Farming with a moderate scale represents the trend of modern agriculture and should be carried forward according to law, Premier Li Keqiang said on Thursday during a trip to China's major grain-producing Shandong province on Thursday.

Li said modern agriculture is supported by three major pillars.

"Its development should be carried out under the premise of farmers' willingness, bounded by legal contracts and relying on advanced agriculture technologies," Li said as he inspected the irrigation system, fertilizing and large-scale agricultural machineries on Deqiang Farm, the first registered family farm in Dezhou, Shandong province.

Feng Shuqiang, owner of Deqiang Farm, said local farmers can see their income increase by almost 40 percent each year after joining his farm - a rural collective offering mechanized seeding, irrigating and harvesting at a discount, as well as grain storage.

Xu Xinfu, a local farmer, said he earned about 70 yuan every day working for the farm, in addition to the income from land leasing. "Taking the rental of agricultural machinery into consideration, it is more cost-efficient for me to transfer the land to the farm than farming by myself," he said.

Feng, the farm owner, said the price of wheat can increase by almost 20 percent after two months of harvest, but farmers can hardly keep their crops untill then, as they don't have storage places with appropriate temperature and moisture control.

By leasing the land to Feng, instead of cultivating it by themselves, for an annual rental of 1,000 yuan ($161) per mu (667 square meters). Having leased their land, farmers either leave to work in cities or stay and work for the family farm.

Chinese farmers "own" farmland through collectives, often a village committee, which distributes land-use rights to farmers through long-term deals under a household contract responsibility system introduced in the late 1970s.

But the climbing cost of agricultural production and the influx of the rural labor force into cities have brought challenges.

The central government pledged in 2013 to speed up rural land transfer and offer subsidies for family farms and farming cooperatives, in an effort to develop large-scale farming.

Deqiang Farm was set up in May 2013, the first registered "family farm" in Lingxian county. To date it has leased 20,000 mu (13.3 square km) of land from farmers.