FAO held a webinar on Chinese experience on digitalization of rural areas and poverty alleviation

Santiago, Chile - The Regional Office of the Food and Agriculture Organization of the United Nations (FAO) held on Thursday, July 6, the virtual seminar "Chinese experience on digitization of rural areas and the role of e-commerce on poverty alleviation: a reference for Latin America and the Caribbean".

The activity was part of FAO's efforts to promote rural digitization in the region, through the project "Response and recovery to the impact of COVID-19 on rural livelihoods and agri-food systems in the countries of the Community of Latin American and Caribbean States (CELAC), through South-South Cooperation", which has the support of the Ministry of Agriculture and Rural Affairs (MARA) of the People's Republic of China.

The event was opened by Dina López, FAO South-South Cooperation Officer and technical leader of the project, who explained that the project seeks to implement pilot plans in 12 CELAC countries, with the objective of "contributing with concrete actions to reduce the gaps generated by the pandemic in rural areas where the most vulnerable populations of the region live".

In this regard, the Official stated that "the Chinese experience in digitization of rural areas is a valuable contribution to consider in the processes being carried out in Latin America and the Caribbean, considering different approaches such as: gender, youth, the role of governments and rural organizations and cooperatives", while thanking the Ministry of Agriculture and Rural Affairs of the People's Republic of China for its support.

The data

Haibo Zhu, a technical expert in rural digitalization, highlighted the role played by his country's government in alleviating poverty through digital transformation since 2012.

"In China, both the central and local governments invested a total of 1.6 billion yuan (about US$221 million) in eight years in prioritized areas, and 832 counties were lifted out of poverty," he said.

The expert stressed that such plans contemplated e-commerce as a fundamental element for the transformation of rural populations, which, he assured, yielded results in a short period of time.

"By 2020, the coverage rate of e-commerce services in administrative villages reached 78.9%. By 2021, the proportion of broadband access had reached 100%, while the proportion of e-commerce broadband had reached 100%, while fiber (optical) and 4G access had exceeded 99% of the population," he said.

Zhu said that all this allowed "China to become the largest online agricultural market in the world", which was "a product not only of investment but also of the rural digitalization policies implemented since 2014, not only by the Ministry of Agriculture and Rural Affairs, but also by other entities such as: the State Council for Cyberspace Administration, the Ministry of Commerce, the Ministry of Finance, among others".

The role of the private corporations

"In order to enable small farmers in rural areas to overcome major challenges such as technology gaps, we needed to create e-commerce value chains that included them," he said.

As an example, he cited "private e-commerce giants Alibaba Group and others like Pinduoduo, which helped small farmers connect with larger markets, generating a direct line between consumers and rural producers."

In addition, the expert said that e-commerce "has created a significant number of employment opportunities, especially for women and young people who have been introduced to the labor market. Alibaba, for example, opened a training school for them in the selection of oranges and subsequent packaging, in Xunwu County, Jiangxi Province".

Other cases of study

Zhu presented several success stories where e-commerce was key to the development of tourism in the communities, the creation of low-cost enterprises and the sale of agricultural products, which had a positive impact on job creation.

Specifically, he pointed out that in Cao County, his country's government succeeded in generating "low-cost enterprises and development, as well as the growth of online stores that generated direct employment through industrial groups that gradually emerged. In them, 337 graduate students began to work, training some 10,000 people per year. All of them work in some 30 companies and 310 express delivery centers".

In this sense, the expert assured that the Government of his country provided special subsidies for those involved, such as tax exemptions and loans to entrepreneurs, especially aimed at young people and women.

The government role

Speaking about the development experience of Taobao Villages, Professor Zhu remarked that the role of the national government of his country was decisive for the achievement of the objectives of this rural area, which, being so large, needed the help of the State for its economic development.

"The entrepreneurs alone could not make the large investments required by the rural digitalization process. The construction of the digital infrastructure depended fundamentally on the government and could not rely on market mechanisms because it would have taken too long and the objectives would not have been achieved," he stressed.

Likewise, the expert pointed out that the government actively participated in the assessment of the state of the digital ecosystem in rural areas, invested in infrastructure, technology, public services and business environment, and then promoted literacy and training of human talent from the territories addressed.

Logistics and big data

According to Mr. Zhu, the first express delivery company focused on rural products was established in Xiu Shan County, "which allowed farmers in the area to bring their products directly to the end consumer; they created an e-commerce platform and a data analysis center for small farmers to organize themselves according to demand.

The expert gave several recommendations for Latin America and the Caribbean, highlighting that small farmers should be integrated into the e-commerce value chain, promote training and talent development, promote the development of rural cooperatives, make use of digital social networks as effective platforms for e-commerce, establish digital payment systems and strengthen technological support for farmers beyond digital literacy.

In this digital seminar organized by FAO, some 552 people participated online between the Zoom, YouTube and Twitter platforms, including decision-makers, members of agricultural organizations, academia and civil society from across the region.

Watch the Webinar

Questions and answers

Question-1: The Academic sector (Universities, Institutes) collaborates with rural development in China. How is this collaboration?

Answer-1: In China, in the field of agricultural and rural development, there are two major research institution systems, one is the Academy of Agricultural Sciences system, including the national Chinese Academy of Agricultural Sciences (CAAS) and the provincial CAAS, the other is the university system, including the National China Agricultural University and provincial agricultural universities in each province, and these two systems constitute the main groups involved in the agricultural and rural academic sector.

In terms of collaboration with rural development, these institutions receive financial allocations every year and complete scientific research and technology promotion tasks according to the task plan. Some specific ways of cooperation include:

1) Science and Technology Commissioner System. According to the deployment of the Ministry of Science and Technology and the Ministry of Agriculture and Rural Affairs, research institutions send scientific researchers to the county level to carry out cooperation. This is a continuous cooperation mechanism. Each group of science and technology commissioners sent to each county will be stationed for 2-3 years, and their main job is to provide technical services for the development of agriculture and rural areas in the county. In addition, universities and scientific research institutions also set up expert workstations in some essential agricultural product production counties and form a flexible expert team led by well-known academicians or scientists in related fields to provide technical support for local agricultural development.

2) Establish technology test and demonstration bases. Scientific research institutes and universities cooperate with local governments to establish technology research and development and test demonstration and promotion bases across the country, mainly to carry out variety improvement, new variety testing and technology promotion, and promote the quality and efficiency of planting, breeding, and other rural industries.

3) Emergency Expert Group. If there is an emergency disaster event, such as large-scale plant diseases and insect pests (such as fall armyworm), extreme disaster weather (such as drought, or freezing damage), the central and provincial agricultural and rural departments will organize expert teams from scientific research institutions to conduct field research and provide preventive solutions.

4) Extensive and in-depth field research. In terms of policy formulation for agricultural and rural development, the Rural Work Office of the Central Committee of the government’s party and the Ministry of Agriculture and Rural Affairs organize experts from various fields to conduct extensive and in-depth investigations in rural areas, listen to the opinions of local governments, enterprises, and rural production and management entities, etc., to provide a reference for decision-making, this ensures that the rural development policies made by the government are truly realistic and able to solve practical problems. At the same time, local governments will also invite expert teams to participate in policy formulation discussions or undertake technical support for industrial development regarding the specific work of agricultural and rural development in the region.

Question-2: Advantages from e-commerce are very clear, but in America, there aren’t technologies installed to support connectivity. How can the lack of connectivity be managed?

Answer-2: To solve the network connectivity problem, the government needs to invest in rural power and telecommunication infrastructure construction, significantly to improve the coverage of 4G. Unlike China, if the telecom operators in LAC are private companies, the government should negotiate with the telecom companies and invite them to increase investment in rural communities. The government provides corresponding financial subsidies for construction and operation. The cost of building 4G mobile base stations is much lower than that of building optical fibers. It can reduce the companies and government's investment pressure and improve the coverage rate of 4G. In this way, smartphones that are now commonly used can be connected to the Internet, and by installing e-commerce apps on smartphones and providing training, rural communities can be helped to participate in e-commerce transactions.

Question-3: How to get agreements between each part of the value chain, considering the example of selling meat products from small farmers?

Answer-3: In the e-commerce value chain of the mutton meat industry in Huanxian County, Gansu Province, the value chain is divided into four parts: mutton sheep breeding and sales, slaughtering and processing, packaging and cold chain transportation, and online marketing on e-commerce platforms. The involved entities include farmers, E-commerce entrepreneurs (new agricultural businesses), cooperatives, slaughtering and processing plants, e-commerce platforms, and consumers.

In this value chain, e-commerce companies play a crucial role in expanding meat sales and distribution channels from traditional offline to online sales. The Pinduoduo e-commerce platform provides search, matching, transaction, and settlement services for e-commerce companies and consumers. Slaughtering and processing plants turn mutton sheep into standardized commodities after slaughtering and dividing.

Based on the quality reputation accumulated on the Pinduoduo platform, the e-commerce company has become the flagship online store selling mutton products on the platform, with very strong sales capabilities. This has led to a continuous increase in the scale of demand for meat sheep. Therefore, to form a stable supply of mutton sheep, e-commerce companies will sign breeding agreements with local farmers through cooperatives, and farmers will breed according to the order size and feeding standards placed by e-commerce companies. Farmers don't have to worry about sales, and the selling price of mutton sheep of the same quality is 8% higher than the market price, so farmers can ensure their income.

In the e-commerce sales link, e-commerce companies open online stores on the platform, pay operating expenses and marketing expenses, and carry out online sales in accordance with the platform specifications. PDD provides consumers with the most cost-effective choice through the transaction model of "the more buyers, the lower the price". At the same time, it also brings economies of scale to the sales of e-commerce companies. The platform will also supervise the product quality of e-commerce companies, handle consumer complaints, etc., and establish a mechanism to restrain e-commerce companies when is needed. The Pinduoduo platform creates its own value by attracting more consumers and better e-commerce companies to join the platform.

Question-4: Which Ministries oversee promoting rural digitalization and rural e-commerce?

Answer-4: The construction of rural digital infrastructure is implemented by the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Finance. Rural e-commerce is mainly promoted by the Ministry of Commerce and the Ministry of Agriculture and Rural Affairs, but some policies will be jointly issued and implemented by multiple ministries, such as the “Comprehensive demonstration project of e-commerce in rural areas”, which was jointly issued by the Ministry of Commerce, the Ministry of Finance, and the State Council Leading Group Office of Poverty Alleviation.

Question-4: Which Ministries oversee promoting rural digitalization and rural e-commerce?

Answer-4: The construction of rural digital infrastructure is implemented by the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Finance. Rural e-commerce is mainly promoted by the Ministry of Commerce and the Ministry of Agriculture and Rural Affairs, but some policies will be jointly issued and implemented by multiple ministries, such as the “Comprehensive demonstration project of e-commerce in rural areas”, which was jointly issued by the Ministry of Commerce, the Ministry of Finance, and the State Council Leading Group Office of Poverty Alleviation.

Question-5: What steps can be taken by Latin America and the Caribbean to implement public policies that promote investment in the connectivity of small-scale farmers?

Some of the answers given in question 2 are part of the answers to question 5. In China, it is a common practice for the government to provide subsidies or direct purchases for telecommunications companies to invest in the construction and operation of rural internet connectivity infrastructure, which is the scope of government public service investment. Therefore, this model is not impossible to replicate, but it depends on whether the government can actively do something.

China's success in promoting network connectivity in rural areas is due to two main factors. Firstly, the government’s party has always adhered to the people-centered development philosophy. Secondly, our institutional arrangements ensure that the construction and operation of major public services that impact people's livelihoods are taken care of.

Here, I need to explain that the three major telecommunications companies in China are all state-owned. When it comes to public investment in internet connectivity in rural areas, the government starts from the perspective of digital inclusion, not considering cost-benefit but making rural areas also enjoy the same digital network services as cities, leaving no one behind.

Whether this model can be replicated in Latin America depends on the government's determination and investment intensity. If the state provides the telecommunications service and the government invests in it, it is possible to change the network connectivity problem in rural areas.

Suppose telecommunication services are provided by private telecommunication companies responsible for their profits and losses. In that case, the government should urge the telecommunication companies to invest more in rural telecommunication infrastructure, but at the same time, the government should give sufficient subsidies.

Question-6: What is the size of the production surface of rural farmers in China that were part of this initiative?

China is a typical agricultural production organization dominated by small farmers and family farming. According to the data of the third agricultural census of China in 2017, there are 230 million farming households in China, with an average operating farmland scale of just 0.5 hectare per household and 210 million farming households operating farmland less than 2/3 hectares. In some hilly and mountainous areas in Southwest China, the per-household farmland is small, and the land plots are also particularly scattered. For example, each household in Sichuan Province has more than ten plots of farmland, and the average farmland field is only 0.4 or 0.5 mu (3% of 1 hectare).