Business licenses were given to the first three farming cooperatives in Shanghai yesterday, as China's new law on farm cooperatives came into effect.

A cooperative, a new kind of economic entity, is a group of farm families which produce the same agricultural products, established through government sponsorship and fundraising.

The cooperatives will be able to lower production costs due to mass production and help farmers improve their planting and managing techniques, said the Shanghai Industrial and Commercial Administrative Bureau.

"The new cooperatives are different from limited companies," said Chen Xuejun, deputy director of the bureau. "Farm families can join or step out of the cooperative freely, and they have equal rights to vote, no matter how much funding they provide."

Chen said the government has given many benefits to agricultural cooperatives. "Cooperatives can register at the bureau for free, and local government provides them with basic facilities," he said.

Sanxing Orange Cooperative in Chongming County started operations in February. Ninety-eight percent of its 114 members plant oranges, and it cost 30,000 yuan (US$3,870) to set up.

"Before, farmers on the island had small areas of orange farmland and backward techniques, and profits weren't satisfactory," said Mao Yongxin, director of the cooperative. "Now we have 79 hectares of farmland registered at the cooperative, and it's much easier to get inexpensive materials and advanced techniques."

Mao expected the cooperative will make 4.74 million yuan profit this year, increasing each family's income by 20 to 30 percent.

China passed the agricultural cooperative law at the end of last year, to raise peasants' competition and negotiation status in the market.

In the 1950s, China ran agricultural cooperatives called people's communes. These were different to the new cooperatives, as farmland belonged to the commune but not to each family.

(Source: www.shanghai.gov.cn )