By Jan Hinrichs

Combining value-chain investment projects with access to e-commerce will accelerate transformation, integration of agriculture

The Chinese government recently released a rural vitalization strategy for 2018-22 to promote poverty reduction, rural development and green and inclusive growth. Despite spectacular economic growth over the past three decades, economic, social, environmental and institutional challenges remain.

These challenges are more profound in rural areas, home to more than 570 million people. In 2017, about 30 million rural people lived below the poverty line. Only 60 percent of the 600,000 villages had solid-waste collection facilities and 20 percent of villages had sewage treatment facilities. Chemical fertilizer application reaches 61 million metric tons per year, of which two-thirds has no impact on crops, resulting in water and air pollution.

To tackle these remaining issues, the rural vitalization strategy makes the management of solid waste and wastewater a priority and enhances rural development by modernizing agriculture. The application of information and communication technology, widely known as "agriculture Internet Plus", is intended to increase agricultural productivity, reduce food safety risks and cut pollution from fertilizers and pesticides. Internet Plus agriculture encompasses the use of mobile internet, the application of network connected sensors, cloud computing, and big data along the food and agriculture value chain.

The internet is exerting a profound influence on the global economy and plays an important role in economic restructuring and urban-rural integration. Internet-based technologies, notably e-commerce, have vitalized rural markets in China by improving the quality of agricultural produce and connecting small farmers with big markets.

With the rapid development of internet technology in China over the past two decades, a set of Internet Plus technologies has had impacts on the national economy. A publication by the National Development and Reform Commission and the Asian Development Bank shows that intelligent agriculture practices such as precision agriculture provide substantial benefits in pollution control that also help mitigate the contribution of agriculture to global climate changes.

Satellite-based, high-precision positioning technology combined with network-connected sensor technology can accurately monitor soil moisture, fertilizer content, weeds and pest locations to enable auto-piloted farm machinery to precisely apply fertilizer and pesticides. Efficient use of fertilizer and pesticide reduces soil, water and air pollution, and also curbs greenhouse gas emissions.

The NDRC-ADB publication illustrates how data-tracking systems can improve the quality and safety of agriculture products. Using a mobile app to scan a QR code, customers can access information such as cultivation base, sampling time and results of pesticide concentration tests, as well as planting, harvest and sales transaction data.

Access to such information helps boost customer confidence in the product's quality and safety. However, there isn't enough incentive to apply these systems commercially, partly because national laws and regulations do not require traceability labels.

E-commerce has provided ways to sell agriculture products while reducing transaction costs and simplifying trading procedures. It has also built a two-way platform for the flow of consumer goods to villages and farm produce to cities.

The number of rural internet users in China reached 209 million in 2017, of which 47 percent make online payments via mobile phones. E-commerce platforms in rural areas have given farmers with an average farm size of less than 1 hectare an affordable way of obtaining high-quality inputs and new opportunities to market and sell their produce.

Giving farmers access to e-commerce requires support for agriculture extension services to standardize production, organize the farmers and build logistics capacity in remote and poverty-stricken areas. The private sector, mainly Alibaba and JD.com, have pioneered e-commerce platforms for agriculture and foodstuff trade.

But there is rising demand in less-developed western regions of China for public-private partnerships to develop platform-based traceability systems and rural logistics infrastructure for public goods. Connecting rural areas with e-commerce demands the adoption of a farm-to-market value-chain approach to create value for poor farmers, local agri-enterprises and consumers. The ADB has already gained considerable experience working with leading agri-enterprises in China to design and implement value-chain investments financed by the public sector.

The Supply and Marketing Cooperative of Gansu province is working with the ADB to develop an Internet Plus agriculture project to build the processing, cold-chain and logistics capacity of leading enterprises linked to provincial and county internet-based knowledge exchange and data analysis platforms.

These platforms will provide production and management advice through farmers' mobile phones and can be directly linked through network-connected sensors to farm machinery, warehouses and delivery vehicles. Traceability systems for produced food products will be integrated into the platforms.

Such initiatives are crucial to the future prosperity of farmers in China. Combining value-chain investment projects with access to e-commerce will accelerate rural transformation and integrate the agriculture sector into the wider economy.

The author is a natural resources economist at the East Asia Department of the Asian Development Bank. The views do not necessarily reflect those of China Daily.