* Market to play only limited role in China's land reform
* Food security still China's "bottom line"
* "Family farms", not commercial firms, to be mainstay of farm sector
By David Stanway and Niu Shuping
BEIJING, Dec 5 (Reuters) - China's new rural reforms will stop short of giving commercial firms free rein to buy land and will focus instead on creating bigger family farms, the country's top rural official said in remarks published on Thursday.
China last month unveiled its boldest land reforms in decades, officially allowing rural collectively-owned land, a legacy of the planned economy, to be transferred, rented or pooled, but officials have called for caution, telling local governments not to "rush into action".
Chen Xiwen, head of the Communist Party's working group on rural affairs, told the official People's Daily newspaper the land reforms had been "misunderstood", and that "clear preconditions and restrictions" would govern the reorganisation.
The priority for the world's most populous country is to ensure enough land and rural labour to maintain food security, after decades of industrial encroachment and an exodus of farm workers to the cities.
Chen told the People's Daily the "bottom line" was to ensure agricultural land was not put to industrial or commercial use.
"Commercial firms are encouraged to go to villages (to take over land) that rural families cannot use, or will find it hard to use," he said. "Those firms are only allowed to do modern farming and livestock breeding, not real estate or tourism."
Chen had already told a forum last month that the market would not play a "decisive role" in the reforms, with Beijing unwilling to risk reducing China's ratio of arable land to population, which already rates as the world's lowest.
To protect the amount of collectively-owned land from further erosion, Beijing will only allow developers to buy and sell leases that have already been earmarked for construction.
Leaseholders in some areas had already been allowed to rent out land, and by the end of 2012, 21.2 percent was transferred, in many cases lost to agriculture, government data has shown.
The figure reached as much as 80 percent in southern regions where township enterprises have boomed.
China's last big reform in the early 1980s gave rural households the right to lease collectively-owned land, but farmers have earned only minimal returns from their small plots, forcing millions to try their luck in the cities.
Beijing is now trying to persuade families to stay in the countryside by raising incomes, and the large-scale family farm has been identified as the most effective method.
By the end of 2012, there were around 877,000 larger family-owned farms covering 176 million mu or 11.7 million hectares of land, making up 13.4 percent of the total land contracted by farmers, agriculture ministry data showed.
Each family-owned farm earned 184,700 yuan ($30,300) in 2012, about ten times higher than the average rural household income.
Researchers have said it was not suitable to develop farms on the scale of those in the United States, given China's huge population and the need to find work for 450 million farmers still likely to live in the countryside by 2030.
Vice agriculture minister Yu Xinrong told a forum last month the perfect size was 4 hectares for rice fields in the south and 8 hectares for corn or wheat fields in the north.
"The development of proper-sized farming is the way we must go," Chen told the forum last month. ($1=6.0916 yuan) (Editing by Clarence Fernandez)
Our Standards: The Thomson Reuters Trust Principles.