Legal Risks of Land Transfer and Agricultural Labor Behind Shandong's Summer Grain Harvest: Lawyers Explain Key Compliance Points

Golden waves of wheat roll across the land of Qilu, and the news of a bumper summer grain harvest in Shandong once again confirms the role of this major economic province as a ballast stone for food security. Modern agricultural models such as large-scale farming, contract farming, and agricultural production trusteeship services are expanding rapidly, but along with them, legal disputes over land transfer contracts, the employment of migrant workers, the procurement of agricultural inputs, and agricultural machinery operations have been rising year by year. As a lawyer team deeply engaged in agriculture-related legal services, we have observed that many agricultural business entities focus their energy on yields and sales channels while neglecting contract terms, employment compliance, and evidence preservation. Once disputes arise, they often find themselves in a passive position. This article starts from recent agricultural hotspots in Shandong, sorts out the legal risk points that are easily overlooked behind the bumper harvest, and provides actionable compliance recommendations for large-scale growers, cooperatives, and agricultural enterprises.

Land Transfer Contracts: Oral Agreements Create Hidden Risks, and Written Terms Must Be Scrutinized in Detail

Many places in Shandong have promoted the Party branch-led cooperative plus farmer households model, and the area of land transfer has continued to expand. In practice, many parties to a transfer complete the transaction based only on an oral agreement or a simple written agreement, leaving hidden risks for later disputes. Article 38 of the Rural Land Contracting Law provides that the transfer of land management rights shall follow the principles of lawfulness, voluntariness, and compensation, and that the transfer term shall not exceed the remaining term of the contracting period; Article 40 makes clear that the transfer price, payment method, liability for breach of contract, and other matters shall be agreed in the contract. If a contract lacks key clauses, then once grain prices fluctuate, operations incur losses, or land is expropriated and demolished, the parties are highly likely to have disputes over rent adjustment, contract termination, and the attribution of compensation for above-ground attachments.

In legal practice, we recommend that a transfer contract at least specify five items: the four boundaries and area survey method of the transferred land; the rent payment cycle and the standard for liquidated damages for late payment; the allocation proportion of compensation for standing crops and above-ground attachments when the land is expropriated; the rules for disposing of above-ground facilities after the contract expires; and the conditions for unilateral termination of the contract. In particular, note that Article 705 of the Civil Code provides that the lease term shall not exceed twenty years, and the portion in excess is invalid. If certain long-term transfer contracts are characterized as leases, the portion exceeding the term will not be protected. For industrial and commercial enterprises that go to rural areas to transfer land, qualification review and project review must also be conducted in accordance with Article 45 of the Rural Land Contracting Law. If, without review, they arbitrarily change the agricultural use of the land, they may face the dual risks of administrative penalty and contract invalidity.

Agricultural employment: seasonal workers and daily-paid workers are not outside the law.

During summer harvest and autumn planting, agricultural business entities make extensive use of seasonal labor and daily-paid workers. Many people mistakenly believe that “working one day at a time” does not constitute an employment relationship. This understanding is a clear legal misconception. Under Article 7 of the Labor Contract Law, an employer establishes an employment relationship with a worker from the date employment begins; Article 14 of the Regulation on Work-Related Injury Insurance provides that an injury caused by an accident during working hours and in the workplace for work reasons shall be recognized as a work-related injury. Even for short-term hired workers, as long as a de facto employment management relationship exists, once accidents such as agricultural machinery injuries, heatstroke, or traffic accidents occur, the employer may still bear liability for work-related injury compensation or personal injury damages.

The relevant judicial interpretation of the Supreme People's Court further clarifies that if an employing unit, in violation of laws and regulations, subcontracts contracted business to an organization or natural person that lacks the qualifications of an employment entity, the contracting-out party that has the qualifications of an employment entity shall bear employer liability for workers recruited by that organization or natural person. This means that if the harvesting and transportation stages are contracted out to an unqualified individual labor contractor, once a worker under that contractor is injured, the agricultural company may still be held liable. Our recommendations are: First, purchase employer liability insurance or group accident insurance for seasonal workers to transfer compensation risk; Second, sign written labor service agreements specifying the work content, remuneration standards, and safety precautions; Third, provide safety training for high-risk positions such as agricultural machinery operation and pesticide spraying and keep records; Fourth, avoid subcontracting core business to unqualified entities; where subcontracting is truly necessary, review their employment entity qualifications and insurance arrangements.

Agricultural Input Procurement and Contract Farming: The Evidence Chain for Breach of Contract Determines the Success or Failure of Rights Protection

The harvest season is also a peak period for disputes over the quality of agricultural inputs and breaches of order contracts. If quality problems with seeds, fertilizers, or pesticides cause reduced yields, farmers may assert liability for breach of contract under Article 577 of the Civil Code, or seek compensation from producers or sellers under Article 43 of the Product Quality Law. In practice, however, many farmers have difficulty adducing evidence because they did not keep purchase invoices, make on-site field records, or apply for an appraisal in a timely manner. Lawyers remind them that after discovering crop abnormalities, they should immediately take photographs and videos, retain packaging bags and remaining agricultural inputs, apply to the agriculture and rural affairs department for a field appraisal, and notify the seller in writing to appear for confirmation, so as to form a complete chain of evidence.

In contract farming, some purchasing enterprises lower prices or refuse to purchase on the grounds of changes in market conditions, and farmers may claim damages for the price difference according to the contract. If the contract stipulates a minimum protective price, an enterprise’s refusal to purchase as agreed constitutes a breach of contract; if the contract stipulates that prices follow the market, the determination must be made in light of trade usage and the principle of good faith. Notably, the 2023 amendment to the Law on the Quality and Safety of Agricultural Products strengthens the production record and traceability systems for agricultural products. Large-scale planting entities that fail to establish production records as required or that illegally use banned or restricted pesticides not only face administrative penalties but may also bear punitive damages because of non-compliant products. For agricultural enterprises, compliance costs are shifting from optional to mandatory.

Agricultural Intellectual Property and Brand Protection: After a Bumper Harvest, It Is Even More Important to Protect the Brand

Shandong has seen the emergence of a number of geographical indication products, such as Zhangqiu scallions, Jinxiang garlic, and Yantai apples, and brand premiums have brought infringement troubles. Some distributors use special geographical indication marks without authorization, or sell products from elsewhere under the guise of local specialties, damaging the regional brand reputation and the interests of lawful operators. Under Article 16 of the Trademark Law, geographical indications may be registered as certification marks or collective marks; use without permission of a sign identical or similar to another party’s registered trademark constitutes trademark infringement. Rights holders may protect their rights through administrative complaints, civil litigation, or even criminal reports.

Lawyers advise that agricultural cooperatives and leading enterprises should complete trademark registration and geographical indication authorization recordal as early as possible, and establish product packaging, anti-counterfeiting labeling, and authorized dealer management systems. When infringement leads are discovered, evidence may be preserved through notarized purchases, webpage screenshots, and other means, and then reported to market regulation authorities or pursued through court litigation. For misappropriation of place of origin and false advertising on e-commerce platforms, liability for false advertising may also be asserted under Article 8 of the Anti-Unfair Competition Law.

The answer to a bumper harvest is written on the land of Qilu—and also in every standardized contract, every compliant employment practice, and every clear transaction record. Guangdong Zhiming Law Firm’s agriculture-related legal services team has long provided full-process legal support to large-scale growers, farmers’ professional cooperatives, and agricultural industrialization enterprises, covering land transfers, employment compliance, contract review, intellectual property protection, and more—helping business operators keep legal risks at bay before the harvest.