When he was 19 years old, Yan Haichun was dispatched to a bleak stretch of fields just outside Shanghai to work on a collective farm. China was in the midst of the Cultural Revolution and Mao Zedong had decreed that the best education a youngster could receive was back-breaking labour alongside peasants.
In the early 1970s, the farm employed more than 20,000 people to produce modest quantities of rice and cabbage. "Everyone eventually went back to the city, except the stupid ones and me," says the 52-year-old Mr Yan, a chain-smoker who coughs when he chuckles at his own jokes.
The last laugh could be with Mr Yan, however. He is now deputy manager of an agricultural business that operates the very same farm. Instead of cabbage and rice, he is producing premium organic pork to be sold at Carrefour and Wal-Mart.
Mr Yan's company is part of a quiet revolution beginning to spread through Chinese agriculture as farmers try to meet the needs of rapidly expanding supermarket chains. Farms that only a decade ago were merely subsisting are now slowly coming under the influence of agribusiness companies. "Agribusiness is in its infancy at the moment in China but it is going to be one of the big phenomena of the next 10 years," says Jonathan Anderson, Asia economist at UBS. "It is a good time to buy into a pig farm if you can."
China has had a huge impact on companies such as Wal-Mart, which every year sources more than $10bn (£5.1bn, €7.5bn) of goods from the country. But Wal-Mart and other modern retailers are also creating a lasting impression on China, even down on the farm.
The expansion of industrial agriculture has been seen all over the developing world over the last two decades - from the savannahs of central Brazil to Egypt's Nile delta. But it is particularly sensitive in China because of its potential impact on two of the most important political issues. The government of President Hu Jintao has pledged to lift farm incomes and reduce the gap that has opened up between the standard of living in rural areas - where 900m of China's 1.3bn people still live - and the booming coastal cities. Making farms more efficient is central to any long-term effort to reduce poverty.
Greater efficiency can partly be achieved through using the sort of machinery and technology that agribusiness brings. But to boost productivity significantly, farms in China will have to become much bigger and directly employ fewer people.
As a result, the introduction of industrial agriculture raises difficult questions about the status of land ownership in rural China. This has become an explosive issue in recent years as property has been seized to make way for factories and apartments. If farmers are bullied off their land to make way for larger operations, the advance of agribusiness could add to already simmering social tensions and accelerate migration to the fast-growing cities.
The dilemma goes back to the early days of economic reform in China in the late 1970s. One of Deng Xiaoping's first decisions was to break up the system of communal farms and distribute land on an equal basis to rural families. Residents did not gain ownership of the land but typically received a 30-year lease from their village.
The initial results were spectacular. Not only did farm incomes rise quickly but China avoided some of the problems of landless rural workers that have afflicted many developing countries undergoing industrialisation. However, the new land system also had considerable limitations. It left China with millions of tiny, inefficient producers - there are around 200m household farms with an average size of 1.5 acres, which cannot be sold. While incomes in the coastal cities soared in the 1990s, rural incomes rose much more slowly, in part because of the low output per worker on Chinese farms.
This creaking rural system stands in contrast to China's fast-growing modern retail network. Supermarkets and hypermarkets are multiplying rapidly as new middle-class consumers look for higher-quality food and more comfortable surroundings. There are now 16,000 supermarkets and hypermarkets, including both foreign and domestic operators, as well as large restaurant chains - KFC has around 2,000 outlets in China and McDonald's some 800.
Yet supermarkets and restaurant chains have very different requirements from traditional markets. They want specific products, they want quality guarantees and they want to be able to trace the source of the food.
These retailers have had to adapt to circumstances. One of the most dramatic examples is the supply chain that McDonald's has put in place for French fries with the help of Simplot, the private US company that is its main supplier of potatoes. Simplot has an operation in China that can churn out 1bn fries a year to the same quality as the US. The potatoes are mostly grown in Inner Mongolia, a region on the same latitude as Idaho and with a climate similar. But it has been a nearly two decade-long struggle.
According to Dan Cushing, the company's general manager in China, when Simplot arrived in the country in 1988 many potato farms still used a horse and plough. A farm needs around 250 acres to justify investment in tractors and fertiliser machinery, he says, but those in China at the time often had less than one acre. "Just to get a piece of land evened out so that water did not accumulate was a huge exercise in China," says Mr Cushing. "That sort of thing you can get done on a US farm by one phone call."
Many farmers were bemused when Simplot proposed a long-term growing cycle that produces commercial potatoes only at the end of the third calendar year. "We had to change the mentality from subsistence farming to commercial agriculture," says Mr Cushing, who admits that the business was lossmaking for a number of years.
Simplot started by selecting potential candidates, giving them advice on how to grow potatoes to its specifications and trying to convince them of the benefits of long-term supply contracts. Some pulled out, others prospered.
Crucially for Simplot, the effective size of the farms has grown larger. A decade ago the company was dealing with 1,000 potato suppliers: now it does business with just 100. Many are private groups that have leased land from other small farmers, while some are large-scale farms that remained under state control after land reform. "To be successful, you do need some sort of scale," says Mr Cushing.
Supermarkets now rarely deal directly with small farmers. Instead, over the past five years, a new generation of companies has emerged to supply them with food. Some of these producers, such as Chaoda, a vegetable producer that operates farms in 29 different parts of the country, have managed to lease large enough tracts of land to justify big investments.
Aisen, which runs the organic pork farm outside Shanghai, is another such business. It has been operating this stretch of land in the Nanhui district of the city for five years and now has 12 different pig farms.
To qualify as organic, the pigs are given no antibiotics in the last few months of life and receive a diet free of animal fat. There cannot be more than 2cm of fat on a piece of meat, 25 per cent less than conventional pork cuts in Chinese supermarkets. "In the big cities, customers now want to know that the meat is safe and that it is not too fatty," says Mr Yan.
Chinese agribusinesses are also beginning to carve out an export sector, especially in labour-intensive crops such as fruit and vegetables. Exports of these have doubled over the past decade and the country is a big supplier of apple juice and garlic. Anyone tucking into the Asian salad served at McDonald's in the US will be eating snow peas produced in China.
Agribusiness may have grown quickly but it has only begun to nibble at the edges of China's vast farming base. One of the few pieces of academic research on the subject looked at 200 communities in the greater Beijing area last year and found that the farmers had been only marginally affected by the creation of supply chains for the city's supermarkets. "It is happening a little, but so far it is not a huge story," says Scott Rozelle, a Stanford academic and one of the authors of the report.
Some researchers are optimistic that modern retailing will increase productivity by creating the conditions for the consolidation of farms and greater investment in equipment, which they hope will lead to higher rural incomes. "There are more and more opportunities for larger-scale farms to develop," says Hu Dinghuan, a professor at the Chinese Academy of Agricultural Sciences. "Supermarkets are going to be the driving force for agriculture in China. They are going to have a huge impact on farms."
Yet there are also concerns about the impact agribusiness will have on rural life in China, with its patchwork of tiny farms. Experts believe that farms will have to become bigger for yields to rise, yet given the ambiguous property rights in rural China, the introduction of agribusiness could open the way to further abuses of small farmers that might aggravate rural poverty and social tensions.
Farmers are not allowed to buy or sell land and, although in theory they can lease their property, many titles have never been formalised. There is huge scope in the system for local officials to make arbitrary decisions that change the terms of land use without providing adequate compensation.
Indeed, land disputes have been one of the most controversial issues in recent years and the cause of many of the thousands of violent protests that have broken out all across the country. According to the Land Ministry in Beijing, there were more than a million illegal seizures between 1998 and 2005, usually for factories or apartment buildings, and the farmers often received little or no compensation.
So far, researchers say, there have been few cases of farmers being pushed off their land to make way for commercial agriculture and larger farms. But Li Xiande, another CAAS professor, says agribusiness groups are increasingly negotiating supply contracts with the village officials who control the use of the land, rather than with the farmers themselves. "It could become a serious issue if the officials do a deal and the farmers only get a small part of the compensation," he says.
The controversy over land rights came to a head last month when a new property rights bill was approved by the National People's Congress in Beijing. The law has been hugely divisive: proponents think it an important step towards strengthening capitalism, while leftwing critics claim it will validate the illegal land grabs of recent years. Yet the law does not change the situation for rural land ownership and legal experts say it will not give farmers much more protection against unscrupulous officials.
Another level of protection could come from farmers establishing more co-operatives, which would allow them to negotiate collectively with buyers and organise larger-scale production. However, although farming co-ops are permitted, only 7 per cent of villages have created one, according to Mr Rozelle at Stanford. "In reality, the Communist party is not so keen on other groups organising themselves."
Tens of thousands of farmers have been elbowed off their land in recent years to make way for the country's manufacturing boom, creating a dangerous well of resentment that China's top leaders have pledged to address. The introduction of agribusiness to rural China is a test of whether Beijing really can look after the small farmer.
