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China - Farmers Professional Associations 37430 Public Disclosure Authorized Public Disclosure Authorized China - Farmers Professional Associations Review and Policy Recommendations Public Disclosure Authorized August 2006 Public Disclosure Authorized East Asia and Pacific Region The World Bank 1818 H Street NW Washington, DC 20433 i Acknowledgements This report was prepared by Achim Fock and Tim Zachernuk. It is based on a World Bank activity on the development on farmers’ associations in China led by Achim Fock (TTL, EASRD) and including Li Guo (EASRD) and Lin Zong-Cheng (EASES). Zhao Hongwei (EASRD) provided assistance. Zhao Jun was responsible for translation. The activity was initiated in response to a Government request for World Bank assistance that was sent by the Ministry of Finance of the People’s Republic of China and sponsored by Messrs. Duan Yingbi (President, China Foundation for Poverty Alleviation) and Chen Xiwen (Vice Minister, Leading Group for Financial and Economic Affairs). The counterpart of this activity has been the Development Research Center under the State Council (DRC) and the team would like to thank the DRC team, in particular Director-General Han Jun, for the strong support and excellent cooperation. Further Government support was provided by the General Station of Management and Administration on Rural Cooperative Economy of the Ministry of Agriculture (MOA), in particular Mr. Liu Denggao; the Government of Sichuan Province, in particular the Rural Affairs Office and Mr. Zhao Wenxin, Senior Advisor to the Provincial Government of Sichuan; and the county Governments of Renshou and Tianquan in Sichuan. Numerous people and institutions have contributed to the various tasks supported by the activity, and while they are too numerous to recognize all by name, we would like to mention the contributions made by the following individuals and institutions: Abel Projects; Center for Chinese Agricultural Policy (CCAP) of the Chinese Academy of Sciences (CAS); Chen Jie; Feng Xiaolin; ICCIC-Gungho; Jiang Changyun; the MBA Center of the College of Economics and Management of the China Agricultural University (CAU); the Institute of Rural Economy, Sichuan Academy of Social Sciences (IRE-SASS); the RAF Institute for Rural Development (RAF); and, last but certainly not least, Yang Lianfang. Funding for the activity was partly provided by the Trust Fund for Environmentally and Socially Sustainable Development (ESSDTF) and a Danish Consultant Trust Fund, and the team would like to thank the donors for their support. The activity also benefited greatly from our partnership with the Canadian International Development Agency (CIDA) and we like to thank all partners for their fruitful cooperation. This report also benefited from policy discussions at various occasions including “Farmers’ Association in Sichuan, China, and Beyond: Workshop for Discussing Policy Options for China and Launching Pilot Activities in Sichuan” in January 2005, and the “International Workshop on Farmer’s Cooperative Law Establishment” in April 2005. Comments on earlier drafts of this report were provided by Bill Turner, Chen Jie, Dan Gibson, Derek Baker, Dzung The Nguyen, Garry Storey, Gayane Minasyan, Hans-H. Münkner, Liu Denggao, Luo Dan, Philippa Kelly, Qin Zhongchun, Richard Hardiman, Sari Söderström, Stephen Mink, Yuan Peng, Zhao Jun, Zhang Linxiu, and Zhang Yuhua. We like to thank all for their contributions. Finally, we would like to thank the peer reviewers, Brian Bedard (Project Director, Canada China Agriculture Development Project) and Olivier Durand (AFTS4), as well as Stephen Mink (Lead Economist, EASRD). i Table of Contents Executive Summary …................…………………………………………………………………… 1 1. Introduction..................................................................................................................................5 Rationale.......................................................................................................................................... 5 Scope ............................................................................................................................................... 7 Terms and Definitions..................................................................................................................... 9 Objective of Report ......................................................................................................................... 9 Methodology ................................................................................................................................. 10 Outline........................................................................................................................................... 11 2. Development of Farmer Associations in China .........................................................................12 Brief History of FPA Development .............................................................................................. 12 Changing Nature of Markets......................................................................................................... 13 Agricultural Modernization........................................................................................................... 15 Legal Framework .......................................................................................................................... 16 Policies and Initiatives .................................................................................................................. 17 Role of Government...................................................................................................................... 18 3. Current Status and Issues for Farmer Associations ...................................................................20 Incidence and Type of Farmer Associations................................................................................. 20 Legal and Institutional Framework ............................................................................................... 22 Support Systems............................................................................................................................ 25 Dynamics of Farmer Associations ................................................................................................ 28 Resource Mobilization .................................................................................................................. 34 Relationship between FPAs and Government............................................................................... 36 4. Policy Recommendations...........................................................................................................42 National Legislation ...................................................................................................................... 42 FPA Formation, Membership and Composition ........................................................................... 42 Finance and Resources.................................................................................................................. 44 Taxation......................................................................................................................................... 45 Registration, Regulation and Supervision..................................................................................... 46 Government Support Programs..................................................................................................... 47 Promotion Strategies ..................................................................................................................... 48 Promoting Public Awareness ........................................................................................................ 50 Creating a Business-friendly Environment ................................................................................... 50 Government and FPA Synergy ..................................................................................................... 51 Poverty and Gender Aspects ......................................................................................................... 51 International Donor Support.......................................................................................................... 52 References..........................................................................................................................................54 ii Tables Table 1: Functional and Formal Farmer Associations.......................................................................20 Table 2: Main Economic Activities of Farmer Associations.............................................................21 Table 3: Agencies at which FPAs are Registered..............................................................................24 Table 4: Initiative for Starting FPA ...................................................................................................28 Table 5: Leadership of FPAs .............................................................................................................30 Table 6: Primary Internal Obstacles to Sustainability of Farmer Associations .................................31 Boxes Box 1: Farmer associations and companies .......................................................................................23 Box 2: Working without guidelines...................................................................................................25 Box 3: Strategic planning...................................................................................................................26
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