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Agricultural Land Contract and Management Rights: Transferring Price and

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 Sept., 2012 Journal of Resources and Ecology Vol.3 No.3
J. Resour. Ecol. 2012 3 (3) 262-268
Article
DOI:10.5814/j.issn.1674-764x.2012.03.009
www.jorae.cn

Agricultural Land Contract and Management Rights: Transferring

Price and Countermeasures in Typical Agricultural Areas of China

MU Songlin1,2,3, ZHANG Yifeng1,2*, WANG Kaiyong1 and Dhruba Bijaya G. C.1,3

1 Institute of Geographic Sciences and Natural Resources Research, CAS, Beijing 100101, China;
2 Key Laboratory of Regional Sustainable Development Modeling, Institute of Geographic Sciences and Natural Resources Research, CAS, Beijing 100101,
China;
3 University of Chinese Academy of Sciences, Beijing 100049, China

Abstract: Henan is a large agricultural province and one of China’s major grain-producing areas.
Agricultural land transfer and large-scale operations will have a profound impact on regional economic
development and food security. This is a case study taken in Xiwan village in Qinyang city, Henan. This
paper builds a transferring pricing model using land use rights assessment and characteristic correction
of land contract and management rights. Results show that the transferring price of land contract and
management rights should include the economic price, social price and corrected price. The use of a
price model should focus on the distinction of theory and practical application. If there is no change in
agricultural project，the actual transferring price should be the sum of the economic price and social
security price. If there is a change in agricultural projects，such as cropland into cash crops，the actual
transferring price should be the sum of the economic price, social price and corrected price. Because of
the complexity of income distribution following the transfer, transferring gains should follow a rational
distribution in the outflow side, inflow side, managers and land owner. The government should establish
reasonable and orderly contracted management of land circulation transferring and use this to build a land
transferring price system.

Key words: typical agricultural areas; agricultural land contract and management rights; transferring price;
transferring model

found that land price expectations are the most important

1 Introduction
1.1 Background
China faces several major problems in terms of agricultural
land. First, the average size of household land management
is still small at the plot scale. Second, the area of abandoned
agricultural land is increasing. Like many fast developing
countries China is under mounting international pressure to
liberalize its farming sector and promote more competitive
agriculture. Against this background, the policy of land
reform should be further speeded up. In theory, agricultural
land use rights reform policy may appear effective, and
agricultural land transfer is an important way to deal with
the conflict between agricultural land fragmentation and
moderate-scale agricultural modernization in China.
The land and production approach has a long history
dating back to the 18th century, for example David Ricardo
(Sraffa and Ricardo 1995). Just and Miranowski (1993)
factor determining land prices in the USA, but point out
that these themselves are determined by yet other factors,
including inflation, the opportunity cost of capital, and farm
returns.
Land transferring issues in China have been addressed
from the perspectives of different disciplines, e.g. sociology,
geography, engineering and economics, due perhaps to the
variety of what are perceived to be important contributory
factors like family, terrain, irrigation and prices. But
transferring price of land contract and management rights1)
are not well explained by the present value model with
rational expectations. According to the theory of human-
1) Land contract and management rights is the basic rights of the peasants
and the main mode of collective land use in China, and has formally
been established as a stable usufructuary after the promulgation and
implementation “Property Law” in 2007.

Received: 2012-03-06 Accepted: 2012-05-23

Foundation: Natural Sciences Foundation of China (No. 41130748), Key Knowledge Innovation Project of the CAS (No. KZCX2-EW-304).
* Corresponding author: ZHANG Yifeng. Email: zhangyf@igsnrr.ac.cn.

09-009.indd 262 2012-9-19 15:57:11

 MU Songlin, et al.: Agricultural Land Contract and Management Rights: Transferring Price and Countermeasures in Typical Agricultural Areas of China
nature relation (Wu 1991; Lu and Guo 1998; Zheng 2008;
Fan 2008; Wu 2008), land use is the core of the relationship
between man and nature (Liu 2008), man-land relationship
is established in certain social production relations. In terms
of Marxist political economics, appropriate production
relationships can promote productivity. Land Contract and
Management Rights belongs to land use rights and is very
important to the development of rural productivity. The land
use policy reform is a major method of solving the “three
rural” problems (issues concerning agriculture, countryside
and farmers in China) and productivity can be improved
through the reform of land use policy. The policy of land
use reform should be accelerated, and the government
should offer to transfer land contract and management
rights in various forms and develop various forms of
appropriate large-scale operations when conditions permit
(Mu and Gao 2009). A scientific and standardized pricing
system is the premise of transferring land contract and
management rights, thus it is only with reasonable prices
that land flow is smooth. As the current price evaluation
system lacks systematic and scientific price assessment of
transferring land contract and management rights,it has
weakened market resource allocation, slowed down the
market allocation of land resources and hindered optimal
land resource allocation.
1.2 Hypotheses
(1) Desire for agricultural land transfer is affected by
different natural, economic, and social factors. The factors
that influence the agricultural land transfer for farmers
include income per capita, education, development level
of non-agricultural industry, resources endowment, and
land per capita. This article focuses on the transferring
price, whether farmers agree with land transfer or not, the
reasonable price is the premise.
(2) Legally, agricultural land did not change its function
after transference. Therefore, this paper argues that the price
of land contract and management rights should include the
economic, social and corrected price.
1.3 Progress
In China, current published articles on transferring land
contract and management rights have mostly concentrated
on defining this term (Ding and Li 2008), significance,
263
driving force (Yang 2009b), types, features (Huang 2009),
problems and causes (Yang 2009a). Transferring price
research is relatively rare. Table 1 shows the that research
into land contract and management rights have dramatically
increased, especially in 2008. This has a direct correlation
with the seventh session of the Third Plenary Session of
the Chinese Party of China meeting. A lot of geographic
scholars insist on research for national economic
construction and policy.
Statistical analyses of transferring price is the basis for
quantitative transferring price. On one hand, this method
can grasp fluctuation range of transferring price, and on
the other hand measure the validity and rationality of
the calculated transferring price. Figs. 1 and 2 show the
temporal and spatial distribution of transferring prices in
China, 2009.
2 Transferring price content
Property rights and benefits are two basic estimation
methods. Rent distribution is a social justice and political
issue (Lin 1999). Land contract and management rights is
land use rights derived from agricultural collective land in
rural China. It exists in the economic, social and natural
environment through transferring market allocation (Fig. 3).
Researchers have no doubt about the economic value
of land, and the social value should also be quantitative.
Although land ownership does not change after transferring
land contract and management rights, agricultural land
undoubtedly is the most fundamental social insurance of
farmers ever since contract responsibility systems have
been practiced in rural China. While in the process of
transference, operational risks exist on the inflow side, and
farmers’ social security cannot be ensured. That is, if the
benefits of inflow side are not obtained, the income on the
outflow side can also not be ensured. Growing grain has low
comparative benefit, so the trend of non-food has appeared
in the transference of rural land and it will have a serious
impact on China’s food security in the long term. Currently,
many farmers have transferred land for the development
of vegetables, flowers, nursery stock, special livestock
breeding and other high-benefit agricultural projects, so the
concept of agricultural land to grow grain is vague in the
hearts of the majority of farmers (Guan 2009). Therefore, its

Table 1 The number of papers looking at transferring land 1000

contract and management rights in China. 900 858 861 838 840
800 740 714 730
Year Number Journals Dissertation Conference 700 626 632
2004 20 19 1 0 600 543 560
500 456
2005 37 30 5 2
400
2006 30 25 5 0 300
2007 35 28 7 0 200
100
2008 59 55 4 0 0
2009 182 168 9 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 204 159 35 10 Fig. 1 Time distribution of land transferring price in China,
Note: Wanfang data, accessed on June 1st, 2010. 2009 (CNY mu-1 y-1).

09-009.indd 263 2012-9-19 15:57:12

 264
Fig. 2 Space distribution of land transferring
price in China, 2009 (CNY mu-1).
Note: Missing data from Tibet Autonomous Legend
Region, Taiwan, Hong Kong and Macao, and Value
their value is assumed to be 0.
Source: http://www.tuliu.com/, in Jan. of 2010
Natural
environment
Economic Land contract and Social
environment management rights environment
Transferring
market
Fig. 3 The economy-society-environment of land contract
and management rights.
social value should be considered in the transferring price.
The corrected price is that of the transferring price
that the agriculture project has changed after land
transference. If the agriculture project did not change, then
the transferring price needs not corrected; otherwise, the
corrected price should be discussed in order to ensure the
rights and interests of the outflow side because change of
agriculture project will boost income.
3 Data and methodology
3.1 Data sources
This paper employed data mainly from the Land and
Resources Bureau of Jiaozuo city and Qinyang city (county-
level) in March 2009. Data included the level of agriculture
land area, agricultural indefinite standard land price and
social security costs. The questionnaire method of random
sampling was employed, and 250 questionnaires were sent
out in Xiwan village, and 216 valid ones were collected
(effective rate of 86%).
3.2 Assessment methods
(1) Assessment method of the economic price: Land
contract and management rights belong to land use rights.
09-009.indd 264
Journal of Resources and Ecology Vol.3 No.3, 2012
255,000
km
0 510,000 1,020,000 1,530,000
Because of ownership characteristics and the profitability
of agricultural land, this paper selected the income
capitalization approach as the economic value assessment
method (Liu and Fu 2007).
(2) Assessment method of the social price. Social price
comprises secure price and stabile price. The insurance
method, the average living cost method, the minimum
social security method and resettlement compensation
method are four assessment methods for the social security
price. This paper selected the minimum social security
method to assess the social security price. With regard to
social stability price, we can use an indirect way to measure
it. Land reclamation fees is a measure of food security
price, based on alternative principles, it can be used as the
quantitative indicator of social stability price.
(3) Assessment methods for the corrected price. In fact,
transferring corrected price is the distribution of differential
rent for transferring land. Differential rent comes from
additional investment on land. Farmers will invest capital
and labor to which the differential rent should belong. In
fact, the land contract and management right is separated
after transferring land, the farmer retains the contract right
and becomes the outflow side, the use right (management
right) transfers to new contract customers, and the
differential rent should be allocated by the proportion of
capital.
3.3 Modeling conversion
 1 
P = PE+PS+PT, T = 1−  n ;
 (1 + r ) 
where P is the transferring price of the land contract and
management rights, PE is the transferring economic price,
PS is the transferring social price, PT is the transferring
corrected price, T is correction of years, r is discount rate,
and n is number of years.
2012-9-19 15:57:14
 MU Songlin, et al.: Agricultural Land Contract and Management Rights: Transferring Price and Countermeasures in Typical Agricultural Areas of China 265
earning power and income level as it is transferring, so the
4 Empirical analyses calculation of qualitative price is based on datum price of
Xiwan Village is located south of the Taihang Mountains agricultural land (Table 2). Agriculture land of Qinyang
and north of Qin River (Fig. 4). As one of the largest City is divided into seven levels, Xiwan Town has two
villages of Qinyang City, Xiwan Village is a typical levels (Table 3).
densely populated village with a total population more After correcting years, the 30-year qualitative price is
than 10 000, of which about 9000 are farmers. In 2008 shown below in Table 4.
“the first auction” of land contract and management rights Year corrected coefficient;
of China occurred in Qinyang City, Henan. Hu Jintao, the
general secretary of the Chinese Communist Party Central  1   1 
T = 1 − n 
= 1 − 30 
= 0.675
Committee (CCPCC) and the President of China had a  (1 + r )   (1 + 3.82%) 
personal interview with Dong Xiaozhu, secretary of the
(3) Numeric value of transferring subsidies price: State
party committee of Xiwan Village. Hu praised him for the
subsidies to farmers should be included in net income.
transferring land work. From September 2007, according
Through investigation in 2010, Xiwan Village the food
to the law, the land contract and management rights have
subsidies standard was 14.08 CNY mu -1 (1 ha = 15 mu)
changed a household of individual management into village
and rural capital subsidies standard was 66.72 CNY mu-1.
collective subcontracting management, unified farming and
Psubsidies= (Pfood subsidies + Prural capital subsidies) ÷ r = (14.08 + 66.72)
management and each household pays 400 kg of wheat per
÷ 3.82% = 2115.18 CNY. This numerical value is the price
year for the transferring fee. Therefore transferring of the
land contract and management rights in Xiwan Village is Table 2 Agricultural indefinite standard land price in Xiwan
representative. Town (CNY m-2).
4.1 Quantification of transferring price Land groups 802 702
4.1.1 Transferring economic price Irrigated land Mean value 18.91 16.92
(1) Numeric value of land discount rate. Land discount Amplitude 15.8712–22.0014 14.9124–19.023
rate = security interest rates + risk coefficient: 1.98% + Dry land Mean value 12.70 11.31
1.74% = 3.72%. The land contract and management rights Amplitude 9.9552–15.453 9.0576–13.4232
belong to creditor’s rights; business risk is larger than the Vegetable land Mean value 41.28 33.43
average land use rights. So, land discount rate is increased Amplitude 34.1292–48.4902 28.5294–38.5968
by 0.1%, whereas the final value is 3.82%. Gland Mean value 20.63 18.2
(2) Numeric value of transferring qualitative price. Amplitude 16.0956–25.2144 14.6064–21.7566
Datum price of agricultural land refers to the quality price Wood land Mean value 7.03 5.90
of agricultural land. That is, the price of land used for Amplitude 4.5288–9.3228 3.6822–7.8132
agricultural purposes is determined by earning power and Unused land Mean value 3.69 2.82
income level in the same ownership. The price of land Amplitude 3.1008–4.5798 2.3664–3.4884
contract and management rights is also determined by
Table 3 Level of agriculture land area in Xiwan Town (ha).
Levels 802 702
N Xiwan Town
Area 2480.04 622.42

Table 4 Transferring quality price (CNY m-2) over the past

30 years.
Land groups 802 702
Irrigable land Mean value 12.76 11.20
Amplitude 10.71306–14.8509 10.0659–12.8405
Dry land Mean value 8.57 7.49
Amplitude 6.71976–10.4308 6.1139–9.0607
Vegetable land Mean value 27.86 22.12
Amplitude 23.0372–32.7309 19.2573–26.0528
Garden land Mean value 13.93 12.04
amplitude 10.8645–17.0197 9.8593–14.6857
Legend
City Wood land Mean value 4.74 3.90
County Amplitude 3.0569–6.2996 2.4855–5.2739
Town Unused land Mean value 2.49 1.86
Fig. 4 Location of the study area. Amplitude 2.0930–3.09137 1.5973–2.3547

09-009.indd 265 2012-9-19 15:57:14

 266 Journal of Resources and Ecology Vol.3 No.3, 2012
-1
for an unlimited period; 30-year price is 1427.75 CNY mu . percentage of capital after the transfer of agricultural land.
With level 802 irrigated land for example, 30-year Agricultural land capital is changed into price of land use
economic price =1427.75 + 8506.67 = 9934.42 = CNY rights, calculating the capital ratio of agricultural land share,
mu-1. The annual economic price is 331.15 CNY mu-1. then calculating the corrected price by expected income:
4.1.2 Transferring social price  p 
Pcorrected = a  
 ( p + c ) 
(1) Social secure price: Assessment of social secure
price is based on the town and village as a unit. It uses the where Pcorrected is transferring price, a is expected income, p
premium rate method according to per agricultural land, is 30-years transferring qualitative price, and c is investment
then divides social security area by price, at last ascertains per mu after the land transfer.
various social secure prices. Social secure price refers Such as the corrected price of irrigated land into garden
to criterion established by the Department of Human land after transfer, based on the investigation, the average
Resources of Henan (Table 5). annual net income to grow fruit is 1130.68 CNY mu-1 in
The social security price is 4290 CNY mu -1 . This Qinyang, so investment is 22 000 CNY mu-1,
numerical value is the price of an unlimited period; 30-year
 p 
price is 96.53 CNY mu-1. Pcorrected = a   =1130.68×(7466.67÷29466.67)
(2) Social stabile price: Calculated with the numeric  (p + c ) 
value of land reclamation. According to the data provided =286.51 CNY mu-1.
by the Bureau of Land and Resources in Qinyang City,
the numeric value of land reclamation is 13 CNY mu-1 4.2 Transferring price analysis
for irrigated agricultural land and 11 CNY mu-1 for dry (1) Agricultural projects do not change after transference.
agricultural land. The numeric value of social stabile price Transferring price = economic price + social secure price.
= (13 ÷ 0.0015) × (27369.10 ÷ 30161.32) + (11 ÷ 0.0015) For example irrigated land, P = Pquality + Psecurity = 331.15
× (2071.77 ÷ 30161.32) = 8667 × 0.9074 + 7333 × 0.06869 + 96.53 = 427.68 CNY mu -1. According to Fig. 2, the
= 7864.44 + 503.70 = 8368.14 CNY mu-1. The 30-year average transferring price of land contract and management
price is 5648.49 CNY mu-1 and one year price is 188.28 in Henan is 472 CNY mu-1, so the model is effective and
CNY mu-1. Garden land reclamation fee is 10.43 CNY m-2, reasonable.
one year social stabile price is 156 CNY mu-1. Wood land (2) Agricultural projects have changed after transference.
reclamation fee is 7.45 CNY m-2, one year social stabile For example, if irrigated land is changed into growing
price is 111.75 CNY mu-1 (Table 6). fruit. P= P E+P S+P T=331.15+96.53+284.81+286.51=99
4.1.3 Transferring corrected price 9 CNY mu-1. Inflow side has capacity and should pay for
it. According to the price estimated by expert of Henan
After land transference, agriculture project alteration will Agricultural University, 2500 mu combined land in Xiwan
cause change in income, such as what happens when arable Village will gain 5000 CNY mu-1 income each year. First,
land changes to garden land. Increased income will be through land transference, it can achieve large-scale
allocated in transferring both sides, and the transferring operation and gains, promote industrialized operation of
price needs to be corrected. In accordance with differential agriculture, and then increase output. So, inflow side will
land rent theory, differential land rent is allocated by the obtain more economic benefits by raising production, saving
costs, and reducing investment and administrative costs.
Table 5 Social security costs in Jiaozuo City (CNY mu-1).
Naturally, part of the differential rent to outflow side should
Units Urban Outside urban
be assigned. In the economic price calculation process, net
control area control area
income values are obtained by grain yields. In the actual
Jiaozuo City 9080 5450
transferring process, cultivation of crops is cash crops with
Xiuwu County 7150 4290
higher income in many agricultural lands, the more revenue
Boai County 7150 4290 the insider is, the more income the outflow side will have.
Wushe County 7150 4290
Wen County 7150 4290 5 Discussion and implications
Qinyang City 7150 4290 (1) The price composition of land contract and
Mengzhou City 7150 4290 management rights at the village level: We have established
a transferring price model by means of the philosophy of
Table 6 Social security costs in Jiaozuo City (CNY mu-1 y-1). agricultural land value, a basic land use rights assessment
Land groups Social secure Social stabile Social and characteristic correction of land contract and
price price price management rights.
Arable land 96.53 188.28 284.81 (2) The difference between the theoretical price and
Agricultural
Garden land 96.53 156 252.53 practical application price model: When agricultural
land
Wood land 96.53 111.75 208.28 projects do not changed and continue to grow food crops,

09-009.indd 266 2012-9-19 15:57:15

 MU Songlin, et al.: Agricultural Land Contract and Management Rights: Transferring Price and Countermeasures in Typical Agricultural Areas of China
Intermediary
organization
Intermediary Intermediary
function function
Sub-contract, renting,
exchanging, transferring,
Outflow side Inflow side
share-holding
cooperation, etc.
Management Management
function Local function
government
Large-scale
operation
Fig. 5 Land contract and management right transferring
market operating mechanism.
the transferring price is the sum of the economic price
and social security price. If there is change in agricultural
projects, such as changing into cash crops, the transferring
price should be the sum of the economic, social (including
social security price and social stability price) and corrected
price.
(3) The complexity of the profit distribution: In
practicing community ownership contract management on
a household basis, land policy, powers and functions of
land contract and management rights include occupy, use,
earnings and exclude the contractor’s right to disposition.
Therefore, the distribution of benefits becomes very
complex. The transferring income can be assigned as a part
of collective economic organizations in order to ensure
ownership is realized in the economy. According to Marx’s
rent theory, the absolute rent and differential rent should
have reasonable distribution and realization. Therefore,
gains should be reasonably distributed between the outflow
side, inflow side, managers and land owner.
6 Suggestions
(1) Establish reasonable and well-ordered land
transferring market: The value of agricultural land can
be realized through market allocation. The ideal land
contracting and management right transferring market is
the sum of economic relations in the process of circulation.
The market needs government supervision and intermediate
information services. Through sub-contracting, renting,
exchanging and share-holding cooperation, outflow side
transferred land into the inflow side. By land transfer, land
can achieve large-scale development and operation, and
land transfer contract can ensure stable interests relationship
to the outflow side and inflow side. Land contract and
09-009.indd 267
267
management right transferring market mechanisms are
depicted in Fig. 5.
(2) Constructing agricultural land transferring price
system by transferring market: The core of the agricultural
land transferring market is to develop a reasonable
price. But the current agricultural land transferring price
mechanism has two problems: first, the transferring price
is not fully integrated into socialist market economic
competition; second, a transferring market has not yet
formed and the impact of competition mechanism on price
is insufficient. Therefore, we should construct a reasonable
and efficient land transferring price system. This will
actively propel the agricultural land transferring market
towards healthy, sustainable and orderly development but
also can attract peasants into the land transferring market.
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 268 Journal of Resources and Ecology Vol.3 No.3, 2012

典型农区农用地承包经营权流转价格及对策研究
穆松林1,2,3，张义丰1,2，王开泳1，Dhruba Bijaya G. C.1,3

1 中国科学院地理科学与资源研究所，北京 100101;
2 中国科学院区域可持续发展分析与模拟重点实验室，北京 100101；
3 中国科学院大学，北京 100049

摘 要：河南既是农业大省又是中国重要的粮食主产区，农用地流转顺畅及适度规模经营对区域经济发展和国家粮食安全
产生重要影响。借助于土地使用权评估的基本方法，并使用土地承包经营权的权属特性进行修正，构建了土地承包经营权流转
价格模型，并对典型区域沁阳市西万村进行了实证分析。结果表明，土地承包经营权流转价格应该包括经济价格、社会价格和
修正价格。价格模型的应用，应甄别理论价格和实际流转费用的区分，农用地流转后经营项目没有转变，流转价格为经济价格
和社会保障价格是总和。农用地流转后经营项目发生转变，比如耕地改种经济作物，流转价格则是经济价格、社会价格与修正
价格三者的总和。收益分配格局存在复杂性，流转收益应在流出方、流入方、管理者和所有者之间合理、公平分配。政府应建
立合理有序的农用地承包经营权流转市场，并以农用地流转市场为载体，构建农用地流转价格体系。

关键词：典型农区；农用地承包经营权；流转价格；流转模型

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