CONFIDENTIAL
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Agriculture
3. Agriculture was the first and has so far been the most
successful area of reform. Deng recognised that the way. to achieve significant increases in agricultural output was
to free the farmers from the deadweight of the collective
system and to promote more individual initiative. His
prescription was straightforward: material incentives
combined with fewer administrative restrictions on rural
economic activity. As a first step, the prices paid by the
State for grain were raised. Thereafter a number of
'responsibility systems' were tried out whereby income was
more directly related to individual effort and much of the
decision-making power hitherto exercised by administrators
was devolved to the farmers themselves. By 1984, the most widespread form was the household responsibility system
(baogan daohu), under which individual farming households
were given the power to make their own management decisions.
Each household was allocated a certain amount of land (based
usually on the number of family members). The land was
allocated for a significant period of time (usually fifteen years) and farmers were given the right to work it as they saw fit, provided that they fulfilled certain quotas set by the State for grain and cotton production. Production over the quota could be sold to the State at higher prices or on the open market.
4.
Another very important aspect of reform in the rural area
was the positive encouragement given to the development of small scale rural industry and collectively or individually run sideline enterprises, such as livestock production or
forestry. The new policies meant that less labour was needed
for primary agricultural production. There was therefore and
continues to be a need for the creation of millions of new
/jobs
CONFIDENTIAL