The Study Of The Mechanism Of Agro-industrialization

Agro-industrialization is an agricultural operating system. Agro-industrialization operation in China began in the early 1990s and extended very rapidly throughout China in the mid-1990s, showing great vitality for further development. It has become another important reform of rural operating system following the rural household responsibility system (HRS) and brought profound changes for the development of agriculture in China. Therefore, it seems to be particularly important to study on the development mechanism of agro-industrialization. This essay, under the guidance of the theories of agro-economics, socialist m arket e conomics, i nstitutional e conomics, d evelopment e conomics, i ndustrial economics and management science, has made an analysis and study of the development mechanism of agro-industrialization, proposed the focus of industrial development, forms of organizational structure, mechanism of benefit and appraisal system for the extent of agro-industrialization development. It has also put forward proposals relating to further development of agro-industrialization for policy-makers.Through the investigation of the origin and development of agro-industrialization home and abroad, it has proven that adopting the agro-industrialization system is an inevitable alternative for China's agricultural operational system under market economic conditions and based on the household responsibility system.We consider that agro-industrialization refers to an operating system and a benefit re-distribution system in which production, processing and marketing are integrated and trade, industry and farming are combined, the risk and b enefit sharing mechanism has been formed by all stakeholders, based on the household responsibility system, relying on agro-related leading enterprises, emphasizing economic efficiency, focusing on the pillar industry with market orientation. In terms of the organizational structure, agro-industrialization involves two marketing stakeholders, households and the 1 eading enterprises; in terms of the operating fields, agro-industrialization operates in all agri-business fields; in terms of the distribution, it forms an entire industrial chain from production to processing and marketing, from farming to industry and commerce. Integrated operation is the essential requirement of agro-industrialization. Integrated operation involves the integrity of operational organizations and that of the benefit. The integrity of benefit is the core for the realization of agro-industrialization. The integrity of organizations is the basis of agro-industrialization.From a micro perspective, any industry can be targeted for agro-industrialization. However, from the perspective of macro-economics, at a given economic development stage, different industries have different capacities in pulling the economic development. The analyses of the changes of the proportion of the values of agriculture, forestry, animal husbandry, fishery and processing industry over the total values of agriculture in Chinaand in Hubei province show that at present China especially Hubei province should take animal husbandry and agri-product processing industries as the key industries of agro-industrialization.The origin and development of the agro-industrialization in China is the result of benefit readjustment under the socialist market economic condition. The benefit balancing point between households and leading enterprises is the average profitability of the industrial chain. Under the circumstances of agro-industrialization, whether or not the households can receive the average profit or how much they can receive depend on the status of negotiation as one of the market stakeholders. At present time, the farmer households are obviously in the disadvantageous position in the negotiation. The reasons are: firstly, under the household responsibility system, the farmer households are not organized. Therefore, they have weak ability to shoulder risks. Secondly, the cultural and scientific quality of farmers is low, and the technical means are backward. It is very difficult for farmers to acquire market information. And farmers have 1 ittle information about their negotiating partners and a lack of negotiating ability and experience. Thirdly, under the circumstances of a relative surplus of agricultural products, there is a contradiction of demands falling short of supplies. For effectively increasing the degree of farmers' organization to reinforce their negotiating capacity, the most effective way is to establish economic cooperatives or farmers (households) associations to which the farmers belong. These agencies will unify the farmers' willingness and actions through the constitutions of the associations, provide farmers with technical services and training, collect market information and master the market dynamics. Meanwhile, in order to strengthen the anti-risk ability, it should reserve certain percentage of risk funds according to the amount of transactions of products that farmers sell through these agencies. Also, these agencies will represent the farmers as a market stakeholder to negotiate with the leading enterprises.The degree of agro-industrialization development reflects to some extent the level of agro-modernization and industrialization in a given area or country. We have selected 11 indicators in the following 4 aspects - scale, structure, stage of agro-industrialization and the degree of development of the leading enterprises, and established an indicating system for the evaluation of agro-industrialization. The indicators of scale involve the index of agri-related enterprise industrialization, the index of rural labor, the index of arable land and the index of total output value. The indicators of structure include the index of animal husbandry and the index of agro-product processing. The indicator of stage is the profit bias index. And the indicators of the leading enterprise development degree consist of the index of the farmers-linking ability, the index of total assets, the index of total output value, and the i ndex o f profitability (profit p er 100 yuan o f s ales). According tot hese indicators, we have undertaken the evaluation of the development level of agro-industrialization in Hubei province. The result shows that the leading enterprises in Hubei province have a high level of development, strong ability of linking farmers, large scales and good benefit. However, from the point of view of the whole province, the development level of agro-industrialization is low.On the basis of the study o f the development mechanism of agro-industrialization and the positive analysis of the development of agro-industrialization in Hubei province,we have proposed some policy recommendations for furthering healthy and steady development of agro-industrialization. These recommendations include the industrial policies concerning the development of agro-industrialization, policies of benefit regulation, policies of support for the leading enterprises, policies relating to the development of farmers' cooperatives, policies regarding export promotion and recommendations of reforming the agricultural management system.