This paper aims to explain the role of middlemen (jing ji ren in Chinese) in China’s corn market by examining the circumstances in Jilin Province, a major corn-producing area in China.
The leading role of the state-owned grain companies in the corn market changed after the reform of the grain distribution system in 2004, when numerous companies and middlemen from the private sector entered the market. Middlemen have since then become active actors in the new distribution channel of corn. Small-scale middlemen are rural residents as well as private truck owners. They purchase corn at farm gates, while offering threshing and truck-loading services to peasants. Small-scale middlemen earn profits by offering these services and utilizing price information at sales. Large-scale middlemen are mostly constituted as companies. They purchase corn at their warehouses from small-scale middlemen and peasants who came to sell, and resell the corn to other companies. Large-scale middlemen expand the profit margin by drying the corn with desiccators before resale. Their sales volumes are much larger compared to those of middlemen who purchase corn at farm gates.
In this way, middlemen are playing important roles as collectors, sellers and service-providers in China’s corn market. Their activities contribute to the reduction of transaction costs compared to the case when peasants sell corn directly to grain companies.
This paper reveals that political changes are not the only factors that promoted the marketization of China’s grain distribution system. It is the internal forces of the agricultural sector that led to the success of the reform of the grain distribution system in 2004. After the reform, rural residents were able to improve their performance as middlemen and the efficiency of the distribution channel in the corn market was increased.
The results shown in this paper support the academic view proposed after the 1980s that middlemen are not always exploiting the peasants, but can be actors to improve the efficiency of agricultural goods markets. The fact that middlemen’s activities are beneficial to both the managements of peasant households and to grain companies also has significant implications for agricultural policy-makers. That is to say, in a country where agricultural production is undertaken mainly by smallholders, policies intended to connect producers to consumers of agricultural goods, or those intended to build large-scale modern distribution facilities in a short time might not always be effective.

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