China turns to machines as farmers seek fresh fields

A farmer stands on a tractor loaded with corn stalks at a private plantation near Suibin state farm, Heilongjiang province October 16, 2012.

BAOQUANLING, China (Reuters) - China needs to replace millions of workers who have quit farms for cities, but even its vast state power might not be able to transform the countryside into a network of big industrial farms capable of feeding its growing economy.

Pulling together small plots of land to make larger operations and introducing modern mechanical techniques would help boost productivity, vital if China's agricultural sector is to meet soaring domestic food demand.

But efforts to modernise the sector are struggling to gain traction because many farmers are suspicious about giving up their land, and even for some mechanised farms, there are too few workers.

Guaranteeing food security is a major tenet of the ruling Communist Party. The country is self-sufficient in rice and wheat, but is struggling to meet corn demand and has long given up trying to satisfy soy demand. It is the world's biggest importer of soybeans, and a major buyer of corn.

It has increased grains output for nine straight years and aims to add 50 million tonnes per year by 2020 to the record 571.21 million tonnes of grain harvested in 2011.

"It now needs the government to come out and manage the land of those who give consent, and improve economies of scale," said Fu Xuejun, a manager at the Baoquanling farm, owned by the Beidahuang Group, a huge state-owned farming conglomerate in Heilongjiang in northeast China.

Some say China should give up its fixation with self-sufficiency and take advantage of growing grains trade internationally.

"China used to emphasise self-sufficiency because the international environment was not favourable," said Li Guoxiang, researcher with the Rural Development Institute of the China Academy of Social Sciences (CASS). "Food security should have two aims - one is domestic production and the other is the ability to buy overseas."

LURE OF THE CITIES

The challenge of reviving the farming sector is daunting at a time when both the rural population and available agricultural land are shrinking.

The number of rural workers has been falling for years because of a low birth rate, an ageing population and most importantly the lure of China's fast-growing cities.

Between 1982 and 2010, when China's overall population rose by a third, the number of registered rural residents fell to around 710 million from 790 million, Reuters calculations based on census data show.

The real rural population is likely to be lower though, because many of 260 million migrants working in cities are registered in their home villages.

Millions of hectares per year of farming land are being lost to urban and industrial development. China's 2011-2015 plan for the farm sector allocates at least 104 million hectares for crops, an area the size of Egypt, compared with 120 million hectares in the previous plan. The main problem is persuading farmers not to abandon their plots.

Some land is simply lying fallow, as farmers find better pay elsewhere but still prefer not to give up their land.

"There is a lot of talk about urbanisation and urban expansion encroaching on agricultural land but I often argue that non-farm wages are more relevant to whether land gets kept in production," said Bryan Lohmar, an agricultural economist and China director of the U.S. Grains Council. "A lot of land is left fallow because nobody wants to farm it."

Reflecting those wage gaps, 69-year old corn grower Li Huamin said he could earn as much from leasing out his land as from planting.

His 36-year-old son plans to abandon the plot near the state-owned farm of Suibin, a few miles from the Russian border, and open a restaurant.

"Young people aren't willing to be farmers anymore and leave to work or study in the cities - more than half have gone already," he said.

AGGREGATION

More than half of China's ploughing, planting and harvesting is carried out by machines, compared with a third a decade ago, but the biggest challenge lies in aggregating farms to develop economies of scale.

Li of CASS said studies have shown only 13-15 percent of small farmers have agreed to aggregate their land or transfer it to commercial farmers.

"The government simply can't go too fast and transfer land too quickly because of the impact on rural social stability," Li said.

Often, if a group of farmers sell, local governments use the land for more profitable industrial uses, and some farmers are reluctant to give up their land.

"Many think that if they transfer their land they won't be allowed to go back, so there are plots that are just empty because the farmers have gone to the cities but don't dare to lease out their land," said Li.

Heilongjiang became the country's largest grain producer in 2011 when yields rose 11 percent from 2010 as farmers deployed bigger and better machinery for threshing and ploughing.

Beijing wants to lift that to 65-70 percent by 2020, but the increased use of machines in most farms was a reaction to rising labour costs, not a drive to meet government targets.

"The core issue is, who will plant for us and ensure food security in future following urbanisation and industrialisation?" said Zong Jinyao, an official in charge of mechanisation of the Ministry of Agriculture.

(Editing by Daniel Magnowski and Simon Webb)