fulfillment of these pilot projects, successful efforts have been made to develop increased investment in tobacco cultivation techniques and strategies and boosting the construction of infrastructure facilities for tobacco production. Focus has also been placed on the development of moderate-scale tobacco growing, the establishment of new forms of organizations of tobacco growers, improving the provision of specialized services, and so on.
On average, each tobacco-growing farm household in the villages designated to fulfill the pilot projects runs 16.4 mu (1.09 hectares) of tobacco plantations. Approximately 57.1% of the tobacco plots are 500 mu (33.3 hectares) or larger. The annual average use of labor for each mu of tobacco planted has declined to 23.32 persons, which is obviously below the national average for all agricultural production.
In an address to the 2009 annual national conference on tobacco work, director-general Jiang Chengkang of the State Tobacco Monopoly Administration (STMA) the regulator of China’s tobacco industry – said that efforts should be made to promote the full-scale development of modern tobacco agriculture in China, which should be undertaken as a great historical task by the entire industry. Jiang also called for efforts to develop a large number of big rural households exclusively engaged in tobacco production, family tobacco farms and specialized tobacco cooperatives through renewal of the organizational form of tobacco production.
In the establishment of tobacco cooperatives, tobacco growers usually offer farmland, facilities, labor or other means of production to acquire shares on an equal footing. In tobacco cooperatives, members can have their strong points in technology and management brought into full play. With proper division of labor and under unified management, members of tobacco cooperatives can commonly fulfill their operational duties and assume risks from tobacco growing commonly. Therefore, the system of establishing tobacco cooperatives can contribute to reducing exposure to potential risks and increasing economic efficiency related to the cultivation of tobacco. The advantages of establishing tobacco cooperatives are presently embodied in the following respects:
Firstly, establishment results in stabilizing the tobacco acreage, and is in the interest of fulfilling contracts for leaf tobacco production and marketing.
Secondly, it contributes to reforming the structure of farmland, facilitating mechanized farming and raising labor productivity in tobacco production.
Thirdly, it is in the interest of generalizing the application of advanced production technologies and realizing specialized tobacco production management.
Fourthly, it contributes to improving the quality of leaf tobacco on a unified basis, solving the problem of unbalanced development of leaf tobacco production among different farmers.
The establishment of the tobacco cooperative at Shandang in Le’an County of east China’s Jiangxi province is a typical example of success in this regard. When the tobacco cooperative was established in 2005, it had only 23 members, and 209 mu (13.9 hectares) of tobacco plantations. Through rapid development over the past four years, it has become a specialized tobacco cooperative with 61 members and 1,108 mu (73.87 hectares) of tobacco plantations.
The operation of the tobacco cooperative at Shandang Village has gone beyond the general model of "companies plus farmers". It is the initial shape of the model of "companies plus cooperatives plus farmers" for tobacco production. This model is intended to reform the resources of labor through labor exchange and mutual assistance and to realize organized production to some extent. The application has led to successes in organizing standardized leaf tobacco production on a large scale. This model has allowed Shandang Village to significantly improve the quality of leaf tobacco it produces and generate higher efficiency than other tobacco producing villages.
Because the development of tobacco cooperatives does not hurt the interests of farmers and results in the generation of greater profits, the establishment of tobacco cooperatives has won extensive support from all farmers amid intense competition in the marketplace. In some provinces and provincial-level regions, the number of tobacco cooperatives has continued to expand and their coverage has kept enlarging. In these provinces and regions, tobacco cooperatives developing rapidly.
From December 2008 and April 2009, Baoshan City Tobacco Monopoly Administration, which doubles as the city tobacco company, supported the establishment of 349 tobacco cooperatives in the city, with the admission of 58,908 members. These tobacco cooperative members are growing 334,200 mu of tobacco, accounting for 96% of the total tobacco acreage in the city.
Facing the issuesTobacco industry experts consider that as the establishment of tobacco cooperatives is a new frontier in the development of modern tobacco agriculture, there will inevitably be some issues and problems to overcome.
Firstly, as tobacco cooperatives are still in a process of initial development, their coverage is small. Tobacco cooperatives are still of a small scope, have a relatively simple organizational structure, are not well regulated and do not yet provide sufficient services for members. As a result, they are not yet highly attractive to tobacco growers.
Secondly, the scope of development is rather limited. In regions unsuitable for tobacco growing or regions whose tobacco production is relatively minor, it is impossible to establish tobacco cooperatives. Meanwhile, in regions with vast potential to develop tobacco production, tobacco growing is subject to quantitative control under the policy of "controlling both the tobacco acreage and output of cigarettes" adopted by STMA. Therefore, tobacco acreage in such regions is rather limited, and it is impossible to admit all tobacco growers into tobacco cooperatives.
And thirdly, most of the tobacco cooperatives already set up do not have well-established systems of internal control. So far, a majority of tobacco cooperatives in China permit tobacco growers to voluntarily join and allow members to voluntarily quit. Besides, there is no requirement for universal registration of tobacco cooperatives. While the majority of tobacco cooperatives have been registered, a small number of tobacco cooperatives have not. Generally, tobacco cooperatives disclose financial information to their members. But some do not. While a small proportion of tobacco cooperatives apply the system of external auditing, a majority of tobacco cooperatives don’t. Moreover, chiefs of tobacco cooperatives are chosen through collective election. Only a small proportion of tobacco cooperatives are still applying the old system of choosing their directors and village chiefs.
Development strategiesAs far as the aforesaid problems are concerned, all tobacco-growing regions across China are required to earnestly study them and find ways of resolving the issues to ensure that tobacco growers will be able to get material benefits from tobacco production.
On the development of tobacco cooperatives, STMA director-general Jiang Chengkang said recently that the establishment of tobacco cooperatives should be based on local realities and that only when the conditions are ripe can tobacco cooperatives be formed. He particularly pointed out that the government should not forcibly broker the establishment of tobacco cooperatives, let alone issue administrative orders on the subject.
"It is essential to renew the forms of organization of tobacco growers," he said. "Efforts should be made to encourage the establishment of family-run tobacco farms, big rural households exclusively engaged in tobacco production, and specialized cooperatives for tobacco production, and explorations should be conducted in this endeavor. There should be no imposition of uniformity on all regions in the establishment of tobacco cooperatives. In practice, analysis and comparison should be conducted to see what organizational forms could better arouse the enthusiasm of farmers and would be more beneficial to increasing production and income by farmers. The adoption of whatever organizational forms must be based on the status quo of local socioeconomic development and on adherence to the policy of practicality. There should be no unrealistic approach in this endeavor. Efforts to promote tobacco growing of scale should be appropriate. It is not the case that the larger a tobacco cooperative is, the better it will be. Rather, the size of tobacco cooperatives should be appropriate to the local level of productivity and management. There should be no rashness to realize immediate interests. Whatever organizational forms adopted should be intended to lower the cost of management and increase economic efficiency," Jiang said.
In daily management of tobacco cooperatives, all members should be involved in the making of policies and decisions. Any deputies elected should be responsible for all members. Members should equally enjoy the right of election. And each member should be allowed to cast only one vote at a time.
In the disintegration of tobacco cooperatives, the will of all members should be respected. Tobacco cooperatives should be operated in accordance with law and administrative regulations of the government. It is essential to establish a complete supervision mechanism, to enable tobacco cooperatives to operate in a sound way.
Firstly, the government authorities concerned need to strengthen external supervision, regularly or irregularly send personnel to inspect the operation of tobacco cooperatives and audit their financial affairs.
And secondly, tobacco cooperatives themselves need to hold regular meetings of with members to report on their operations. The leadership should voluntarily accept supervision by all members.
In the process of promoting the development of modern tobacco agriculture in China, tobacco cooperatives have emerged as the times require. In initial practice, the system has shown more and more advantages, though continued exploration in this regard is necessary. However, there are also some problems in their development. Improving the system remains a long-term and arduous task.
