7. Challenges Facing Agricultural Development

One way to visualize this is: A local government buys land rights from a rural citizen collective with a fixed term, using non-market methods. That government then sells those land rights, for the entire duration of the established term, at market prices (or extremely low prices) and using market methods (or non-market methods). The government earns enormous profits (or promises of investment) from such transactions.

In 2005, 10.1% of all arable land in the world was in China, but China accounted for 21.8% of global grain production. India has slightly more arable land than China, but that country produces only half of the grain that China does. The US has 12.3% of the world's arable land and 16.4% of global grain production. Among all the primary grain producing nations in the world, only France and Germany have higher land productivity rates than China.

In China, both within development zones and elsewhere, the rate of land occupation for industrial uses is low. Particularly in “development zones” in which local governments invest their own funds, most factories occupy only a few mu of land, and the whole zone might require the enclosing of only several dozen mu. The primary reason for this is that local governments offer such land to companies at very low prices, sometimes for free. Owners clearly place importance on operational efficiency of their factories, but also on the potential for value appreciation of their land reserves.

China’s current per capita constructed urban area is 126 m², higher than the figures for developed nations, 82 m², and developing nations, 87 m². China’s investment per unit of area constructed is one third that of the US, one seventh that of Germany, and one tenth that of Japan and the UK. In 2011, the average investment per square kilometer of urban constructed area in China was USD $140 million. In 2007, that same figure was $772 million for New York, $798 million for Hong Kong, and $1.479 billion for Tokyo.

The UK government had basically no protections in place for farmland prior to the Second World War. Most domestic demand for agricultural products at the time was met by imports. This policy led to rapid decreases of farmland. To reverse this trend, the UK government passed the “Town and Country Planning Act” in 1947. The law stipulates that land development rights belonged to the government, and that any person wishing to develop land had to apply and receive a permit before proceeding. Any land owner or developer wishing to change the use of a plot of land had to receive permission from a planning body, even if their designs did not conflict with existing development plans. The US also established a comprehensive system for farmland protection. The “Farmland Protection Policy Act,” passed in 1981, divided all farmland in the country into four categories and imposed rigorous controls on the usage of said land. The “Agricultural Risk Protection Act” of 2000 safeguards the production capacity of farmland by limiting non-agricultural uses of prime farmland and special farmland. The “Urban Planning Act” of China stipulates that farmland not be willfully occupied or transferred. China’s “Farmland and Countryside Protection Act” stipulates that planning permits are necessary for all development endeavors.

In general, scales of agricultural operations are relatively larger in nations where agriculture is dominated by immigrants, such as the US, Canada, Brazil, and Argentina, as well as the Northeast and Xinjiang in China. Agricultural operations scales tend to be smaller in nations where agriculture is dominated by non-immigrants.