How Technology and Capital Can Help Accelerate Agricultural Innovation in China

Most farmers in China have not tried their hands at new business models in agriculture because of hurdles including a shortage of capital and insufficient technology, a survey has found. 

Less than 30% of farmers in China are involved in new businesses like agricultural e-commerce and organic farming, despite evidence that these activities bring tangible benefits like higher incomes and rural modernization, according to the findings of a survey of 3,937 agricultural business entities conducted last year by the China Institute of Economic Trends of the Economic Daily and the School of Agriculture and Rural Development of Renmin University of China.

Overcoming such hurdles would be key to China’s goal to boost its rural economy. Last year, China completed an eight-year drive to eradicate extreme poverty, with the priority shifting to modernizing the rural economy. The development master plan highlighted tasks such as building infrastructure for information technology, promoting agricultural technologies, and building modern breeding systems.

The challenges are particularly big for smallholder farmers, according to Zheng Fengtian, Vice Dean of the School of Agriculture and Rural Development, Renmin University. “Although the economic boost to smallholder farmers by adopting new agribusiness is higher than that to larger-scale farmers, the hurdles facing smallholder farmers are also higher,” Zheng said at an April event organized by China Economic Daily. 

The proportion of smallholder farmers developing new agricultural businesses stood at 12.4%, which is 9 percentage points lower than that of large-scale farmers, according to the survey. By types of agricultural businesses, about 20% of the surveyed are involved in facility agriculture, while 17% adopted agricultural e-commerce, according to the survey. 

One major reason affecting the enthusiasm of developing new agricultural business is financial constraints. The survey found that 56% of smallholders and 52% of large-scale farmers lack capital for developing new agricultural businesses. 

Insufficient technology is another key factor hampering the development of new agricultural businesses. The survey results show that the proportion of smallholder and large-scale farmers lacking technology is 55% and 49%, respectively.

To help more farmers seize new agribusiness opportunities, China should improve financial services and increase training for new technologies for farmers, the report suggested. It should also provide more support and guidance to smallholder farmers to help them become models for new agribusiness so that more “new farmers” with knowledge, technology, and management skills would return to their hometowns to join them. 

Pinduoduo, the biggest agricultural e-commerce platform in China, is one of the companies helping attract young talent back to rural areas. The company, which has connected more than 12 million farmers directly to its pool of buyers, has pledged to train another 100,000 e-commerce merchants to boost sales of farm produce through online channels.

The company is also helping to standardize the production and quality of agricultural products, building modern cold-chain logistic networks for fresh produce, and establishing branding strategies for farmers who sell on the platform. It organizes an annual Smart Agriculture Competition to promote the development of economically viable technologies suited to China’s farming industry. 

“In the future, through promoting and optimizing agricultural e-commerce, nurturing new farmers who know both e-commerce and agricultural products, and building supporting logistics systems to realize the ‘digital transformation of agriculture, smallholder farmers will be better connected to the big market,” said Huo Xuexi, professor of Northwest Agriculture and Forestry University, at the event.

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