Report: Information technology, e-commerce present growth opportunity for agriculture in China 

Manilla - Targeted investments and support for farmers and rural residents of China are required to boost the uptake of new technologies and development of agricultural e-commerce, according to a new report commissioned by the Asian Development Bank. The report finds the use of new and emerging information and communication technologies present rural areas and farmers with substantial opportunities for economic growth but that many rural areas of the country lack the connectivity and skills necessary for realizing this potential.  

The report, Information and Communication Technology for Agriculture in the People’s Republic of China, focuses specifically on the role and impact of Information and communication technology (ICT), particularly e-commerce in rural areas.  ICT has been developed and adopted rapidly in recent years, influencing business development in the People’s Republic of China. The report documents trends in the major applications of ICTs, identifying the enabling factors and the major constraints of adopting ICTs, examining their likely impacts, and generating policy implications for further development of ICT in rural China. Because ICT applications cover wide areas of rural economy, the study focuses on rural e-commerce and its impacts on farmers. 

Applications of ICTs have expanded rapidly in the past decade in China. The number of internet users increased from 210 million (or 16% adoption rate) in 2007 to 772 million (56%) in 2017. China’s mobile phone subscriptions increased from 50.4 million in 2007 to 753 million in 2017.  

E-commerce is growing even faster. The value of online sales (1,885 billion RMB) surpassed that of the US in 2013, and China has become the largest market for e-commerce in the world since then. By 2016, online sale values reached 5,328.8 billion RMB, accounting for about 15% of total retail values.  

However, internet penetration and e-commerce are not distributed evenly across the country. The coastal and more developed provinces have higher rates of internet penetration than other provinces and e-commerce is more developed in urban areas.  In more remote rural areas, the use of e-commerce is limited. According to Jikun Huang, Director of the China Center for Agricultural Policy, and leader of the China study, the key constraints are lack of knowledge and skills to operate online, storage and preservation facilities, high logistical costs, and required marketing skills.  

But a survey of rural areas in the more economically advanced regions of Shandong and Zhejiang shows the high potential of rural e-commerce.  Nearly 60% of surveyed households operated e-commerce during 2016-2017, and the analysis shows that e-commerce raised farmers’ income In areas surveyed in this study, the price of agricultural commodities sold online is higher than that sold offline. Although the marketing cost of selling products online is generally higher than that of offline, farmers gained net profits through online sales.   

The emerging application of drones and other new technologies in agriculture is also presenting opportunities to boost economic activity in rural areas. The crop area using drones for pesticide spraying tripled between 2015 and 2017, improving the speed and effectiveness of pest control. Drones use fewer pesticides and only use a tenth of the water that is traditionally required by manual spraying, reducing ecological and economic costs. 

The report recommends several policies to facilitate applications of rural ICT and e-commerce in rural China:  

1) investment in storage and transportation for the development of e-commerce in agriculture;  
2) investment in farmers’ capacity building through practical training on how to operate e-commerce;  
3) providing financial and credit supports for farmers, particularly to small farmers, in e-commerce business;  
4) facilitating farmers to work together in e-commerce through farmer cooperation;  
5) improving market regulations and providing a favorable market environment for the development of agricultural e-commerce; and  
6) promoting more inclusive e-commerce development in rural areas.  

Research for the report was conducted by the China Center for Agricultural Policy and International Food Policy Research Institute (IFPRI) in collaboration with ADB. 

The report is one of three related ADB reports on food security being released today. The other two reports provide an analysis on investments required to eliminate hunger in Asia and the Pacific region broadly, and a deep dive into investments and policies for achieving food security in Indonesia specifically. All three reports are available on the ADB website.  

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The International Food Policy Research Institute (IFPRI) seeks sustainable solutions for ending hunger and poverty. IFPRI was established in 1975 to identify and analyze alternative national and international strategies and policies for meeting the food needs of the developing world, with particular emphasis on low-income countries and on the poorer groups in those countries Visit: www.ifpri.org