Why is it still so difficult to establish farmer cooperatives a century on?

Foodthink says

In 1924, Fei Dasheng and the teachers and students of the Jiangsu Provincial Girls’ Sericulture School arrived at Kaixiangong Village in Wujiang County to establish the Silk Improvement Society; nearly 100 years have passed since then. Their goal was to reverse the decline of the silk industry and the widespread rural bankruptcy of the time. In 1930, after a field visit by the Central Cooperative Research Group of the Nationalist Government, the society was highly praised as the “only model cooperative in the province”. The experiences of the cooperative were later partially incorporated into a doctoral thesis by Fei Dasheng’s brother, Fei Xiaotong—which became the renowned work *Peasant Life in China*—while other parts were adapted into a literary form, serving as the basis for the novel *The Cocoon*.

A century later, contemporary rural practitioners have entered the countryside with similar objectives, establishing various types of cooperatives. What lessons can be drawn today from the cooperatives of a hundred years ago? Do contemporary NGOs engaged in rural development and livelihood interventions encounter similar difficulties? And what demands does cooperation place on organisers and villagers respectively?

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

– Click to view the reading club’s article and live stream replay –

Since 2007, I have assisted villagers in a village in Yunnan with the establishment of a rice farming cooperative, helping them market their ecological rice.

In 2013, the non-profit organisation I worked for also experimented with a cooperative in the rural areas of Conghua, Guangdong. Having discovered an abundance of green plum trees in the village, we invited outside experts to teach the villagers processing techniques. The process was relatively straightforward and could be carried out in small home-based workshops. After producing a few initial samples, we felt that green plum processing was a viable venture. In 2016, the villagers established a green plum processing cooperative; more than ten households joined in, and it continues to operate to this day.

When compared with the silk cooperative promoted by Fei Daisheng and the Women’s Sericulture School in those days, although the specific industry and social climate differ, there are still many parallels worth exploring. Comparing these two practical experiences prompts us to consider: what exactly is a rural cooperative economy, and what challenges arise in practice?

● An elderly Fei Dasheng (third from left) and Fei Xiaotong (third from right) returning to Kaixiangong Village. Photographed at the Fei Xiaotong Jiangcun Memorial Hall.

● A group photo of farmers producing plum essence at the Yuanxiang Meihao Cooperative.

I. From Agriculture to Industry

Looking back at the practices of Fiddisen and the Women’s Silk School nearly a century ago, one cannot help but be struck by how remarkable they were. In my view, establishing cooperatives in Kaixiangong Village presented numerous challenges, one of the most significant being the highly marketised nature of the silk industry. The methods of production and the patterns of profit across silkworm rearing, reeling, processing, and sales were firmly established, and control of the entire industry did not lie with the producers. For a cooperative to enter such an interconnected chain, it would need to change not just a single link, but every stage of the value chain.

Some time ago, we visited the Gannan navel orange production areas in Ganzhou, Jiangxi. The navel orange industry has flourished for two or three decades as a pillar of the local villages, holding a position similar to that of the silk industry in Kaixiangong Village, with a highly specialised division of labour in the market. Objectively speaking, relying on market forces, villagers do not need to cooperate; they can rely on their own merits. As long as they can grow the oranges, although they may not always fetch a high price, they are guaranteed a buyer.

Consequently, regarding farmer cooperation in that region, we can currently only envision the establishment of a “field school” to organise farmers to learn techniques that reduce costs and thereby increase their income. If the goal were larger-scale cooperation, it would require transforming the entire navel orange supply chain—something we currently dare not imagine.

Today, we often speak of “rural revitalisation” requiring the integrated development of primary, secondary, and tertiary industries, yet few are able to successfully implement the secondary industry. Most practices either focus on the primary industry or skip the secondary entirely to move straight into the tertiary. Thus, although their efforts were forced to a halt in 1937, they had already achieved a great deal.

The Women’s Silk School arrived in Kaixiangong Village in 1924, first establishing a silk improvement society with 21 households. By 1925, this had expanded to 120 households organised into five groups, implementing shared disinfection, shared stimulation of silkworm growth, shared rearing of young worms, and joint cocoon sales. Fiddisen and his colleagues always believed that agricultural cooperation, such as shared silkworm rearing, had its limits. In 1929, they organised silk farmers to take shares and secured bank loans to create a raw silk production, transport, and sales cooperative. To Fiddisen, this was an attempt to guide the traditional rural economy towards a modern industrial economy, while hoping that the process of industrialisation would allow villagers to avoid migrating to cities—what we would today describe as “leaving the soil, but not the village”.

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

Later, using Kaixiangong Village as a base, they established cooperatives in many surrounding villages and towns, hoping to create a system that linked urban and rural areas, integrated production and marketing, and fostered the coordinated local development of industry and agriculture. This was an achievement that few could surpass even today.

II. Setting up factories: how to address technology and capital?

The ability of the Women’s Sericulture School to successfully establish the cooperatives was inseparable from their outstanding technical advantages. Intervening from a technical perspective was highly effective at the start, spanning from silkworm rearing to reeling technology, which reduced losses, improved production efficiency, and enhanced the quality of the raw silk. Consequently, in the early years, the cooperatives’ products were competitive in the market, which in turn increased the income of the members. They also introduced ‘contract reeling’, spinning off the cocoon drying and reeling stages of the original cooperative into a non-profit factory. This factory charged only a reeling fee, while all other profits remained with the members. In this way, production efficiency was improved through a specialised factory, while the villagers gained control over more stages of the process, thereby increasing their share of the profits.

● The Zhenze Silk Factory. In 1935, following its takeover by the Women’s Silkworm School, it was converted into a cooperative providing drying and reeling services. Fei Dasheng once served as the factory’s manager. Photographed at the Fei Xiaotong Jiangcun Memorial Hall.

Today, many non-profit organisations approach rural development through a technical lens: introducing new crop varieties or improving cultivation and breeding techniques to increase farmers’ incomes. However, without the support of professional bodies like the Women’s Silkworm School, implementing such technical improvements is arduous, and farmers struggle to gain a competitive technological edge on their own. For most modern non-profits, it is difficult to replicate the profound impact the Women’s Silkworm School once had.

Looking at the Green Plum Cooperative we helped develop, it has remained an artisanal workshop in terms of technology. This isn’t due to a lack of desire for improvement; we even consulted experts from the Academy of Agricultural Sciences to explore the possibility of building a processing plant, but we eventually abandoned the idea. One of the primary obstacles was that the production line required technical skills to operate and maintain automated equipment—skills that were difficult for the villagers to master.

● Some of the silk-making processes at the cooperative’s factory. The local workforce was primarily composed of young women. Photographed at the Fei Xiaotong Jiangcun Memorial Hall.

Another barrier to establishing a processing plant is capital. The funding required for the Green Plum Cooperative to build a factory was too substantial, which in turn increased the associated risks.

In the case of Kaixiangong Village, the Silk Improvement Society originally established by the Women’s Silkworm School required little capital. Simple technical improvements were achieved by encouraging silkworm farmers to collaborate on tasks such as disinfection and “greening” (stimulating growth), which only required access to a communal village building rather than significant financial investment.

However, once a cooperative transitions to running a factory, capital requirements soar—funds that the villagers themselves are unable to provide. In the Kaixiangong village cooperative, members were unable to pay their share capital in full. This was a reality that Fei Xiaotong and Fei Dasheng recognised clearly. In the novel *The Cocoon*, Director Wu is forced to seek a bank loan in Shanghai to secure the necessary working capital. This mirrored the actual situation in Kaixiangong, where the cooperative’s primary funding also came from farmers’ bank loans.

The issues of technology and capital are inextricably linked to the scale of the industry. To increase profitability and expand market reach, a cooperative must become more competitive, which is best achieved by introducing machinery to improve technical standards, production efficiency, and product quality. However, this not only necessitates greater investment but also expands the scale of operation, which in turn creates immediate pressure to increase sales. It is a chain of dependencies, and for farmers, every link in that chain is a challenge. Consequently, our Green Plum Cooperative did not dare to take that leap.

● Group smoking of green plums. Fresh green plums are evenly smoked and dehydrated using firewood, left to rest for several days, and then roasted until black to create *wumei* (smoked plums).

● Traditional tools used by the Green Plum Cooperative to produce plum essence. Materials such as stone, wood, bamboo, and ceramics are used to prevent the essence from reacting with metal.

III. A Growing Divide Between Villagers and Cooperatives?

Once the factory in Kaixiangong Village was established, the villagers and the cooperative actually grew apart. Fei Xiaotong noted in *Peasant Economy of Jiangcun* that after 1930, the volume of cocoons purchased declined year by year. This was because the prices offered by the cooperative were not high enough and payments could not be made entirely in cash; consequently, silk farmers felt it was better to reel the silk by hand at home before selling it.

Conversely, because the factory was underutilised, it had to source raw materials from outside the cooperative to maintain production. Following this market logic, the cooperative’s factory became indistinguishable from external processing plants, drifting further and further from the cooperative’s original purpose.

At this point, the relationship between the villagers and the cooperative became a purely economic one—members were simply responsible for selling cocoons to the factory. This led to a situation where farmers would think: “I’ll sell to you when the cooperative is doing well, but if business dips, I’ll simply break the agreement.” The villagers were merely trying to maximise their own earnings, which is entirely understandable.

While theoretically the villagers also held the status of members and owners of the cooperative, they lacked this consciousness. The member participation mechanisms established by the cooperative were never effectively implemented.

A similar situation occurred with our Green Plum Cooperative. Farmers growing green plums would weigh up whether to sell to the cooperative or to other middlemen, as the requirements of the two differed in certain details. For instance, the plums required by the cooperative could not be simply shaken from the trees; they had to be picked individually, or sorted carefully after being shaken, to ensure they were undamaged for later processing. Some products also had size requirements; for example, plums used for preserved plums cannot be too small, otherwise there is too little flesh, which hinders sales. Thus, although the hillsides were covered in green plums, finding suitable fruit was not easy. The cooperative required meticulously selected, pesticide-free fruit; if these hidden costs were to be reflected in the purchase price, the expense would be extremely high. In practice, however, the cooperative could only offer a price slightly higher than that of other middlemen.

For the farmers growing the plums, if they viewed their relationship with the cooperative solely through the lens of economic interest, they would be likely to sell their fruit to middlemen, and their choice might change from year to year.

● To supply the cooperative, members select only the highest quality green plums.

IV. Sales and Marketing

Ultimately, the success of a cooperative economy hinges on whether the products can actually be sold—a point that is particularly stark in the case of agricultural produce. Some non-profit organisations start with technical interventions, such as introducing new breeds of livestock to villagers; however, they often face significant hurdles due to the high risks of farming and market volatility. Consequently, in the context of today’s cooperative economy, a stable market is more critical than technical expertise.

When we first began producing green plum wine, market conditions were relatively favourable. However, other competitors eventually entered the market, creating a challenging environment for us. After all, we were merely a small cooperative in a vast marketplace; the quality and scale of factory-produced plum wine are entirely different from that of small-scale village workshops.

To this day, competition for processed green plum products has intensified across both local and national markets. Prior to 2020, our non-profit organisation handled all the marketing. Feeling the immense difficulty of selling the produce, I wrote an article titled ‘Non-profits Doing Business? Think Twice Before Diving In’ to articulate my reflections at the time.

If the relationship with the villagers remained purely commercial, the pressure on the sales team would be even greater. For instance, if we produced 1,000 bottles of wine, it might take a very long time to sell them all. In the past, when rice was sold in the village, there was a local saying: ‘Credit of three is not worth cash of two’—meaning it is better to receive two yuan in cash than to be owed three. The cooperative lacked sufficient capital; how long could the villagers tolerate waiting for their payments? And if the stock truly failed to sell, would the villagers be willing to share the risk?

By 2020, our organisation had reached its limit, and we were forced to hand the marketing responsibilities back to the villagers.

The villagers began to take on more roles within the cooperative, and the division of labour became more specialised. This was intended to be a positive development and aligned with our original goals; by keeping more stages of the supply chain within the village, the villagers could, in theory, secure a greater share of the profits. However, we discovered that this evolution involved more people and created increasingly complex webs of interest, making the coordination of relationships among the villagers far more difficult.

● Women from Leming Village in Xianniangxi sharing their experience of making preserved plums.

V.How to Move Beyond Economic Ties?

In truth, the relationship between villagers and the cooperative should not be a purely economic one, as the cooperative is owned by all its members. For instance, the silk cooperative in Kaixiangong Village uses the members’ assembly as its highest authority; every member holds a share and is expected to fulfil their responsibilities toward the cooperative. However, I believe that, in practical terms, collective ownership by all members is very difficult to achieve. In reality, the Kaixiangong silk cooperative, guided by the vocational school, is managed by a few capable individuals in the village, while the vast majority of members do not participate in its operations. This model is closer to the factory run by Director Wu, described by Fei Xiaotong in *Cocoon*—an enterprise of fifty or sixty people, most of whom are simply labourers. The owner, Director Wu, is a conscientious boss, but that is all: he did not turn the factory into a cooperative, nor did the villagers working there become members.

● A share certificate from the Kaixiangong Village Raw Silk Refining, Transport and Marketing Cooperative. Photographed at the Fei Xiaotong Jiangcun Memorial Hall.

Looking deeper, however, the issue is not merely one of structure, but of factory ownership and how the villagers perceive it. In *The Cocoon*, it is mentioned that if a silk factory wishes to increase production efficiency without imitating other factories or exploiting workers through overtime, where does the workers’ motivation come from? How can they be encouraged to invest their time and labour willingly? *The Cocoon* suggests that education for the farmers is essential, so they realise that the factory belongs to them all, not just to the manager.

From my own practical experience, this kind of guidance and education is incredibly challenging. A century later, the Qingmei Cooperative faces a similar dilemma: if a cooperative is seen merely as a business venture, the villagers will naturally engage as long as it is profitable and abandon it the moment it is not.

Under these circumstances, as the cooperative grows and the chain of cooperation extends, the fundamental issues regarding relationships remain unresolved. This means the cooperative is built on precarious foundations; once external risks emerge, it can easily collapse.

This was the reality in Kaixiangong Village. Despite its initial success, the Kaixiangong Cooperative struggled to sustain both production and sales after the global economic crisis of 1929 caused international markets to shrink and members ceased selling their cocoons to the factory, leading to a gradual deterioration in operations. Today, we can understand that the factory’s primary concern at the time must have been securing enough raw materials to keep the plant operational; they would have had little capacity left to consider how to mobilise the farmers.

To be frank, this mobilisation and education should have been the priority. Otherwise, a situation easily arises where members are happy to share the rewards when the cooperative thrives, but struggle to share the burdens when difficulties hit. Conversely, some rural organisations that did not begin with economic goals—sorting out relationships and aligning visions while there were no financial interests at stake—tended to operate more healthily when they later transitioned to a cooperative economy.

VI. The Rural Cooperative Economy as an “Intermediate Form”

Fei Dasheng’s efforts in Kaixiangong Village eventually came to a complete halt after 1937. This was partly due to external factors, such as the global economic crisis and Japanese aggression affecting the silk market, but I believe it would have struggled to persist even without them. When the Women’s Sericulture School intervened in the village, they attempted to use their technical expertise as a lever to shift the rural economic model and the relationships between villagers; this approach was not entirely successful. The cooperative was essentially walking on one leg: economic progress was rapid, but the organisational and educational frameworks failed to keep pace.

While Fei Dasheng and the Women’s Sericulture School showed great courage in tackling the rural issues of the time, certain shortcomings were inevitable. The cooperative in Kaixiangong Village was a transitional experiment, not the end goal. This is the meaning of the “intermediate form” mentioned in the title—the idea that a cooperative economy is a temporary state within history.

The value of a cooperative economy lies not only in increased income and improved livelihoods, but in its potential to reshape production relations. Reshaping these relations is the very level of achievement intended by Fei Xiaotong’s vision of “rural construction as the way forward for Chinese society”. Fei Dasheng held similar notions regarding the cooperative, though he did not implement them fully.

From a contemporary perspective, what might the path forward be for the cooperative economy? I have not yet fully worked this out.

For example, if we use the “rural collective economy”—a frequent term in current policy—as a reference, such economies are generally led by the village committees and can integrate and mobilise the resources of the entire village. Our current cooperative economies are far from reaching this level. Can the “small-scale cooperation” of a few individuals leap to the “large-scale cooperation” of a collective economy? In making such a leap, one encounters fundamental questions: Who represents the village? Who has the authority to dispose of its resources?

Many cooperatives fail to make this leap. However, I believe this transition is vital; otherwise, a cooperative economy limited to a small group can hardly provide a way out for the village, let alone contribute to a way out for society as a whole. From this perspective, the practice of rural cooperative economies can be seen as an exercise in organisational development and talent cultivation, preparing the ground for more profound social changes in the long run.

Foodthink Author | Huang Yajun

Rural community development practitioner and co-founder of Guangdong Fengnianqing. I have lived in the countryside, worked the land, and organised cooperatives that failed—yet my interest in the rural cooperative economy remains undiminished. I have sold various types of agricultural produce and admit I am not naturally cut out for business, but I have always held onto the hope for mutual aid between urban and rural areas.

Photo: Yuanxiang Meihao Cooperative, Foodthink

Edited by: Wang Hao