Why Is Running a Farmers’ Co-operative Still So Hard a Century Later?

Foodthink Says

In 1924, Fei Dasheng, along with teachers and students from the Jiangsu Provincial Women’s Sericulture School, travelled to Kaixiangong Village in Wujiang County to establish the Silk Improvement Society, nearly a hundred years ago. Their aim was to reverse the decline of the sericulture industry and the widespread bankruptcy of rural households at the time. In 1930, following a field visit by the National Government’s Central Cooperative Research Class, the society was hailed as the “only model cooperative in the province”. The cooperative’s experiences were later drawn upon by Fei Dasheng’s brother, Fei Xiaotong: one portion was woven into his doctoral thesis, later published as the renowned *Peasant Life in China*, while the remainder, after literary adaptation, became the prototype for the novel *Cocoon*.

A century later, contemporary rural practitioners, driven by similar objectives, have once again ventured into villages to set up a wide variety of cooperatives. What can today’s practitioners learn from the cooperatives of a hundred years ago? Do contemporary NGOs working in rural development and livelihood intervention face comparable challenges today? And what specific demands does cooperation place on organisers and villagers respectively?

The author of this piece, Huang Yajun, is a rural practitioner who has long been involved in helping villagers form cooperatives in their communities. This past May, at a reading group organised by Foodthink on Fei Xiaotong’s *Peasant Life in China* and *Cocoon*, he shared his reflections on these two distinct cooperative experiences from the perspective of an advocate for the rural cooperative economy.

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

Since 2007, I have been working with villagers in a Yunnan village to set up a rice-growing cooperative, helping them market ecologically farmed rice.

In 2013, the charitable organisation I was with also piloted a cooperative in a village in Conghua, Guangdong. We noticed the village was dotted with green plum trees, so we brought in outside instructors to teach the locals processing techniques. The process turned out to be quite straightforward and could be handled in small family-run workshops. After trial runs yielded a few products, we felt the green plum processing venture was worth pursuing. In 2016, the villagers established a green plum processing cooperative. More than ten households joined, and it has been running ever since.

When set against the silk cooperative championed by Fei Daseng and the Women’s Sericulture School a century ago, our efforts differ in both sector and social context, yet offer much for comparison. Placing these two experiences side by side invites reflection: what does a rural cooperative economy actually look like? And what challenges have surfaced in practice?

● Elderly Fei Dasen (third from left) and Fei Xiaotong (third from right) revisit Kai Xian Gong Village. Photograph taken at the Fei Xiaotong Jiangcun Memorial Hall.

● Group photograph of farmers from the Yuanxiang Meihao Cooperative producing plum extract.

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 remarkably capable they were. In my view, there are considerable obstacles to establishing cooperatives in Kaixianqiao Village, one of which lies in the high degree of marketisation within the sericulture industry. Silkworm rearing, reeling, processing, and sales: the production methods and profit structures across these stages are rigid, and control over the entire sector rests far from the producers. For a cooperative to enter such an interlocking chain, it is not enough to alter just one link; it must engage with every tier of the supply chain from top to bottom.

Some time ago, we visited the navel orange growing region in Ganzhou, Jiangxi Province. The industry has flourished for two to three decades, acting as a pillar for local villages. Much like sericulture in Kaixianqiao, market division of labour is highly specialised. Objectively speaking, relying on market forces, villagers do not need to cooperate. Each can rely on their own skills; as long as they can cultivate the fruit, they can be assured of finding a buyer, even if not at a premium price.

Consequently, when it comes to farmer cooperation in that area, we can currently only envisage setting up a “farmer field school” to bring growers together to learn techniques that lower costs and boost incomes. Should cooperation need to scale up, it would require transforming the entire navel orange supply chain, which is beyond what we currently dare to contemplate.

Today we frequently advocate that rural revitalisation demands the integrated development of the primary, secondary, and tertiary sectors, yet few manage to execute the secondary sector well. Most initiatives either confine themselves to primary production or bypass it entirely to jump straight into the tertiary sector. Therefore, although their pioneering efforts were forced to cease in 1937, they had already attained a remarkable level of achievement.

Upon arriving in Kaixianqiao Village in 1924, the Women’s Sericulture School first established a Sericulture Improvement Society comprising 21 households. By 1925, membership had expanded to 120 households, organised into five groups that undertook collective disinfection, collective egg incubation, joint rearing of young silkworms, and collective cocoon marketing. Fei Dasheng and his colleagues always maintained that this form of agricultural cooperation, centred on joint silkworm rearing, had inherent limitations. In 1929, they mobilised sericulture farmers to become shareholders, secured bank financing, and established a Raw Silk Production and Marketing Cooperative. In Fei Dasheng’s view, this step represented an attempt to guide the traditional rural economy towards a modern industrial one, whilst hoping the industrialisation process would spare villagers the need to uproot themselves and relocate to cities, echoing what is today termed “leaving the land but not the hometown”.

● The new methods introduced by the Silk Improvement Society, alongside the communal rearing of young silkworms, greatly reduced mortality rates among the early instars. Photograph taken at the Fei Xiaotong Jiangcun Memorial Hall.

Later, taking Kaixianqiao Village as their base, they expanded the cooperative movement across numerous surrounding towns and villages, hoping to build a system that bridged urban and rural divides, integrated production with sales, and fostered the coordinated local development of industry and agriculture. Such achievements remain difficult to surpass even today.

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

The Women’s Silkworm School’s success in establishing cooperatives rested firmly on its distinct technical expertise. Intervening from a technical standpoint proved highly effective initially. By introducing improved methods for silkworm rearing and silk reeling, they minimised waste, boosted productivity, and elevated the quality of the raw silk. As a result, during the first few years, the cooperative’s products proved highly competitive in the market, and members’ incomes rose accordingly. They also pioneered a ‘contract reeling’ system. This involved separating the cocoon-drying and reeling stages from the cooperative and transferring them to a non-profit facility. The facility charged a fee only for the reeling service, with all remaining profits passing directly to the members. Through this arrangement, production efficiency was enhanced via specialised factory operations, while villagers managed a greater share of the production chain and thereby benefited from increased returns.

● The Zhenze Silk Factory. After being taken over by the Women’s Sericulture School in 1935, it was converted to provide contract silk drying and reeling services for cooperatives. Fei Dasheng once served as its manager. Photographed at the Fei Xiaotong Jiangcun Memorial Hall.

Today, when some charitable organisations engage in rural development, they typically start with technical interventions: introducing new crop varieties or improving farming and husbandry techniques to boost farmers’ incomes. Yet without the kind of expert backing provided by the Women’s Sericulture School, upgrading technology proves extremely difficult, and farmers find it hard to build a technical edge of their own. Most NGOs today struggle to replicate the profound impact the School once had.

Turning to the Green Plum Cooperative we have nurtured, it has consistently remained at a handicraft workshop level in terms of technology. This is not for want of trying to modernise. We even consulted researchers at the Academy of Agricultural Sciences about the feasibility of building a processing plant, but ultimately shelved the plan. One of the main hurdles is that an industrial production line requires the skills to operate and maintain automated machinery—expertise that is difficult for local villagers to acquire.

● Some of the silk-processing stages within the cooperative’s affiliated factory. The local workers employed at the silk mill are predominantly young women. Photographed at the Fei Xiaotong Jiangcun Memorial Hall.

Capital presents another significant barrier to establishing a processing plant. The Green Plum Cooperative would require a substantial amount of funding to build one, which would inevitably magnify the financial risks.

By way of comparison, in the case of Kai Xian Gong Village, the original Silk Improvement Society founded by the Women’s Sericulture School required very little capital. By encouraging silkworm farmers to pool resources for disinfection and egg incubation, they could achieve basic technological upgrades. Such work often only required a shared communal building in the village, necessitating minimal financial outlay.

However, the moment a cooperative sets up a factory, capital requirements skyrocket, far beyond what the villagers themselves can muster. In the Kai Xian Gong cooperative, members were unable to even fully pay their initial share capital. Both Fei Xiaotong and Fei Dasheng recognised this reality at the time. In the novel *The Cocoon*, the factory manager, Wu, is forced to travel to Shanghai to secure bank loans for working capital. This closely mirrors the situation in Kai Xian Gong, where the cooperative’s primary source of funding was indeed a loan from the Farmers’ Bank.

The challenges of technology and capital are deeply intertwined with the scale of production: to improve profitability and expand market share, a cooperative must enhance its competitiveness. The most effective route is to mechanise, thereby raising technical standards, boosting productivity, and ensuring consistent quality. Yet this inevitably drives up investment and expands operational scale, which in turn places immediate pressure on sales. These factors form an interconnected chain, each link presenting a formidable hurdle for farmers. Consequently, our Green Plum Cooperative has not yet dared to take that leap.

● Communal smoking of dried plums. Fresh green plums are slowly dehydrated over a wood fire, left to rest for several days, and then baked until blackened to produce traditional smoked plums.

● Traditional tools used by the Green Plum Cooperative to produce plum extract. Stone, wood, bamboo and ceramic are carefully selected for these implements to prevent the acidic extract from reacting with metal.

III. Are Villagers and Cooperatives Growing Apart?

Once the factory in Kexianggong Village was up and running, the relationship between the villagers and the cooperative paradoxically grew more distant. As Fei Xiaotong observes in “Peasant Life in China”, silkworm cocoon purchases declined year on year after 1930. The cooperative’s offered price was simply too low, and settlement was not made entirely in cash. Consequently, sericulture farmers found it more profitable to reel the silk by hand at home and sell it themselves.

Conversely, facing underutilised capacity, the factory was forced to source raw materials from outside the cooperative to keep production lines running. Driven by this market logic, the cooperative’s factory gradually lost what set it apart from external processors, drifting ever further from the cooperative’s founding ethos.

By this stage, the link between villagers and the cooperative had been reduced to a purely transactional arrangement: members merely supplied cocoons to the factory. This inevitably fostered a highly opportunistic approach: villagers would supply the cooperative when it was thriving, but renege on their agreements when business slumped. Given that their primary concern was simply maximising their own earnings, this behaviour is hardly surprising.

In theory, villagers held a dual identity as members and joint owners of the cooperative, yet this sense of stewardship never truly took root. The mechanisms designed to foster member participation likewise failed to materialise in practice.

A similar pattern has emerged in our own green plum cooperative. Growers constantly weigh whether to sell their harvest to the cooperative or to independent middlemen. The two parties impose different standards at a granular level. For instance, the cooperative requires that plums not be knocked from the branches; they must be hand-picked individually, or at the very least carefully sorted after harvesting to ensure they are unblemished, which streamlines subsequent processing. Certain end products also dictate specific size requirements. Plums destined for making preserved plums, for example, must be sufficiently large to yield adequate flesh; undersized fruit simply won’t sell well. Consequently, even when the hillsides are blanketed with green plums, sourcing fruit that meets specifications remains a challenge. The cooperative demands hand-sorted, pesticide-free produce. To compensate growers adequately for these hidden labour and compliance costs through higher purchase prices would be prohibitively expensive. In reality, however, the cooperative can only offer a marginal premium over the rates paid by independent traders.

For upstream growers, evaluating their ties to the cooperative purely through a financial lens makes it highly likely they will route their harvest to independent traders, with their allegiance shifting year by year depending on the margins.

● To supply the cooperative, members carefully select the finest green plums.

IV. Sales and Markets

Ultimately, the success of a cooperative economy hinges less on theory and more on whether the products can actually be sold—a reality that is especially pronounced in agriculture. Some non-profit organisations have attempted to drive change through technical interventions, such as introducing new breeds of cattle and sheep to local farmers. Yet, faced with high breeding risks and volatile markets, these initiatives have run into considerable difficulties. By comparison, within today’s cooperative economies, securing a stable market often outweighs technological input.

In the early days of producing green plum wine, market conditions were quite favourable. However, as other players entered the green plum wine market, we faced direct competition. After all, we are merely a small cooperative operating within a vast market. The quality and scale of their factory-produced green plum wine stand in stark contrast to what can be achieved in a village home workshop.

Today, competition in the processed green plum sector has intensified, both locally and nationwide. Prior to 2020, our non-profit organisation had actually shouldered the responsibility for marketing. Frustrated by the sheer difficulty of selling the goods, I felt compelled to pen an article—《Doing Business as a Non-Profit? Think Twice Before Diving In》—to set out my reflections at the time.

Were the relationship with the villagers to remain strictly transactional, the pressure on the sales team would only mount. Take a batch of a thousand bottles of wine: it could take an age to clear the inventory. When we used to sell rice in the village, locals often quoted the saying, ‘Better two paid in cash than three on credit’—meaning it is far preferable to settle two yuan immediately rather than leave three outstanding. The cooperative simply lacks the capital to front such costs. For how long could villagers tolerate delayed payments? And should the goods fail to sell, would they be willing to share the risk collectively?

It was in 2020, when our organisation simply reached its limit, that we handed marketing responsibilities back to the villagers.

The trend of villagers taking on increasingly numerous and specialised roles within the cooperative was, in principle, a positive development and aligned with our original vision. As more stages of the supply chain shifted into the village, the objective was to ensure farmers captured a greater share of the profits. Yet we soon discovered a complication: as more households became involved, the web of financial interests grew tangled. Coordinating among the villagers and balancing these competing stakes became progressively more difficult.

● Xianiangxi and the women from Leming Village shared their experience of making preserved plums.

V. How to Move Beyond Economic Ties?

In principle, the relationship between villagers and a cooperative should not be merely economic, as the cooperative is owned collectively by all its members. Take the silk cooperative in Kai Xian Gong village, for example. It too established a general members’ assembly as its highest governing body, with each member holding a share and bearing a corresponding responsibility to the cooperative. Yet in practice, I believe genuine collective ownership by all members is exceedingly difficult to realise. In reality, the Kai Xian Gong silk cooperative operated under the guidance of an industrial school, with management entrusted to capable individuals from the village, while the vast majority of members played no part in its running. This arrangement more closely resembles the factory run by Manager Wu, as depicted by Fei Xiaotong in his book *Cocoon*. It was a concern employing fifty to sixty people, most of whom were simply wage labourers. Manager Wu, the owner, was certainly a conscientious employer, but that was where it ended. He did not transform the factory into a cooperative, and the villagers who worked there never evolved into full members.

● Share certificate of the Kai Xian Gong Village Raw Silk Refining and Marketing Cooperative. Photographed at the Fei Xiaotong Jiangcun Memorial Hall.

But dig deeper, and the issue is not merely one of structure; it lies in factory ownership and how the villagers perceive it. *The Cocoon* observes that if a silk factory aims to raise productivity without emulating other mills or relying on overtime to exploit its workforce, where does the workers’ motivation come from? How can they be persuaded to willingly invest their time and labour? The book argues that farmers need educating, so they understand the factory belongs to them collectively, not merely to the manager.

Drawing on my own fieldwork, I can attest that this kind of guidance and education is exceedingly difficult. A century on, the Qingmei cooperative confronts a familiar dilemma: if a cooperative is treated as merely another business, villagers will naturally approach it with a pragmatic mindset—pursue it if it profits, and abandon it if it does not.

Under such conditions, as a cooperative expands and its supply chain lengthens, leaving these foundational relational issues unresolved amounts to building on sand. When external shocks strike, the cooperative is all too likely to crumble.

This precisely mirrored the reality in Kaixiangong Village. Despite its relatively sound management, the village’s cooperative faltered as the 1929 global economic depression contracted international markets and members ceased selling their cocoons to the mill. Struggling to sustain both production and sales, its operations steadily declined. In hindsight, it is easy to see that the mill’s immediate priority had to be securing raw materials just to keep the doors open and machinery running; there was simply no bandwidth left for mobilising or educating farmers.

Frankly, mobilisation and education ought to precede economic ventures. Otherwise, the classic scenario unfolds: members are happy to share in the prosperity when times are good, but falter when hardship strikes. Consequently, some rural organisations that initially forsook purely economic aims have fared better. By first clarifying relationships and aligning visions before financial stakes were introduced, they were better positioned to transition into cooperative economics with a far healthier operational foundation.

VI. Rural Cooperative Economics as an “Intermediate Form”

Fei Dasheng’s initiatives in Kaixiangong Village ultimately ground to a halt after 1937. While external factors played a role—namely the collapse of the silk market amid the global depression and the Japanese invasion—I suspect the project would have struggled to survive regardless. The Women’s Silk School approached rural intervention from a technical vantage point, their area of expertise, hoping to use it as a lever to transform the local economy and reshape village relations. In practice, however, this approach proved somewhat flawed. The cooperative was effectively balancing on one leg: economic progress moved swiftly, while organisational development and education lagged far behind.

Fei Dasheng and the Women’s Silk School undoubtedly showed remarkable courage in tackling the era’s rural challenges head-on. Yet their shortcomings are undeniable. The Kaixiangong cooperative was but a transitional experiment, not a final destination. This captures the meaning of the “intermediate form” referenced in the heading: cooperative economics, in this historical context, was merely a provisional stage.

The true value of a cooperative economy extends beyond mere income generation and improved livelihoods; it lies in its latent capacity to reshape the relations of production. It is precisely this transformation that Fei Xiaotong envisioned when he proposed rural reconstruction as the pathway forward for Chinese society. Fei Dasheng had already grasped this concept, though her execution lacked completeness.

Viewed through a contemporary lens, what paths might lie ahead for the cooperative economy? I must admit, I have not yet fully mapped this out.

Take, for instance, the rural collective economy frequently cited in contemporary policy. Typically spearheaded by the village party branch and village committee, it possesses the authority to pool and deploy resources across the entire village—a scale that modern cooperatives have yet to reach. Can the “small-scale collaboration” of a standard cooperative leap into the “large-scale solidarity” of a collective economy? Making such a leap inevitably raises fundamental questions: who truly represents the village? And who holds the authority to manage its resources?

Many cooperatives fail to make this leap. I believe, however, that it is essential; without it, a cooperative’s economic model is unlikely to secure a village’s future, let alone contribute to society at large. From this vantage point, rural cooperative initiatives should be viewed as exercises in organisational development and talent cultivation, laying the groundwork for more profound societal transformations down the line.

Foodthink Author | Huang Yajun

Rural community development practitioner and co-founder of Fengnianqing in Guangdong. He has lived and worked in villages, tilled the land, and helmed cooperatives that ultimately fell short, yet his dedication to rural cooperative economics remains unwavering. Though he has traded agricultural goods in many guises and freely admits he is not cut out for business, his belief in urban–rural solidarity endures.

Photo: Yuanxiang Meihao Cooperative, Foodthink

Editor: Wang Hao