A Century On, Why Is Running Farmer Cooperatives Still So Hard?

Foodthink Says

In 1924, Fei Dasheng and a team of staff and students from the Jiangsu Provincial Women’s Sericulture School arrived in Kaixiangong Village in Wujiang County and established the Silk Improvement Society — nearly a century ago now. Their aim was to reverse the decline of the silk industry and the economic collapse of the countryside. In 1930, after the Central Cooperative Research Class of the National Government conducted a field visit, it hailed the Society as “the only model cooperative in the province”. Part of the cooperative’s experience was later incorporated by Fei Dasheng’s younger brother, Fei Xiaotong, into his doctoral dissertation, which became the renowned Peasant Life in China; another part, after being adapted into literary form, served as the prototype for the novel Cocoon.

A century on, a new generation of rural workers has entered the villages with a similar purpose, setting up all manner of cooperatives. What can the cooperatives of a hundred years ago teach us today? Do modern NGOs working on rural development and livelihood support encounter the same difficulties? And what demands does cooperation place on organisers and on villagers respectively?

The author of this article, Huang Yajun, is himself a rural worker who has long been involved in helping villagers organise cooperatives. At a reading group organised by Foodthink this May, covering Fei Xiaotong’s Peasant Life in China and Cocoon, he shared his reflections on the two very different cooperative experiences from the perspective of a practitioner of rural cooperative economy.

– Click to view the reading group post and live-stream replay –

Since 2007, I have been helping villagers in a village in Yunnan set up a rice-growing cooperative and sell their ecologically grown rice.

In 2013, the public-interest organisation I worked for also tried setting up a cooperative in a village in Conghua, Guangdong. We noticed that the village had a great many green plum trees, so we invited teachers from outside to show the villagers how to process green plums. In practice, it was quite straightforward — it could all be done in a small home workshop. After producing a few trial batches, we felt that green plum processing was something we could really make work. In 2016, the villagers formed a green plum processing cooperative with more than ten households taking part, and it has carried on to this day.

When I compare this with the silk cooperative that Fei Dasheng and the Women’s Sericulture School set up all those years ago, our specific industry and social context are very different, yet there is much worth comparing. Placing the two practices side by side prompts us to ask: what does rural cooperative economy actually look like in practice? And what problems does it run into along the way?

● The elderly Fei Dasheng (third from left) and Fei Xiaotong (third from right) revisit Kaixiangong Village. Photo taken at the Fei Xiaotong Jiangcun Memorial Hall.

● Households of the Yuanxiang Meihao Cooperative posing together after producing plum concentrate.

I. From Agriculture to Industry

Looking back at the work of Fei Dasheng and the Women’s Sericulture School nearly a century ago, one cannot help but marvel at how extraordinary they were. In my view, there were many obstacles to setting up a cooperative in Kaixiangong Village. One was the very high degree of marketisation in the silk industry. Silkworm rearing, silk reeling, processing and sales — the methods of production and the distribution of profits at each stage were fixed, and the entire industry was not in the hands of the producers. If a cooperative wanted to enter such a tightly interlinked chain, it would need to change not just one link but every link, up and down the supply chain.

Some time ago we visited the Gannan navel orange production area in Ganzhou, Jiangxi. The navel orange industry has flourished for two or three decades and serves as the pillar industry of the local villages — much as the silk industry once was in Kaixiangong. Division of labour in the market there is also highly specialised. Objectively speaking, thanks to the power of the market, villagers do not need to co-operate; they rely on their own skills. As long as they can grow the oranges — even if they cannot always command a high price — they can be sure of selling them.

Therefore, as far as farmers’ co-operation in that area is concerned, the only thing we can currently imagine is setting up a “farmer field school”, organising farmers to learn together some techniques that can cut costs, thereby raising their income. If co-operation were to reach a larger scale, it would require changing the entire navel orange supply chain, and that is something we cannot even begin to imagine.

These days we often talk about how rural revitalisation requires the integrated development of primary, secondary and tertiary industries, yet very few people manage to do the secondary sector well. Most practitioners either stay with the primary sector or skip the secondary entirely and go straight to the tertiary. So although their experiment was forced to end in 1937, it had already achieved remarkable results.

The Women’s Sericulture School arrived in Kaixiangong Village in 1924 and first established the Silk Improvement Society with twenty-one participating households. In 1925, it expanded to 120 households, organised into five groups, practising communal disinfection, communal egg hatching, communal rearing of young silkworms, and communal cocoon selling. Fei Dasheng and her colleagues always believed that this form of agricultural co-operation — communal silkworm rearing — had its limitations. In 1929, they organised silkworm farmers to buy shares, secured bank loans, and established the Raw Silk Production and Marketing Cooperative. In Fei Dasheng’s view, this step was an attempt to guide the traditional rural economy towards a modern industrial economy, while hoping that industrialisation would allow villagers to avoid uprooting themselves for the cities — what we might today call “leaving the land without leaving home”.

● The new technologies promoted by the Silk Improvement Society and the communal rearing of young silkworms greatly reduced the mortality rate among young silkworms. Photo taken at the Fei Xiaotong Jiangcun Memorial Hall.

Later they used Kaixiangong Village as a base to develop cooperatives in many surrounding villages and towns, hoping to build a system that connected urban and rural areas, integrated production and sales, and coordinated the local development of industry and agriculture. Such achievements are rarely surpassed even today.

II. Setting Up a Factory — How to Solve the Problems of Technology and Capital?

The Women’s Sericulture School was able to set up cooperatives thanks to its outstanding technical expertise. Intervening through technology proved highly effective from the outset — from silkworm rearing to silk reeling, it reduced losses, improved production efficiency and raised the quality of raw silk. So in the first few years, the cooperative’s products were competitive in the market and members’ incomes rose. They also created the “contract reeling system”: the cocoon-baking and silk-reeling stages, which had previously been handled within the cooperative, were separated out and moved to a factory operated for the common good. The factory charged only for the reeling service; all remaining profits went to the members. In this way, on the one hand, specialised factories improved production efficiency; on the other, villagers took on more stages of the process and could share in a greater portion of the profits.

● The Zhenze Silk-Reeling Plant. After the Women’s Sericulture School took it over in 1935, it was converted into a cooperative facility for contract cocoon-baking and reeling. Fei Dasheng once served as manager of the plant. Photo taken at the Fei Xiaotong Jiangcun Memorial Hall.

Now, when some public-interest organisations take on rural development work, they too usually begin with technology: to raise farmers’ incomes, they introduce new breeds or improve planting and rearing techniques. But without expert backing of the kind the Women’s Sericulture School provided, technical improvements are very difficult, and it is hard for farmers to build a technological advantage on their own. Most public-interest organisations today would struggle to play as pivotal a role as the Women’s Sericulture School once did.

Looking back at our own green plum cooperative, we have remained at the workshop level in terms of technology. It is not that people are unwilling to improve — we even consulted staff at the Agricultural Sciences Academy about the feasibility of setting up a processing plant, but eventually abandoned the idea. One problem is that the production line in a factory requires the skills to operate and maintain automated equipment, and it is difficult for villagers to acquire those skills.

● Some of the silk-reeling processes in the cooperative’s factory. The local workers in the silk mill were mainly young women. Photo taken at the Fei Xiaotong Jiangcun Memorial Hall.

Another barrier to the cooperative setting up a processing plant is capital. The funds needed to build a factory for the green plum cooperative were too great, and the corresponding risks grew too large.

Turning to the Kaixiangong example, the Silk Improvement Society first set up by the Women’s Sericulture School required very little capital. Encouraging silkworm farmers to disinfect together, to hatch eggs together, and so on to achieve simple technical improvements — this could perhaps be done by finding a shared building in the village, without large capital outlays.

But once the cooperative wanted to build a factory, the need for capital shot up, and villagers themselves could not provide such capital. In the Kaixiangong cooperative, members had not even fully paid in their share capital. Both Fei Xiaotong and Fei Dasheng saw this clearly at the time. In the novel Cocoon, Factory Manager Wu has no choice but to go to Shanghai to seek a bank loan for the factory’s working capital. This mirrors the actual situation in Kaixiangong, where the cooperative’s main source of funding was also loans from the Farmers’ Bank.

The questions of technology and capital are also intertwined with the scale of the industry. To raise returns and expand the market, one must boost competitiveness, and the best way to do that is to use machinery to raise the level of technology and production efficiency and stabilise product quality. This not only increases investment but also expands the scale, at which point the pressure on sales rises sharply. Each link is tightly interlocked, and for the farmers none of them is simple. That is why our green plum cooperative has still not dared to take this step.

● Everyone working together to make smoked plums. Fresh green plums must be evenly smoked over wood fires to draw out moisture, left to rest for a few days, then baked until black to produce the smoked plum.

● Traditional tools used by the green plum cooperative to make plum concentrate. Stone, wood, bamboo and ceramic are chosen to prevent the plum concentrate from reacting with metal.

III. Are Villagers and Cooperatives Drifting Further Apart?

After the factory was set up in Kaixiangong Village, the relationship between the villagers and the cooperative actually grew more distant. In Peasant Life in China, Fei Xiaotong noted that after 1930 the volume of silkworm cocoon purchases declined year by year. The reason was that the price the cooperative paid for cocoons was not high enough, nor could it be settled entirely in cash. Silkworm farmers felt it would be better to reel the silk by hand at home and then sell it themselves.

Conversely, because the factory lacked sufficient work, it had to look beyond the cooperative for raw materials to keep production going. Following this market logic, the cooperative’s factory became increasingly indistinguishable from any outside processing plant, drifting ever further from the cooperative’s original purpose.

At this point the only bond between villagers and the cooperative was a purely economic one — members simply sold their cocoons to the factory. This gave rise to a situation where: if the cooperative’s business was good, I would sell to you; if it was poor, I would simply break the agreement and refuse. The villagers were only trying to earn a little more for themselves, and this is quite understandable.

Although in theory the villagers also held the identity of members — they were the owners of the cooperative — they had no such sense of ownership. The mechanisms for member participation that the cooperative had put in place were never actually implemented.

Our own green plum cooperative experienced a similar situation. The households growing green plums would weigh whether to sell to the cooperative or to other traders. The two had different requirements on certain details. For example, the green plums the cooperative required could not simply be knocked off the tree; they had to be picked one by one, or if knocked down, carefully sorted to ensure the fruit was free from bruises — only then would the subsequent processing go smoothly. Some products also specified the size of the green plums: for instance, plums destined for preserved plum production could not be too small, otherwise there would be too little flesh, which was also unfavourable for sales. So although the hillsides were carpeted with green plums, finding fruit that met the criteria was no easy task. The cooperative’s fruit had to be meticulously selected, and no pesticides could be used; if these hidden costs were to be reflected in the purchase price, the expense would be enormous. Yet in practice, the cooperative could only offer a little more than the price the traders were paying.

For the households at the upstream end growing green plums, if they measured their relationship with the cooperative purely in terms of economic benefit, they were very likely to sell their fruit to the traders instead — and their choice would shift from year to year.

● Members carefully select the finest green plums to supply the cooperative.

IV. Sales and the Market

Ultimately, whether cooperative economy can succeed depends even more on whether the products can actually sell. This is especially true of agricultural produce. Some public-interest organisations begin by intervening through technology — for instance, introducing new breeds of cattle and sheep to villagers — but they, too, have run into many difficulties owing to high rearing risks and market instability. So by comparison, in today’s cooperative economy, a stable market matters somewhat more than technology.

When we first started making green plum wine, the market was still quite good. But later, other producers also entered the green plum wine market, and we found ourselves in competition. After all, we are just a small cooperative in a vast market; the quality and scale of factory-made green plum wine are completely different from what a villager’s home workshop can achieve.

To this day, whether in the local or the national market, competition in processed green plum products grows ever fiercer. Before 2020, it was in fact our public-interest organisation that bore the burden of marketing. At the time, I was inspired to write an article, Public-Interest Organisations in Business? Think Twice Before Diving In, to explain my thinking, as I found selling goods so difficult.

If villagers maintain a purely economic relationship, the pressure on the sales team becomes all the greater. For example, if we process 1,000 bottles of wine, it might take a very long time to sell them all. In the past, when selling rice in the village, the locals had a saying: “Three on credit is not worth two in cash” — meaning that being owed three yuan is not as good as receiving two yuan settled in cash on the spot. The cooperative has no sufficient capital either — how long can the villagers tolerate us before we settle their accounts? And if we truly cannot sell everything, can the villagers bear the risk alongside us?

It was also in 2020 that our organisation simply could not carry on any longer, so we handed the marketing work back to the villagers.

The villagers were taking on more and more work within the cooperative, and the division of labour was growing ever more specialised. This was meant to be a good thing — indeed, it was our original intention. As more and more stages of the supply chain fell within the village, villagers could objectively claim a greater share of the benefits. But we also found that this evolution meant ever more villagers were involved, the web of interests grew ever more complex, and coordinating relationships among them became increasingly difficult.

● Aunties from Xianniangxi and Leming Village sharing their experience of making preserved plums.

V. How to Break Through Economic Relationships?

In truth, the relationship between villagers and the cooperative should never have been a purely economic one, since the cooperative belongs to all its members. Take the silk cooperative in Kaixiangong Village, for instance: its highest authority was the general meeting of members, each member held a portion of shares, and each should have fulfilled their responsibilities to the cooperative. But I believe that in practical terms, genuine collective ownership by all members is extremely difficult to achieve. The reality in Kaixiangong was that, under the guidance of the industry school, the cooperative was managed by capable local figures, while the vast majority of members took no part in its operations. This arrangement was closer to the factory run by Factory Manager Wu, as described by Fei Xiaotong in Cocoon — an enterprise of fifty or sixty people, most of whom were simply labourers. The owner, Factory Manager Wu, was a conscientious boss, but that was all — he did not turn the factory into a cooperative, and the villagers who worked there did not become members.

● Share certificate of the Kaixiangong Village Raw Silk Refining and Marketing Cooperative. Photo taken at the Fei Xiaotong Jiangcun Memorial Hall.

But if one digs deeper, the problem is not merely one of structure; it is a question of who truly owns the factory and how the villagers understand that ownership. In Cocoon, it is noted that if the silk factory wished to raise production efficiency without learning from other factories by exploiting workers through overtime, then where would the workers’ willingness to labour come from? How could they be moved to invest their time voluntarily? Cocoon argues that the answer lies in educating the peasants, so that everyone comes to recognise the factory as theirs and not the factory manager’s.

Yet from my own experience of this work, such guidance and education is extraordinarily difficult. A hundred years on, the challenge facing the green plum cooperative is this: if the cooperative is merely a business, then for the villagers the logic is obvious — take part when there is money to be made, walk away when there is not.

Under such circumstances, as the cooperative gradually grows and the chain of co-operation stretches ever further, the fundamental question of relationships remains unresolved. The cooperative is left standing on a very fragile foundation. The moment an external risk emerges, it can easily collapse.

This was also the reality in Kaixiangong Village. The cooperative there, which had been doing reasonably well, saw international markets contract owing to the global economic crisis of 1929. Compounded by members ceasing to sell their cocoons to the factory, it found it increasingly difficult to sustain itself on both the production and sales ends, and operations gradually deteriorated. Today we can understand that the factory’s first priority must have been to find more raw materials so it could keep running and maintain normal output — it could hardly spare the energy to think about how to mobilise farmers.

To be frank, the mobilisation and education work should have come first. Otherwise the risk is that when the cooperative is thriving, members share in the good times, but once difficulties arise, they cannot bear them together. In fact, some rural organisations never set out with economic aims in mind; while interests were not yet entangled, they first sorted out relationships and aligned thinking, and only later transitioned into cooperative economy. These tend to operate far more healthily.

VI. Rural Cooperative Economy as an “Intermediate Form”

Fei Dasheng’s work in Kaixiangong Village was ultimately interrupted entirely after 1937. Part of the reason lay in external factors such as the global economic crisis and the Japanese invasion striking the silk market, but I believe that even without these, it would have been very difficult to sustain. When the Women’s Sericulture School intervened in the countryside, it chose to enter through its strength in technology, hoping to leverage a transformation in the village’s economic structure and the relationships among villagers. In practice, this path was not particularly successful. The cooperative was always walking on one leg: the economy moved fast, but organisation, education and everything else failed to keep pace.

Fei Dasheng and the Women’s Sericulture School showed great courage in confronting the rural problems of their time head on. But the shortcomings within their work cannot be overlooked either. The Kaixiangong Village cooperative was a staged experiment, not an endpoint. This is what “intermediate form” means in the title — cooperative economy as a transient form in history.

The value of cooperative economy lies not only in economic gains and improved livelihoods, but in its latent power to reshape the relations of production. It is precisely this reshaping of production relations that constitutes the level Fei Xiaotong had in mind when he spoke of “rural construction as the way forward for Chinese society”. In fact, Fei Dasheng already harboured similar thoughts about the cooperative, but she did not carry them through thoroughly enough.

Looking from today’s vantage point, what paths might cooperative economy take as it moves forward? I have not fully worked this out yet.

For example, take the rural collective economy, which is frequently mentioned in current policy. Collective economy is typically led by the village Party branch and village committee, and can integrate and mobilise the resources of an entire village. Our cooperative economy is still far from reaching that level. Can this “small cooperation” of a handful of people leap to the “large cooperation” of collective economy? Making such a leap touches fundamental questions: who can represent the village? Who can decide over the village’s resources?

Many cooperatives cannot achieve this leap. But I believe such a leap is essential — otherwise, cooperative economy among a small group can hardly become a way out for the village, let alone contribute to the way forward for society as a whole. From this perspective, rural cooperative economic practice can be seen as an exercise in organisation and talent development, making preparations for longer-term social change.

Foodthink Author | Huang Yajun

Rural community development worker; co-founder of Guangdong Fengnianqing. Has lived in villages, farmed land, organised failed cooperatives, yet his interest in rural cooperative economy has not waned; has sold all manner of agricultural produce and acknowledges he is not cut out for business, but remains ever hopeful about urban–rural mutual aid.

Images: Yuanxiang Meihao Cooperative; Foodthink

Edited by Wang Hao