Chapter 380 - Micro-Loans

"The difference is enormous," Wu Nanhai explained. "Landlords actually come in many varieties. The landlords we're most familiar with exploit primarily through tenancy—they divide their holdings into small plots for tenants. According to traditional Chinese landlord-tenant relationships, once land is leased, what to grow and how to grow it becomes the tenant's business. As long as tenants pay their rent, landlords have no right to interfere with farming activities. Sometimes they can't even change tenants. So they have zero interest in improving agricultural technology—their energy goes entirely into dealing with tenants and ensuring rent is paid on time and in full."

"By contrast, entrepreneurial landlords carry something of the flavor of modern agricultural capitalists. They hire long-term and short-term workers, paying wages. Some are even tenants themselves. They have strong demand for maximizing land profits—since they can't simply raise rent to increase income, they must extract more output from the land. Their demand for agricultural technology is far more urgent."

"Tenants? If they're tenants, how can they be landlords?"

"Hehe, didn't you know there was a term 'tenant-rich-peasant' during land reform?" Wu Nanhai smiled. "Actually, calling such people landlords is technically inappropriate. They're professional land operators, generally possessing substantial capital or specialized skills. They lease large areas directly from landowners and profit by cultivating high-value cash crops."

"I see." Wan Lihui nodded, somewhat embarrassed. "And here I'm supposed to be from a farming background—"

"Hehe, the rural society you came from had long since passed this stage." Wu Nanhai said. "In this time-space's Guangdong, Fujian, and the Jiangsu-Zhejiang region, entrepreneurial landlords are rising—though they mainly grow cash crops. Pure grain-focused entrepreneurial landlords remain rare. Those are whom we want to support."

"Entrepreneurial landlords are very capitalistic," Ye Yuming observed. "Representatives of advanced productive forces in this time-space, would you say?"

"Exactly. So our agricultural policy is: support entrepreneurial landlords, protect owner-cultivators, squeeze out tenant-landlords—gradually making them disappear or transform into entrepreneurial landlords."

"What about tenants themselves?" The question came with evident concern. "Eliminating tenant-landlords eliminates tenants' livelihood. The Executive Committee isn't planning land reform—how do we solve their land problem? Under tenancy they at least had a way to survive. Eliminate tenant-landlords and they won't even have bitter rice to eat."

"Lingao has plenty of wasteland. Distribute seeds and oxen, help them clear land, organize them to build irrigation..."

Wu De directly objected: "After all that effort, we'd only create a batch of new Lingao smallholders. We don't need to expand the smallholder base here—it's useless to us."

"It sounds reasonable though—smallholders will fight desperately to defend their land and homes."

"The working class will fight just as desperately, and they possess nothing—no fretting about spring planting or autumn harvesting." Wu De allowed himself a sardonic smile. "Alright, actually, for defending homes, people don't necessarily need fifty mu to cultivate. They just need a society that feels prosperous, stable, and hopeful."

"As for absorbing surplus labor, there are many solutions. The simplest is industry." Wu De continued. "Then agriculture itself—we don't need peasants, we need agricultural workers. Except for certain specialty crops, everything gets intensive cultivation on consolidated land."

Wen Desi cleared his throat, about to speak, when Li Quan from the farm entered carefully carrying a tea tray. This little girl, collected along with her mother from Gou Family Village by Zhang Xingjiao, had after most of a year at the farm grown into quite a cute loli—two black braids, a clean thin silk blouse, large eyes blinking.

"Chief Wen, please have tea," Li Quan said sweetly. Despite her young age, she knew the transmigrator collective's main figures well—these gentlemen were "big shots" who frequently appeared at the farm.

"Good, thank you." Wen Desi raised the porcelain teacup. The little girl smiled brightly, then distributed cups to everyone. Perhaps because cute little girls were rare, everyone's appreciative gazes fixed on her, making her cheeks flush crimson. She quickly retreated.

Wen Desi gave a cold "hmph."

"Li Quan is now at Citizens' School. Very clever. Xiao Zishan wrote a recommendation for her—plans to send her to Military-Political Academy..." Wu Nanhai looked around, mustered courage, and said quietly.

"Military-Political Academy? She's far too young!" Wen Desi was puzzled, momentarily not grasping Wu Nanhai's meaning.

"In a few years she won't be." Wu Nanhai's face reddened slightly; he seemed reluctant to elaborate. Just then Ye Yuming resumed speaking, so he dropped the subject. Ye Yuming was introducing measures for small farmers and minor landlords.

For this group, the Heaven and Earth Society would primarily promote livestock and poultry techniques through contract farming, with the Agricultural Committee purchasing all output.

This wasn't simply distributing chickens and ducks to households—it was a micro-loan operation.

"I suggest Delong Grain Store handle this," Ye Yuming said. "If Delong considers the business too amateur for their operation, it can be delegated to the Agricultural Committee..."

"No problem—Delong is a financial institution by nature. Micro-loans fall within our scope." Yan Ming agreed readily. "This approach is actually preferable—easier accounting."

He proposed: during distribution, directly issue Grain Circulation Vouchers. Borrowers then use vouchers to purchase poultry from the Heaven and Earth Society for raising. These loans would be small—worth only five to ten chickens.

Households would buy chicks from the Society, raise them to maturity, then submit twenty eggs to the Society as principal and interest. The Society would then uniformly purchase additional eggs at rates of several vouchers per egg. When laying hens aged out, they could be sold to the food factory for meat products.

"We can jointly invest with local major landlords in small food processing factories. We provide technology; they manage operations. Downstream raw materials controlled by the Heaven and Earth Society; upstream sales controlled by the Trade Department. Even if factories nominally belong to landlords, they're really just processing plants—they can't cause trouble."

Ye Yuming finished explaining his plan in one breath.

"There's a procedural issue," Wu Nanhai pointed out. "Farmers receive voucher loans but repay the farm with eggs. But the farm can't repay its bank loans with eggs."

"I say let it go." Wen Desi's tone was pragmatic. "Never mind the mismatch between in-kind loans and monetary loans. Have you observed poverty-area aid programs in our time? First they distributed cash directly—farmers spent it instantly. Then they switched to distributing chickens, pigs, sheep—animals taken home and slaughtered within days for eating. Farmers would claim disease had killed them. What do you do then—demand repayment?" No one could guarantee this time-space's farmers were more honest than those in the other time-space.

"So rather than a loan format, use a futures format. Provide quality breeds free initially, then contract with farmers to purchase at agreed prices later, paying a partial deposit upfront. At least they won't immediately eat the poultry. Also, poultry farming carries risks—disease causes batch deaths, easily bankrupting farmers who then can't repay. That breeds resentment, affecting transmigrators' reputation and local social stability. So livestock and poultry farming should be postponed—first popularize quality crops."

"These are micro-loans. I think ten or fewer chicks won't bankrupt anyone." Ye Yuming was insistent. "If all the birds die and they can't repay, send them to the labor camp for a month as debt payment. If you're still worried, have employees' families do the raising first. Besides, freebies will equally be eaten then blamed on disease."

"If farmers calculate that completing the contract benefits them more than eating the chickens and drinking up the deposit, they'll work properly," Wen Desi shrugged. "Of course, some chronically impoverished people won't think this way. If Lingao's common people prove to be relatively enterprising laborers, contract farming should be implementable. My objection to micro-loans has two concerns: first, locals may lack the concept of borrowing for productive purposes; second, loans easily associate with negative phenomena like usury—hard to promote."

"Regarding borrowing concepts, Director Wen, you're overthinking." Yan Ming had researched this topic. Local rural lending existed and was actually quite diverse. Farmers often used it for fertilizer, tools, or to survive lean seasons. Lenders were mainly local landlords and wealthy households, predominantly making in-kind loans. Interest rates varied widely—from under 1.5% annual interest for mutual-aid lending within local gentry clans to usurious monthly rates of 1%.

"Overall, farmers do possess lending awareness. If our loan interest is low, farmers will be willing to borrow. For further risk mitigation, we can develop evaluation standards and implement risk control." Yan Ming was clearly interested in agricultural micro-loans—this would be his first loan operation. Small business, but a beginning.

"That approach means we can't increase local farmers' income to win popular support. The genuinely poor get nothing..."

"We must balance both." Wen Desi said after careful consideration. "For truly destitute peasants who possess nothing, no loans. Begin lending with small owner-cultivators. Lower the standards, broaden coverage, benefit as many as possible."

(End of Chapter)