ADB Technical Assistance Project TA 7036-PRC Package 2: Jiangxi Development Strategy

Jiangxi Rural Development Strategy

Project Consulting Team

Team leader: Wu Guobao

© 2010 Asian Development Bank All rights reserved. Published 2010. Printed in the People's Republic of China The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank or its Board of Governors or the governments they represent. The Asian Development Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. Use of the term “country” does not imply any judgment by the authors or the Asian Development Bank as to the legal or other status of any territorial entity.

Contents

Acknowledgements ....................................................................................v Contributors ...............................................................................................vi Abbreviations ........................................................................................... viii Executive Summary................................................................................... 1 I. Introduction ........................................................................................... 15

1. Context of the Study ........................................................................... 15 2. Objectives and Scope of the Study .................................................... 20 3. Approaches and Methodologies ......................................................... 20

II. Current Status of Rural Development in Jiangxi .............................. 23 1. Current Status of Rural Economic Development in Jiangxi ................ 23 2. Rural Physical Infrastructure and Village Renovation ........................ 55 3. The Status Quo of the Rural Public Service System .......................... 61 4. The Status Quo of Grassroots Organizations..................................... 69 5. Current Situations of Environmental Protection in Rural Jiangxi ........ 84 6. Overall Assessment of the Rural Development in Jiangxi .................. 93

III. Comparative Advantages and Disadvantage Facing to the Rural Economic Development in Jiangxi........................................................119

1. Locational Conditions and Macro Economic Environments ..............119 2. Comparative Advantages, Constraints and Potentials ..................... 129

IV. Strategies Proposed for Rural Development in Jiangxi Province 153 1. Overall Strategic Goals for Rural Development in Jiangxi by 2020.. 153 2. Strategy for Income Growth of Rural Residents in Jiangxi ............... 154 3. Strategy for Rural Industries Development in Jiangxi....................... 160 4. Strategy for Rural Public Services Development.............................. 165 5. Strategy for Rural Environment Protection ....................................... 165 6. Strategy for Rural Governance......................................................... 165

V. Recommendations............................................................................. 167 1. Organizational Innovations............................................................... 167 2. Institutional Innovation and Improvement......................................... 169 3. Financing Innovations ...................................................................... 171 4. Institutional Innovations Required for Scientific and Technological Supports ............................................................................................... 173 5. Infrastructure Construction and Management .................................. 174 6. Policy Suggestions ........................................................................... 174

Appendix: International Experiences for Jiangxi Rural Development Strategy................................................................................................... 183

1. Land Tenure Policies for Optimising Agricultural Production ............ 183 2. Processing and Logistics of Agricultural Products............................ 193 3. Financial Services to Agriculture ...................................................... 195 4. Quality and Safety of Agricultural and Food Products ...................... 197 5. Promotion of Quality and High Value-added Products ..................... 208 6. Towards A Comprehensive Approach to Rural Development Planning..............................................................................................................211 7. Enhancing the Capacity and Efficiency of R&D, Extension and Information Services............................................................................. 218 8. Enhancing Public Participation......................................................... 221 9. Farmer Cooperatives........................................................................ 231

References.............................................................................................. 239

Acknowledgements Jiangxi Rural Development Strategy is one of the two packages in ADB

TA 7036-PRC: Provincial Development Strategies for Selected Provinces in the Central Region. It is financed by the Asian Development Bank (ADB). The consulting firm, Rural Development Institute at the Chinese Academy of Social Sciences, formed a team composed of national and international experts to implement the project. Per request of Jiangxi provincial government, the Jiangxi development strategy study focused on the research of rural development in the context of rural-urban coordinated development. The team has made comprehensive and in-depth analysis on the comparative advantages and disadvantages, potentials and constraints for rural development in Jiangxi based on the overall and 10 subject studies. The 10 subject studies are: (i) rural industries development; (ii) agricultural product standard and safety; (iii) rural land property right reform; (iv) rural infrastructure development; (v) rural logistics development, (vi) rural environment and ecology; (vii) rural public services; (viii) rural grassroots governance and organizational reforms; (ix) rural vocational training; and (x) institutional innovation and reforms. Overall and sector specific strategic goals and approaches are proposed for the rural development in Jiangxi Province by 2020. The team has also made recommendations on the required institutional innovations and policy changes to guarantee and support the realization of the proposed strategies for rural development.

The TA was incepted in Nanchang, the capital city of Jiangxi Province in November 2008. Senior officers from Jiangxi provincial government, the Department of International Cooperation at the Ministry of Finance, Jiangxi provincial Department of Finance, and ADB PRC Resident Mission, have been keeping concerns about and providing guidance and advice for the TA implementation. The concerned government departments at provincial, prefecture and county level in Jiangxi Province provided helpful advice and assistance in the process of consultations and field visits. Participants who attended the Inception Workshop, Mid-Term Report Review Workshop and Final Report Review Workshop made important contributions to the preparation and revision of the main report and sub-reports. The consulting team would like to extend sincere thanks to al of them for their strong supports and valuable contributions.

Team leader: WU Guobao

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Contributors Asian Development Bank Kanokpan Lao-Araya Economist ZHUANG Jian Senior Economics Officer GAN Mei Assistant Project Analyst TA Project Executive Agency MAO Zuxun Director of the TA Project Management Office,

Deputy Director General, Jiangxi Department of Finance

ZHANG Sheng Project officer, Division director, Jiangxi

Department of Finance FANG Hua Project officer, Division director, Jiangxi

Department of Finance ZENG Wenquan Project officer, Division director, Jiangxi

Department of Finance SU Changping Project officer

Deputy division director, Jiangxi Department of Finance

TA Consulting Team WU Guobao Team leader, professor of Rural Development

Institute, Chinese Academy of Social Sciences LI Zhou Environmental protection specialist, deputy

director and professor, Rural Development Institute, Chinese Academy of Social Sciences

DU Zhixiong, Rural industry development specialist, professor

of Rural Development Institute, Chinese Academy of Social Sciences

JIANG Jingfa Rural governance and public service specialist,

vice president and professor of Jiangxi University of Finance and Economics

MO Rong Rural vocational training specialist, Deputy

Director and professor of Institute for Labor

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Sciences, Ministry of Human Resources and Social Protection

CHEN Yunjuan Rural logistics expert, professor of Nanchang

University ZHANG Liguo Agricultural standard and safety specialist,

professor of Jiangxi University of Finance and Economics

YANG Feng Rural land property expert, professor of Jiangxi

University of Finance and Economics LUO Xiandong Rural infrastructure expert, associate professor of

the Center for Finance Studies at Jiangxi Department of Finance

Sylvie Dideron International expert for rural industry development Tim Zachernuk International expert for rural governance Independent Experts SU Ming Independent Finance and Taxation Expert,

Deputy Director and Professor of the Institute for Finance Science, Ministry of Finance

LI Wanping Independent Finance and Taxation Expert,

Professor of the Center for Finance Studies at Jiangxi Department of Finance

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Abbreviations

ADB Asian Development Bank AOC Automatic Operations Control APL Agricultural product logistics CCP Chinese Communist Party CCPC Chinese Communist Party Committee CNY Yuan, PRC currency unit COD Chemical Oxygen Demand EDI Electronic Data Interchange EU European Union FAO Food and Agricultural Organization FSWOS GAP

Full scale well-off society Good Agricultural Practices

GDP Gross Domestic Product GI Global Illumination GIS Geographic Information System GPS Global Positioning System ICA International Cooperative Association ISO International Organization for Standards NBS National Bureau of Statistics of China NCCP NGO

New countryside construction program Non-government Organization

NRCMS OECD

New Type of Rural Cooperative Medical System Organization for Economic Cooperation and Development

PLEEZP Poyang Lake Ecological Economic Zone Planning POS Point of sale PRC People’s Republic of China RCC Rural Credit Cooperative RDI Rural Development Institute, Chinese Academy of Social

Sciences R&D Research and Development TA Technical assistance TVE Township and village enterprise VC Vertical coordination

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Executive Summary I. Goals and Approaches of the Study

The Jiangxi Rural Development Strategy Study is one of the two packages under ADB TA 7036-PRC: Provincial Development Strategies for Selected Provinces in the Central Region. It is an attempt to assist provincial governments to develop the provincial rural development strategy in the framework of the new countryside concept. The TA study aims to help with promoting the new socialist countryside construction and faster the development of the central regions, in particular in Jiangxi province.

The objectives of the study are to assist in formulating development strategies for rural areas of Jiangxi in line with the national policies on rural development and reform, and with the long-term development plan of Jiangxi Province to achieve inclusive, sustainable, balanced and pro-poor socio-economic development in the rural areas.

The approaches adopted to study Jiangxi rural development strategy are integrated or multidimensional, multi-sectorial, multidisciplinary approach; open, rural-urban linkage approach; historic and dynamic approach; and participatory and stakeholders-centered approach. II. Regional Location Conditions and Macro Environments

Location. Jiangxi Province has a unique regional location. Three out of four national economic zones and two out of six national reform experimental zones are around Jiangxi. Therefore, Jiangxi is able to share the economic benefits and experiences of reform experiments through geographically and culturally closed linkages and trickle down effect.

Urbanization. Although Jiangxi has made large progress in urbanization since 1978, its urbanization rate in 2008 was still 4.32 percentage points lower than national average. Without the supports from the urbanization in other regions, Jiangxi needs to increase its urbanization rate from 39.8% now to 55.45% to sustain its recent income generation and employment. Accelerating the urbanization, therefore, is an important prerequisite for achieving the goals for rural development in Jiangxi in the coming decade.

Local Fiscal Capacity. The total fiscal revenue of Jiangxi province has risen 16% annually from 1994 to 2008, which was much higher than the GDP growth rate during the same period in Jiangxi. But its per capita budgetary revenue in 2008 was only equivalent to 43.2% of the national average, lower than all central provinces except for Anhui. Therefore, it is difficult for Jiangxi local finance to provide sufficient supports for the rural development in the province even if the proportion of fiscal expenditure on agriculture and rural areas can be raised. Financing. The supports from financing on agriculture and rural development in Jiangxi have been improved since 1996 by means of financial institutional reforms and innovation of financial products and

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services. However, it is found that only 15.1% of the borrowed funds of farmers’ households in 2008 were provided by banks and credit cooperatives. The farmers had to seek financial support from informal financing channels. Term of trade. Jiangxi has had a lower foreign trade dependency rate compared with the provinces in coast regions. However, the low foreign trade dependency rate in Jiangxi may conceal the actual dependency of Jiangxi economies on domestic and foreign trade. In general, Jiangxi has been an economy based on primary products and services. In addition, the rural development in Jiangxi is also facing the opportunities and challenges generated by the transformation of national economic development pattern, aging of population, global climate change and science and technological innovations. III. Comparative Advantages and Disadvantages Facing to the Rural Economic Development in Jiangxi The comparative advantages of land resources Jiangxi has cultivated land areas of 2.17 million ha, accounted for 1.65% of the country. The location quotient of cultivated land in Jiangxi was 0.46, indicating the cultivated land resources in Jiangxi are of significantly comparative disadvantage in the country. The agricultural development in Jiangxi should control the land intensive products. But Jiangxi has location quotient of 1.68 and 2.64 in forestry land and inland water, therefore, very large comparative advantages in forestry and fishery development. Crop production The rice, rape seeds, sesame and citrus in Jiangxi has been of comparative advantages among the major agricultural products. In particular, the rice and citrus in Jiangxi had location quotient of 2.93 and 3.22 respectively in 2008. But the two largest crops in terms of sowing areas in Jiangxi, rice and rape seed were lower in land productivities than the national average. The yield per hectare of rice and rape seeds in Jiangxi in 2008 was 87.2% and 57.8% of the national average respectively. The major problems of crop planting development in Jiangxi are (i) agricultural production pattern of small scale, extensiveness and low efficiency, (ii) lacking division of labors and professional services for agricultural production, (iii) the cropping structure is not diversified, and (iv) low proportion of agricultural products being processed.

Forestry development Jiangxi has had strong comparative advantages in forestry development. Except for that for forestry lands, Jiangxi has had also strong comparative advantages in timber, camellia seed, bamboo, turpentine, Tung oil seed and raw lacquer. In particular, the camellia seed in Jiangxi accounted for 19.33% of the national output, had an absolute advantage in the country.

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The main constraints facing to forestry development in Jiangxi are (i) small scale, scatter and extensive forestry production, (ii) constraints for the transfer of forestry property, (iii) slow progress made in cooperative development in forestry, and (iv) no effective ways for addressing the financing of forestry development

Livestock development Jiangxi has had no comparative advantages in livestock except for pigs. But relatively livestock in Jiangxi was a more mature industry. The major constrains facing to the livestock development in Jiangxi are: (i) the livestock dragon-head enterprises in Jiangxi have been weak in the economic linkage with farmers’ income generation; (ii) the insurance for livestock has been underdeveloped, which makes the development of livestock in Jiangxi unable to insist the natural and market shocks; and (iii) the capacities of processing and refrigeration for livestock products has been very limited in Jiangxi.

Aquatic products development Jiangxi has strong comparative advantages in inland water resources and aquatic products. In particular, its fresh water aquatic products were of large comparative advantages in the country with location quotient of 2.5. The constraints in aquatic development are (i) low productivity; (ii) scatter regional distribution; (iii) no unified national brand for aquatic products has been developed; and (iv) only 13.5% of aquatic products in Jiangxi in 2007 had been processed.

Safety of agricultural products The comparative advantages in the safety of agricultural products in Jiangxi are of abundant ecological resources and beautiful environment. Its disadvantages are in low safe production consciousness of farm households, no perfect market of agricultural products of safe quality, and unreasonable utilization of farm chemicals.

Agricultural product logistics Jiangxi has advantageous resources and production bases for

developing agricultural product logistics and developed a road transport network good for APL development.

The major problems in modernizing the logistics for agricultural products are (i) disperse anticipators, small-scale, single function, low degree of organization; (ii) lack of coordination and integration mechanism; (iii) lack of driving force for investment on specialized assets of anticipators; (iv) absence of core enterprise as leaders in modern APL; and (v) inadequate supporting system.

Vocational training Jiangxi province has already established a well functioned

organizational framework and vocational training network. The major problems existing in vocational training are (i) unsatisfactory Implementation of Policies; (ii) insufficient funds allocating for the vocational training of

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farmers; and (iii) no good linkage of the vocational training policies with the needs of farmers. IV. Rural Public Services, Environmental Protection and Governance

Public Services. Jiangxi has made marked progress in improving the public services in rural areas since 2000 especially after the new countryside construction pilots initiated and expanded. But there exist some problems in the rural public service system in Jiangxi, including (i) blur responsibilities in the supply of rural public services; (ii) insufficient public resources allocated; (iii) irrational rural public service supply structure and decision-making mechanisms; and (iv) poor coordinated public resources.

Environmental Protection. Jiangxi has a unique ecological advantage, including high air and water quality, higher proportion of the land covered by wetland and forestry. The major problems include overused chemical fertilizer, pollution in the irrigation water, contamination of livestock excretion, untreated domestic garbage and poor forestry quality

Governance. Jiangxi has piloted some innovative ways for improving the rural governance in recent years, including development of villagers’ councils in around 40,000 rural communities during the process of new countryside construction since 2004 and pilot in cooperation with the ADB on exploring the effective partnership of government with civil organizations in the village development planning for poverty alleviation. These innovated experiments have accumulated valuable assets for the improvement in rural grassroots governance in Jiangxi in the future.

The problems existed in public governance in rural Jiangxi are (i) government’s functions have not been fundamentally changed; (ii) "Townships finance supervised by county" and “Village finance supervised by townships” weakened the capacity of public administration of grass-roots government; (iii) no effective ways found for addressing the issues troubled township department reforms; (iv) weak and narrow participation of civil society organizations; and (v) public administration in rural areas has been not good for the play of villagers self-management capability. V. Strategies Proposed for Rural Development in Jiangxi province

1. Overall strategic goals for rural development in Jiangxi by 2020 Based on the decided national and provincial long-term development

strategies and plans in rural areas and the comparative advantages Jiangxi has in rural development, overall strategic goals for rural development in Jiangxi are to proposed as building rural Jiangxi into a prosperous and civilized green rural society of affluence, harmony, and full of vitality by 2020.

Building an affluent rural Jiangxi is the central and fundamental strategic goal for Jiangxi rural development by 2020. The targets set for building an affluent rural Jiangxi are (i) the productive capacities for food and

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other major agricultural products are improved largely; (ii) the per capita net income of rural residents in Jiangxi by 2020 will grow up to CNY10,000 or by more than one fold than that in 2008; and (iii) the income inequality among rural residents will be controlled and absolute rural poverty will be eradicated fundamentally. These targets will be elaborated and explained in the coming sections.

Building a harmonious rural Jiangxi is to adopt inclusive and coordinated rural development approach. It compose of: (i) building up harmonious relation between urban and rural areas by equalizing the primary public services, (ii) building up harmonious relations among rural areas and rural residents by equalizing the access to primary public services and social security, and (iii) building up more mutually trustable relation between grassroots government and rural residents by transforming the grassroots governments and organizations into ones centered on supplying services needed. Building a civilized rural Jiangxi is to improve the grassroots democracy and governance by moving forward the grassroots democracy and autonomous administration, to establish healthy and lively rural society by increasing the quality of living of rural residents and developing rural cultural and sport undertakings, and to promote conservation culture by improving the living and ecological environment of rural residents. Building a green rural Jiangxi should be taken not only as one goal for the rural development in Jiangxi but also as a core value which will be adhered to through the whole process of rural development. The green rural development includes the adoption of environmentally friendly production and technologies and low-carbon lifestyle, and generation and maintenance of sustainable eco-system. Rural Jiangxi will be full of vitality socio-economically and politically as long as rural Jiangxi has been built into a prosperous and civilized green rural society of affluence and harmony.

2. Strategy for income growth of rural residents in Jiangxi Strategic goals set for income growth of rural residents in Jiangxi by

2020 are to establish the institutions and infrastructure necessary for sustained income growth of rural residents, to transform the ways for income growth, and to increase the per capita net income of rural residents to over CNY10,000, and to control the income gaps as well as to fundamentally eradicate rural absolute poverty.

Priorities proposed to accomplish the targets set for income growth of rural residents in Jiangxi are to transform the ways for income generation, including: (i) transforming the low-efficiency ways for agricultural income generation to higher efficient ones; (ii) transforming the income growth in agriculture from mainly depending on the increase in the output to that with more dependence on the improvement in the quality and standards of agricultural products; (iii) transforming the income generation earned mainly

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from raw agricultural production to that earned from both agricultural production and increased value added by extending the industry chain to include grading, package, transportation and processing of agricultural products; (iv) transforming the income generation of the rural migrants from mainly relying on unskilled and unprofessional employment to increasing the migrants’ income by improving their professional skills; (v) developing the small businesses in rural areas to make it become the third income growth point after agriculture and migration; and (vi) increasing the income of rural residents from land property owned by supporting the transfer of cultivated lands and forestry lands in Jiangxi.

Expected change in income sources. It is forecasted the per capita net income of rural residents in Jiangxi will increase to CNY10,162 in 2008 price, among which 41.6% will be from agricultural income, off-farm business and migration will contribute 11% and 36% respectively, the income from property, direct transfer from government and social welfare together will contribute 7.3% of the total net income Based on the forecasted income change in rural Jiangxi by 2020, the shares in forestry and fishery and from property income and social welfare transfer will rise largely while those in crop production and livestock will decrease.

3. Overall strategy for rural industries development in Jiangxi The overall strategic goals are to largely increase the productive

capacities of food and other agricultural products of importance for national food security and to steadily raise the income of rural residents in Jiangxi by improving the ways for rural industries development.

Overall strategic approaches proposed for supporting rural industries development in Jiangxi are: (i) applying industry chain oriented rural industries development strategy to optimize the production, logistics and processing of the major agricultural products which are of comparative advantage in Jiangxi; (ii) adopting green agricultural development strategy to take better use of the eco-environmental advantage in Jiangxi and to generate value added from the production of safe agricultural products; (iii) adopting agricultural development strategy with better economy of scale and specialization by accelerating the development of farmers’ cooperatives and specialized commercial farms; (iv) undertaking brands based agricultural development strategy; and (v) adopting economically efficient agricultural development strategy.

4. Strategies for development of key rural industries Food industry The strategy proposed for food industry in Jiangxi by 2020 is to raise

the quality and safety standards of food, to increase the output of grain to 25 million ton or increase by 18% more than that in 2008, and to largely improve the economical efficiency of food industry by application of applicable technologies and increasing the scale of food production.

Edible oil industry

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It is expected that the output of edible oil in Jiangxi will increase to 900,000 ton by 2020 or 3.5 times as high as that in 2008, by which the output value of edible oil industry in the province will grow up to CNY28 billion by 2020.

The major strategic measures proposed to achieve the goals set for edible oil industry development are to develop high yield camellia seeds lands of 982,700 hectares, which will produce 558,700 ton camellia oil and generate output value of CNY25 billion, and to increase the productivity of rapeseed by application of new seeds and technologies and by increasing the specification and scale of production.

Fruit and vegetable Jiangxi provincial government has formulated the Planning of High

Quality Vegetable in the Poyang Lake Ecological and Economical Zone, by which the vegetable in Jiangxi province will generate CNY40 billion by 2020 and raise the per capita income of vegetable farmers by over CNY1,500.

Citrus in Jiangxi is of absolute advantage in terms of the natural conditions and output in the country. It is suggested that top priority for citrus development in Jiangxi be given to increasing the quality and standardization of the products and to development of citrus processing by increasing the output of citrus suitable for processing and strengthening the R&D capacities.

Forestry The 61% of Jiangxi lands is covered by forestry, which makes Jiangxi

province one of the provinces with best living environment in the country. But the forestry in Jiangxi has not yet been transformed into economic asset and a large industry. The strategy proposed for forestry development in Jiangxi is to foster the development of forestry industry and to double the contribution of forestry industry to farmers’ income while efforts continue to be made on stabilizing and strengthening the function of forestry ecologic system. Proposed measures are: (i) transforming the priority of forestry production to increasing the quality of forestry and drawing attention to nurture of planted trees; (ii) transforming to the situation where a small part of farmers and enterprises are specialized at managing the forestry and all owners of the forestry land can benefit from the forestry development by transfer of contracted forestry land property and specification of forestry management, which will generate a win-win mechanism; (iii) transforming the scatter distribution of small forestry processing enterprises to relatively concentration of forestry processing; and (iv) transforming the forestry production and processing from traditional technology based status to higher technological levels by enhancing the R&D of forestry production and processing.

Livestock Livestock has been the second largest sources of agricultural income in

Jiangxi. Pig and waterfowl are two types of livestock of comparative

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advantage in the country. In particular, the number of waterfowls, mainly ducks and gooses in Jiangxi stand on the top eight provinces. The strategic goals for livestock development in Jiangxi are recommended to steadily increase the supply of livestock products while attention is drawn to the improvement in the quality and safety standard of livestock products and to increase the contribution of livestock to income generation of farmers. It is suggested that efforts be made to improve the quality and safety of livestock products by enlarging the scale of livestock production and to facilitate the processing and refrigeration of livestock products.

Aquatic products The aquatic product development in Jiangxi is of large potential in terms

of the market share and inland fresh water resources. But it is also confronting with the challenge in water body pollution and low productivity. It is recommended that green and high efficiency aquatic product development system is established in Jiangxi to increase the competitive strength of the aquatic products and to double the share of aquatic product production income in the farmers’ income by 2020.

Rural logistics The underdevelopment of rural logistics has been one bottleneck for the

rural industries development in Jiangxi. Establishing a modern rural logistics system is the solution proposed to address the logistics constraint in rural Jiangxi.

5. Strategy for employment of rural labors in Jiangxi A new strategy for employment of rural labors is recommended to

Jiangxi based on the change in labor market demand and the supply of labor resources. The priorities suggested for employment of rural labors in Jiangxi are to reduce the proportion of labors engaged in self-employment in subsistence agriculture and increase the share of labors in running businesses as well as to improve the stability and quality of migrated employment.

In order to support the employment strategy, it is necessary to improve the vocational training provided for rural labors. Proposed strategy focus on establishing vocational training system opened for all rural labors, intensifying the roles of townships in organizing training and distribution training information, and developing vocational training models adapted to the context of Jiangxi.

6. Strategy for rural public services It is believed that the national strategic objectives set up for rural public

service development by 2020 are applicable to Jiangxi. In order to achieve the objectives, main recommended measures are (i) enlarging the coverage of rural public services to improve the accessibility and availability of all rural residents; (ii) improving the quality of the rural public services stably; (iii) continuing the reform of the financial system below the provincial level with the guidance of the equalization of basic public services; (iv) establishing a

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“bottom-up” and “top-down” combined mechanisms of decision-making and performance evaluation for the public services in rural areas in Jiangxi to improve the quality of public services; (v) strengthening the platform of rural community centers in providing rural public services by integrating the resources available for public service development; and (vi) setting up an effective supply system for the rural public services which is demand-oriented.

7. Strategy for rural environment protection The strategic objectives suggested for rural environment protection in

Jiangxi by 2020 are: rural production and living pollution has been effectively curbed, production and living environment of the farmers significantly improved, ecological conditions in rural areas further optimized, the environmental supervision capacity of rural areas observably increased, the relationship between economic and social development and ecological and environmental protection more harmonious and become the country's leading green province. In order to realize the objectives, special programs should be formulated in the concerned areas. Special efforts should be made for the rural environment protection in Poyang Lake Ecological Economic Zone.

8. Strategy for rural governance The strategic objectives for rural governance in Jiangxi are to effectively

protect the democratic rights of rural residents by improving the governance of grassroots organizations and perfecting the villagers’ autonomy system.

In order to realize the strategic objectives for rural governance suggested fro Jiangxi, following measures are recommended: (i) decentralizing the power for decision making and management of rural public administration down to county government; (ii) strengthening the rural democratic system by taking the lead in electing county People’s Congress representatives according to the same proportion of population in urban and rural areas; (iii) improving the organizational structure and system to protect the democratic rights of farmers, including establishing sound democratic decision-making mechanisms to protect the democratic rights of farmers, improving the democratic management and the villager autonomy regime, strengthening democratic supervision, and developing a sound contact system for village cadres to listen to public opinion sufficiently; and (iv) improving the system of villagers’ autonomy. VI. Recommendations

1. Organizational innovations Trans-departmental rural development coordination agency should be

established at provincial level to coordinate the planning and policy making regarding rural development and to reduce the inconsistence and conflicts among departmental based policies and planning. Similar organizations should be established at municipal and county level.

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Advisory committee for rural development at provincial level can be established to strengthen the capacities of Jiangxi province for policy making and planning making on rural development. Such a committee can be formed utilizing the research resources distributed in Jiangxi.

Industry associations related to rural industry development should restore the nature of industry association as clubs of member organizations and be strengthened.

Farmers’ professional cooperatives perform imperative actors in achieving economies of scale, supporting the development of standardized and brand based green agriculture, organizing and undertaking training of agricultural technology for farmers, and facilitating the grassroots democracy and governance in current situations. Jiangxi province can borrow from other countries in organizing and promoting farmers’ cooperatives with the supports of professional promoters.

2. Institutional Innovation and improvement A set of institutional innovations are recommended so as to guarantee

the accomplishment of the proposed strategic goals. • Land property transfer system should be modified to support the

transfer of land property when the interests of the owners and contractors of the lands are protected, including the transaction market of land property, information management system for the registration and transaction of land property, institutional arrangements for consulting, evaluation and pricing of land property transfer.

• The coverage and operation of rural social security system and public services should be improved to provide basic social safety and public services for all rural residents.

• The rural grassroots democracy system should be modified and strengthened to protect the democratic rights of rural residents.

• The regulations and legislations regarding green agricultural development should be made and modified, including the regulation on standardized production, inspection and testing, authorization management, law enforcement, and green technology promotion system, and information release system.

• Vocational training system serving for all rural labors should be established to provide necessary training and education for all rural labors.

• Sustainable utilization and management system for rural infrastructure should be developed and modified.

• The laws, regulations and standard system on rural environment protection should be amended to provide more effective institutional supports for rural environmental protection.

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3. Institutional innovations required for scientific and

technological supports • Build and increase the capacities for research and development for

the production, processing and logistics of major agricultural products in Jiangxi

• Strengthen the research on the standard relating to rural development

• Establish a workable agricultural technical extension network • Establish a system of providing training for all rural labors 4. Financing innovations Public finance. The public finance should prioritize the expenditure on

public services and social security in rural areas. Public finance should play leverage roles of seed money by setting up venture funds and guaranty funds for supporting the brand development of green agricultural products of comparative advantage and giving bonus to the innovation in agricultural development.

Financing. First, efforts should be made to develop new style of rural financing institutions, such micro-credit, community development fund and agricultural insurance while continuing the reform on rural credit cooperatives and other formal financing institutions. Secondly, the innovation of financing products and services should be encouraged and supported to improve the financing services for rural development in Jiangxi. Possible directions include innovating the collateral and guaranty for landing on the base of risk evaluation, such as using the contract of product sales, contracted land property and expected income as collateral to increase the credit lines for agricultural development; innovating the terms of loans according to the production cycle and cash flow and increasing the terms of loans for forestry and fruit development; setting up special guaranty funds for some important green agricultural products in Jiangxi by the government to share risks when financing institutions make loans to the producers and marketing enterprises of these products; and innovating the agricultural insurance supported by policies. Private investment. Efforts should be made to support large leading agricultural production and processing enterprises to directly raise funds from stock market and to improve investment environments for private investors from within and beyond Jiangxi province to make investment in rural industries development.

Investment of local farmers. The government should formulate more favorable policies to encourage and support the local farmers, in particular, those retired from migration, to make investment in rural industries development.

Financing support for the Poyang Lake Ecological Economic Zone

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Planning. The financing mechanisms should be innovated to adapt to the needs of the Poyang Lake Ecological Economic Zone Planning. The recommended measures include consummating horizontal financing networks standardized within the region, expanding funding sources and channels to promote the commercial banks of regional center cities to cooperate for formulating regional banking group, business financing institutions. The financial products and services should be innovated by setting up agricultural industry development fund, proving necessary interest subsidies, grants and other financing supports to attract more financial resources investing in the Poyang Lake areas. In addition, government should increase the capital investment to support the development of environment friendly agriculture and agriculture industrialization.

5. Infrastructure The priorities of rural infrastructure development in Jiangxi are

recommended to be in five areas: (i) developing rural information infrastructure and information platform to provide timely and sufficient information necessary for rural economic and social development and management; (ii) strengthening rural water conservancy infrastructure, in particular the small irrigation, and establishing sustainable operation and management institutional arrangement; (iii) further accelerating the construction of rural drinking water facilities to ensure the access of rural residents to safety drinking water; (iv) Developing rural road infrastructure to improve the road access of farmers; and (v) improving the rural logistics infrastructure, including storage, refrigeration, transportation and logistics parks.

6. Policy Suggestions Establish and perfect modern agriculture and rural development

supportive policy system in following areas: • Ensuring stable increase of public finance expenditure used for

agricultural development. The top priority should be given to effectively identify and standardize channels of financial support for agriculture and rural development so that each policy can be carried out in the end.

• Buttressing development of important agricultural products of comparative advantage

• Support large-scale irrigation projects and small irrigation facilities such as ponds, dams, canals and small reservoirs.

• Popularize science and technology for agriculture. • Encourage and support the transfer of land property by linking the

land transfer to the provision of training, pension insurance and allowing the farmers use their land for share-holding businesses.

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• Diminish the threshold for starting enterprise and cooperative and simplifying the procedures for registration and appraisal.

Support rural social undertakings. Recommendations are to develop and improve the long-term guarantee mechanism for rural compulsory education expenditure, to increase expenditure of public finance on rural public health, and to improve the coverage and service of rural social security system with focuses on rural minimum living protection scheme and pension insurance. Deepen the reform of financial system in counties and townships. Policies should be modified to improve the financial system in which provincial finance take direct charge of the finance at county level in a comprehensive way, to establish basic financial security system at the county level step by step, and to proactively eliminate debts owed grassroots government. Innovate the ways for integrating rural development related funds. Efforts should be made to decentralize decision-making of fund allocation and utilization down to county governments and to raise the proportion of general transfer payment while that of special projects decreased, to integrate special funds by the central finance, and to encourage funds integration by county governments. Establish demand-oriented decision making mechanism for rural public goods. It is suggested to identify the priorities of farmers’ demands for public goods, and allocating the funds available based on the orders of priorities, and improve the grassroots decision making mechanism and give farmers says on public goods supply Develop sustainable mechanism for supporting the rural development in Poyang Lake Ecological and Economic Zone. The suggested policies include innovating ecological protection mechanism and enhance ecological construction and environmental protection, coordinating ecological improvement and economic development and transform the ecological advantages into economic advantages, and giving full play to the leverage finance and taxation and develop win-win pattern between ecological protection and economic development.

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I. Introduction 1. Context of the Study 1.1 Government policies During the last two decades the rising disparities between rural and

urban areas, between the coastal regions and western and central regions, and contradiction between environmental sustainability and economic development in the PRC has increasingly become the most important challenge for sustainable development of the country. In order to address the unbalanced development issues that emerged during the development process, the Government of PRC made a lot of efforts to transform the distorted development pattern in recent years. The major measures taken to date are the adoption of the principles of a balanced people-centered scientific development and a harmonious society development, the promotion of development in western and central regions, the elaboration and implementation of a program for the building of a new socialist countryside construction, and the implementation of an environment friendly development strategy. The 3rd session of the 17th Chinese Communist Party (CPC) national congress held in October, 2008, put forward the “Decision on Some Major Issues Relating to the Reform and Development in Rural Areas”, which further specified the national policies and development goals for rural reform and development by 2020.

The key goals and tasks of the special program for building a New Socialist Countryside, as defined by the government, are to boost rural productivity, to improve rural infrastructure, to promote social development and to deepen democracy in the countryside as well as to increase the living standards of farmers. During the 3rd session of the 17th CPC national congress held in October, 2008, the Central Committee of the CPC set up more specific goals to achieve in the field of rural development by 2020. These include (i) improving the fundamental economic system in rural areas and the establishment of a system to harmonize the development between rural and urban areas; (ii) increasing the global productive capacity of agriculture in order to ensure the country food security; (iii) doubling of farmers’ income, the improvement of farmers’ consumption, and eradication of absolute poverty; (iv) further strengthening the construction of rural grassroots organizations and enhancement of the System of Villagers’ Autonomy to truly ensure the farmers’ right for democracy; (v) speeding up the process of providing equal access to public services to both the farmers and the urban citizens, developing the culture in rural areas and ensuring the farmers’ right for basic culture, ensuring all rural citizen enjoy the right and opportunities to access to good education, improving the basic health protection system and basic medical and health care system as well as the social management system in rural areas; and (vi) building up a resource saving and environment friendly agricultural production system, greatly

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improving the living conditions of farmers and the ecological and environmental situation in rural areas to continuously improve the sustainable development capacities.

The government’s new policies for rural reform and development have drawn a picture of PRC’s national rural areas development up to 2020. However, there are a lot of things to be done to translate the national goals into practical and feasible regional rural development strategies adapted to local conditions, which would build on local advantages and improve the local sustainable development capacity. In some sense, the national policies for rural development just defined long-run goals. It is now even more important to draw a road map to reach the defined goals taking into account the local conditions. The ADB supported Technical Assistance (TA) for the elaboration of the Jiangxi Province Rural Development Strategy is one attempt to assist provincial governments to develop the provincial rural development strategy in the framework of the new socialist countryside construction concept. The TA study aims to help with promoting the new socialist countryside construction and faster the development of the central regions, in particular in Jiangxi Province.

1.2 Context of the Study Area 1.2.1 Locations and Natural Conditions Located on the southern bank of the middle and lower reaches of the

Yangtze River, Jiangxi Province is adjacent to Zhejiang, Fujian, Guangdong, Hunan, Hubei and Anhui Provinces. Its specific geographical location, close to the three of the four economic growth centers in the PRC, namely the Yangtze River Delta, the Pearl River Delta and West Straits Economic Zone, enables Jiangxi to take advantage of the effects of these three economic development poles in the PRC, and to gain more and better development opportunities.

The total area of Jiangxi Province is 166,900 square kilometers, 36% of which are covered by mountains, 42% are hilly areas, and 22% are plains and water surfaces. Cultivated land accounts for 2,126,700 ha, forest land 8,716,900 ha, and fresh water utilized for fisheries 379,500 ha.

Jiangxi enjoys a sub-tropical humid monsoon climate with an annual mean temperature of 18°C, and an average annual rainfall of 1,637.9 mm. A total of 2,400 rivers flow into the Yangtze River through Poyang Lake—the largest fresh water lake in the PRC. Water resources are plentiful with 141.6 billion cubic meters of water and a water surface of 1,670,000 ha, accounting for 10% of the total fresh water areas in the country. Jiangxi Province has 19 districts in cities and 80 Counties among which there are 10 county level districts and 70 counties, distributed in 11 prefecture level cities. There were 177,081 rural natural villages 1

1 Natural village refers to the rural community or settlement with close social and cultural

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distributed in 17,235 administrative villages of 1,404 townships by the end of 2008. Its population was 44 million at the end of 2008 of which 58.6% lives in rural areas.

Map 1: Geographic position of Jiangxi in the PRC

1.2.2 Economic development in Jiangxi since 2000 The economy of Jiangxi is in the stage of industrialization. In 2008, the

per capita GDP was CNY14,781, and the total GDP was CNY648 billion, of which the agriculture GDP accounted for 16.4% while the secondary and third sectors accounted for 51.7% and 31.9% respectively. The private sector contributed to 52.2% GDP of the Province.

Between 1978 and 2008, the provincial GDP was multiplied by 16.92, the agricultural GDP and the GDP per capita multiplied by 3.93 and 10.52 respectively (Figure 1). Since 2000, Jiangxi Province has achieved a fast economic growth with average GDP annual growth rate of 12% from 2000 to 2008. In the meantime, the value added in agriculture and the GDP per capita had grown 5.1% and 11.2% annually respectively. In spite of fast growth of the economy achieved in Jiangxi Province, Jiangxi was still standing on number 26 among the 31 provinces of the country in terms of

contacts in PRC. Usually, several natural villages form an administrative village in Jiangxi.

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per capita GDP in 2008. Jiangxi has also achieved outstanding growth in the agricultural sector

since 2000. The agriculture gross output value had increased by 5% annually from 2000 to 2008. Among the sub-sectors of agriculture, the gross output value in forestry and fishery sectors had increased 7.1% and 7% annually over the period, much faster than the crop production and livestock sectors. Between 2000 and 2008, grain production has increased by 17.9%, from 16.15 million tons in 2000 to 19.04 million tons. During the same period, meat production increased by 28.6% from 1.923 million tons to 2.47 million tons.

Figure 1: Economic Development in Jiangxi over1978-2008

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Data source: Jiangxi provincial Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press.

The per capita net income and living expenditure of farmers increased

by 6.54% and 5.32% annually respectively from 2000 to 2008. During the period, the per capita housing areas for farmers had increased from 27.79 square meters to 37.56 square meters. The number of TV sets, motorcycles and cell phones owned per 100 farmers’ households increased from 30.16, 17.47 and 1.43, to 95.76, 50.65 and 106.98 respectively over the same period.

The physical infrastructure and living conditions of farmers in rural Jiangxi by the end of 2006 were in general comparable to the average

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situation in the whole country and in the central region. The facilities for transportation, education, health care and communication in rural areas of Jiangxi were better than the average conditions observed in the whole country as well as in the central region while indoor sanitary facilities and environmental facilities were slightly below the national average and central regional average.

1.2.3 The New Countryside Construction Program in Jiangxi

Province Jiangxi was one of the pilot provinces for the New Socialist Countryside

Construction program in the PRC. In September 2004, Ganzhou municipal government in Jiangxi firstly launched the pilot for New Countryside Construction in some villages, which won the appreciation and supports from provincial and central government. From 2005 to 2008, Jiangxi Province has implemented the New Countryside Construction program in about 40,000 natural villages, becoming the province with the largest numbers of pilot villages in the country.

Good practices experimented and proved in Jiangxi Province as a pioneer of the New Countryside Construction Program in the PRC have been borrowed and adopted by other provinces. These include taking the natural village as the basic unit for organizing rural development activities, forming villagers’ council at community level, starting the New Countryside Construction by improving living conditions, focusing on the development of village based specialized products (“one village, one product”), and consolidating the earmarked investments for rural development.

1.2.4 Poyang Lake Ecological Economic Zone Planning The Poyang Lake Ecological Economic Zone Planning (PLEEZP) was

officially approved by the state council as a national strategic planning on December 12, 2009. The planning zone located in the north Jiangxi around Poyang Lake, covers 38 counties (districts) in nine prefecture level cities and 30% of the total land areas and about 50% of the total GDP in Jiangxi Province.

The PLEEZP identified the strategic roles of the Poyang Lake Ecological Economic Zone as: (i) the demonstration zone for national comprehensive development of the Great Lakes watershed, (ii) the Yangtze River water ecological safety and security zone, (iii) an important impetus to accelerate the rising of the central region, and (iv) an important platform for launching international ecological and economic cooperation. Correspondingly, the PLEEZP puts forward the strategic tasks of the Poyang Lake Ecological Economic Zone development during the construction period from 2009 to 2015 and long-term outlook to 2020, including (i) constructing sustainable ecological system, (ii) developing ecologically and environmentally friendly economic system, and (iii) building

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up an ecologically civilized society in the planning zone. Following the PLEEZP, Jiangxi provincial government has formulated a

set of sectorial development plans, such as the Vegetable Development Plan, the Forestry Development Plan, the Industry Development Plan. It is hold by the Jiangxi provincial government that the PLEEZP will be taken as the center and basis for formulating the provincial 12th five-year plan in the province.

2. Objectives and Scope of the Study 2.1 Objectives of the Study The objectives of the study are to assist in formulating development

strategies for rural areas of Jiangxi in line with the national policies on rural development and reform, and with the long-term development plan of Jiangxi Province to achieve inclusive, sustainable, balanced and pro-poor socio-economic development in the rural areas.

2.2 Scope of the study The study is expected to contribute to the improvement of the strategic

planning for rural areas in Jiangxi and to achieving inclusive, sustainable, balanced and pro-poor socio-economic development in the rural areas. The major outputs of the study include (i) a complete development strategy in line with the national policies on rural development and reform and with the long-term development plan of Jiangxi Province based on consultations with the stakeholders and comprehensive studies of the comparative economic advantages, constraints and potentials of Jiangxi rural areas; and (ii) a package of policies and institutional recommendations for ensuring the implementation of the proposed strategy.

The study covers (i) analyses of the present situation regarding the socio-economic development status, grassroots organizations structure, and environment and ecology in rural Jiangxi; (ii) a comparison of rural Jiangxi’s economic comparative advantages and disadvantages with those of other provinces in the central region; (iii) proposes for the goals, targets, and strategies for rural development in Jiangxi Province by 2020; and (iv) policy recommendations.

Though the study covers all the important issues relating to rural development, but it focus on but not confine to nine major sub areas in order to support the overall strategic study on rural development in Jiangxi Province. Nine sub areas are (i) rural industries development, (ii) rural land property right reform, (iii) rural infrastructure development, (iv) rural logistics development, (v) rural environment and ecology, (vi) rural public services, (vii) rural grassroots governance and organizational reforms, (viii) rural vocational training, and (ix) institutional innovation and reforms.

3. Approaches and Methodologies

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3.1 Approaches Adopted for the Study Rural development is a dynamic process aimed to improve the quality

of life of farmers and to increase the capacity for sustainable development in rural areas. The approaches adopted to study Jiangxi rural development strategy are integrated, multidisciplinary and participatory ones, and will consider the historic context and evolution.

An integrated approach, or multidimensional, multisectorial, multidisciplinary approach, is utilized to analyze the rural development situation and issues in Jiangxi. Such a multi-folds approach is necessary because rural development covers various dimensions including economy, sociology, politics, culture and environment, and also considers the changes that occur in these different fields. Moreover, the economic development in rural areas comprises different sectors, such as agriculture, industry, services. Therefore, only a multidisciplinary approach can contribute to understand the actual situations and issues in rural areas, and to identify effective solutions to rural development.

An open, rural-urban linkage approach is adopted for the study. Rural development in Jiangxi cannot be isolated from the situation and changes going-on in urban areas and from the situation in other Chinese provinces. As a consequence, the development strategy for rural Jiangxi needs to be considered from an open and rural urban linkage angle.

A historic and dynamic approach is applied because the recent development in rural Jiangxi cannot go without its historical evolution which affects the selection of development path and solutions. Similarly, any development cannot jump one step to the end. It must go through a dynamic process.

A participatory and stakeholders-centered approach is adopted when preparing the rural development strategy because farmers and other stakeholders know much more about the history, context, situation and demand than any other outside expert or organization. The demands of farmers and other stakeholders should be taken into account when formulating the rural development strategies. Therefore, consultations with stakeholders will take place through the whole research process during this study.

Macro-micro linkage approach is adopted for the study. Though the provincial development strategy for rural Jiangxi mainly aims to address the macro development at the province level, it is impossible to come up with any meaningful strategic solutions without taking into account of the situations and demands in rural communities and inter-regional differences.

3.2 Methodologies Applied to Accomplish the Tasks The selected methodologies aim to complete the tasks set for the study.

We employ the following methods to carry out the study based on our tentative analysis and understanding of the Terms of References.

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SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis method is applied to assess the strengths and weaknesses of the existing development strategies and approaches in rural Jiangxi, and to analyze the possible development options and the risks involved. This method has been used for the overall and sectorial studies for the rural development strategy.

Statistical and econometric analysis has been the extensively used method for this study. Statistical methods are used to compare and analyze the development status and major constraints, comparative economic advantages and disadvantages in rural Jiangxi over other provinces, and the gaps between the demands for future development and the resources and capabilities available. The statistical analyses mainly use the secondary data for Jiangxi and other central regions over time while first hand data of 463 sample households and 35 villages in seven sample counties have been collected.

Case studies are undertaken to assess and analyze the performance of rural development, resources available for future development, major constraints, existing institutional arrangements and policy settings, and demands for development in selected representative counties and communities. Case studies are also used to analyze and identify the best practices in rural Jiangxi. Seven counties located in mountainous areas, hilly areas, lake areas, plains and suburbs of large cities have been investigated to represent major types of rural development contexts and models.

Participatory assessment and stakeholder consultation are applied to assess the performance and effectiveness of the existing development strategies and policies, analyze the constraints to development, discuss and analyze the feasibility of and problems involved in the proposed strategies and action plans as well as policy and institutional recommendations.

Except for the above methods for the overall study, some other methods have been employed for sectorial analysis. For instance, value chain analysis is used in the agricultural production, industrial development and logistics development sectors.

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II. Current Status of Rural Development in Jiangxi Complete and facts based assessment of the current status of rural development in Jiangxi is the prerequisite for proposing feasible options for rural development in the province. The assessments made in this chapter cover the status of rural economies, public services, grassroots governance and environmental protection in rural Jiangxi.

1. Current Status of Rural Economic Development in Jiangxi 1.1 Agricultural development from the perspective of size,

efficiency, safety and regional disparity 1.1.1 Agricultural development in Jiangxi The agriculture in Jiangxi has made impressive progress since 1978. The value added in real term generated by agricultural sector has multiplied by 3.7 times, or 139% as high as the national average during the period. The annual growth rate of agricultural value added in Jiangxi since 1999 has been higher than that of the national average as showed in Figure 2.

Data source: NBS. 2009. China Statistics Yearbook 2009. China Statistics Press; Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press.

The major agricultural products in Jiangxi have increased largely in

and the Country over 1978-2008

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Jiangxi from 1978 to 2008. The most popular products in Jiangxi, rice and pigs, have increased 1.9% and 8% annually (Table 1). Fruit, silkworm and aquatic products have grown fastest among the major agricultural products in Jiangxi, with annual growth rate of 16.4%, 14.3% and 12.5% respectively during the period. In addition, tobacco and cotton have also increased steadily since 2000. The output of fruit, silkworm, aquatic products, tobacco and cotton in Jiangxi have increased 26.4%, 11.6%, 6.1%, 12.8% and 6.4% annually respectively from 2000 to 2008. The higher growth of the five agricultural products with high commercialization degree does not only help improve the structure of the agriculture in Jiangxi, but also help maintain a quite high growth rate of the agricultural sector when the two most popular agricultural products, grain and pigs, have grown slowly during the period.

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Table 1: Agricultural Development in Jiangxi over 1978-2008

1978 1980 1990 2000 2008 Growth (%) in 1978- 2008

Growth (%) in 2000- 2008

Value added in Agricultural sector (CNY billion) 3.6 4.8 17.6 48.5 106.0 5.5 5.1

Gross output value of agriculture (CNY billion) 4.9 6.8 25.5 74.1 168.1 5.5 4.9

Grain (million ton) 11.3 12.4 16.6 16.2 19.6 1.9 2.4 Cotton (1,000 ton) 348.0 430.0 570.0 680.0 1,119.0 4 6.4 Oil crops (1000 ton) 1,349.0 1,376.0 5,489.0 9,673.0 9,119.0 6.6 -0.7 Tobacco (1,000 ton) 61.0 37.0 231.0 182.0 478.0 7.1 12.8 Tea (ton) 8,878.0 10,385.0 19,415.0 15,703.0 22,977.0 3.2 4.9 Silk worm (ton) 143.0 181.0 2,639.0 3,266.0 7,833.0 14.3 11.6 Sugar cane (1,000 ton) 682.9 857.4 1,942.9 1,368.1 642.1 -0.2 -9 Fruit (1,000 ton) 29.2 56.1 233.0 423.4 2,753.6 16.4 26.4 Output of meat(1,000 ton) 262.7 380.5 1,117.4 1,923.1 2,616.3 8 3.9 Output of aquatic products (1,000 ton) 59.3 75.5 306.8 1,271.2 2,046.0 12.5 6.1

Data source: Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook. China Statistics Press.

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The growth path of the agriculture in Jiangxi, however, has not been straight in the past 30 years. There have been fluctuations going along with the growth of agriculture as a whole and of the different sectors. The gross output value of agriculture in Jiangxi has been in the status of positive growth except for in 1981 and 1999 (Figure 3). More important is the fluctuation of growth rate has been going with the agricultural development in Jiangxi in the past 30 years. There have emerged 14 years of declining and 17 years of increasing in terms of growth rate over the period. The year by year change in the growth rate of agricultural gross output value in Jiangxi from 1978 to 2008 showed some observable regular pattern, by which the gross output value of agriculture in Jiangxi kept going up for two or three years and then slowing down for one year. Among the sub-sectors of agriculture, the fluctuation in the output value of crop planting in Jiangxi was more obvious than in other sub sectors. There were some rules underlining the change in the output value of crop planting in Jiangxi from 1978 to 2008, by which the value declined once after growing for 4 or 5 years. There have emerged 5 cycles in Jiangxi since 1978 (only exception appeared in 1993 when no negative growth appeared but only slowed gown). The year by year fluctuation in the output value of livestock has been relatively small. Except for the negative growth in 1998-2000, the output value of livestock has been in positive growth for the remained years. The fishery output value in Jiangxi has never declined on the year by year basis but has been the sub sector with largest fluctuation in the past 30 years.

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Figure 3: Annual growth rate of agricultural output value over 1978-2008

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Data source: Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook. China Statistics Press. 1.1.2 The size of Agriculture in Jiangxi We estimate and analyze the change in relative size of the agriculture in Jiangxi since 1978 using the proportion of agricultural output value and major agricultural products in Jiangxi in the county as a whole as one indicator. It is found that although Jiangxi has been taken as a large agricultural province in the PRC for a long time, the proportion of the agriculture in Jiangxi has been not very big and been declining in the last three decades (Table 2). The proportion of agricultural output value in Jiangxi in the country has never been larger than 4% since 1978 and it declined to 2.9% in 2008. The gross output value of agriculture in Jiangxi ranked number 15 in thirty one provinces of the PRC in 2008. The forestry in Jiangxi has occupied largest proportion in the country among its all sub sectors of agriculture. The output value of forestry in Jiangxi once accounted for 12% of the national output value of forestry. There is one unbalanced relation existed in the forestry development in Jiangxi. The proportion of output value of forestry in Jiangxi in 2008 was less than 2/3 of its proportion 30 years ago even though the forestry coverage in Jiangxi has kept increasing in the last decade and now stands on the number 2 in the country. The output value of forestry per hectare of forestry land in Jiangxi in 2008 was CNY1,443, ranked number 11 in the country. In this regard, the forestry development in Jiangxi is confronting with the

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choice between the growth of forestry land and improvement in the productivity of forestry production. The reasons underlining the mismatch of ranking in forestry coverage and forestry economic productivity are (i) Jiangxi provincial government has attached high attention to the increase of forestry coverage and environmental protection but no same efforts were made to improve the forestry economic productivity; (ii) the overall economic productivity of forestry in Jiangxi should be much higher than that estimated only by the output value per hectare if the integrated economic returns of forestry, including the contributions to environmental improvement and investment environment as well as to the improvement in the quality of live, is taken into account rather than only considering the direct forestry income; and (iii) no effective ways have been developed to coordinate the relation between the increase of forestry resources and improvement in the economic returns of forestry in Jiangxi. Crop planting has been the largest source of farmers’ income in Jiangxi. The proportion of output value of crop planting in Jiangxi once accounted 3.52% of the national value in 1980. It has declined in 1990’s and recovered after 2000. In 2008 the output value of crop planting in Jiangxi accounted for 2.48% of the national value. The output of grain has steadily contributed 3.7-3.8% of the total grain production in the PRC. The total grain output, per capita grain for sale and the total grain for sale in Jiangxi in 2008 ranked number 12, number 8 and number 9 respectively. Jiangxi government has been prided itself on the record by which Jiangxi has been one of the two provinces that have not stopped providing net grain export to other provinces since 1949. Jiangxi has not only made directly contribution to stabilizing the supply and price of grain in the country through providing net export of grain to other provinces, but also indirectly transferred its income and wealth out through the forced low grain pricing policy existed in the PRC over 40 years. Except for grain, the oil crop in Jiangxi, in particular, the rape seed has had a relatively important role in the country. The output of rape seed in Jiangxi in 2008 accounted for 4.27% of the national output. The output of tea in Jiangxi had once occupied 4% share in the country but halved in recent years. Fruit in Jiangxi has been a fast growing agricultural sector in recent years. Its output share in the country increased from 0.44% in 1978 to 2.3% in 2008. In particular, the output of orange in Jiangxi has occupied about 10% of the country’s market.

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Table 2: Change in the Position of Agriculture in Jiangxi in the Country (%)

1978 1980 1990 2000 2008 Gross output value of agriculture 3.53 3.54 3.33 2.98 2.90 Output value of crop planting 3.26 3.32 2.43 2.48 2.48 Output value of forestry 12.21 11.80 5.91 6.19 7.00 Output value of livestock 3.01 2.69 3.15 3.00 2.70 Output value of fishery 2.90 2.40 2.45 3.69 4.07 Yield of grain 3.69 3.87 3.72 3.49 3.70 Yield of cotton 1.61 1.59 1.26 1.54 1.49 Yield of oil crops 2.59 1.79 3.40 3.27 3.09 Yield of tea 3.31 3.42 3.59 2.30 1.83 Yield of fruit 0.44 0.83 1.24 0.68 2.31 Yield of meat 3.07 3.16 3.91 3.20 3.58 Yield of aquatic products 1.27 1.68 2.48 3.43 3.89

Data source: NBS. 2009. China Statistics Yearbook 2009. China Statistics Press; Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook. China Statistics Press.

Jiangxi has maintained its share of output value of livestock in the country at about 3% in spite of fluctuation in the share in meat output since 1978. The output pork of pork in Jiangxi has had a relatively higher share in the country. It accounted for 4.29% of the national output in 2008. Fishery has been the fastest growing sub sector in Jiangxi’s agriculture. The share of output value of fishery in Jiangxi in the national market has increased from 2.9% to 4.1% in 2008. Fishery is the only agricultural sub sector in Jiangxi which has increased its share since 2007. In particular, the fresh water aquatic product in Jiangxi accounted for 8.29% of the national output in 2008. 1.1.3 Agricultural production organizations in Jiangxi Farmers’ household has been the fundamental and leading agricultural production organization in Jiangxi since the household responsibility system was established in early 1980’s. The production organization in Jiangxi has now undergone some important changes recently with the increase of migrated rural labors and loosening of the legal control over land property transfer. Major changes are in following three aspects. First, the size of and scope of land property transfer has been increasing. The data from the national 2nd Agricultural Census showed that there were 12.3% of the cultivated lands being transferred by means of leasing, changing the contracts with villages and transfer of land property right, which was higher than the national average and central region

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average. The scope of land property transfer in Jiangxi based on the field survey data is quite large. There were 46.54% of the sample households engaged in the transfer of cultivated land. As the result of land transfer, a new division of labors has been developed among farmers’ households. Some farmers planted more lands while some farmers’ households with migrating labors planted fewer land or stopped planting lands. According to the data collect from the sample villages, 68.75% of the sample villages have had relatively large farmers with 20-30 mu cultivated land. There were 18.85% of farmers’ households with 20-30 mu cultivated land, 5.38% households with 30-50 mu cultivated land, 1.57% households with 50-100 mu cultivated land and 0.29% households with over 100 mu cultivated land in the sample villages. In addition to the transfer of property of cultivated lands, there has been fast growth emerged in the transfer of the property of forestry lands in Jiangxi since 2005. The official statistics shows that there occurred 40,700 cases of property transfer for forestry lands in Jiangxi since 2005 covering 3.8 million mu forestry lands, accounting for 2.86% of total collective owned forestry land areas. There has been large variation among prefecture cities and counties in terms of the forestry land property transfer. Five out of total 80 counties have had over 10% forestry land areas being transferred with the highest one, Tonggu county with 18.3% forestry land areas being transferred. The top three prefecture city in terms of the percentage of forestry land areas being transferred are Fuzhou, Yichun and Jiujiang (Table 3). Ganzhou and Ji’an, wherein the per capita forestry land areas are more than the provincial average, had lower proportion of forestry land areas being transferred.

Table 3: Transfer of Forestry Land Property in Jiangxi in 2005-2009 Region % Forestry land transferred Per capita forestry land area (mu)

Nanchang 3.67 0.50 Jingdezhen 1.80 4.33 Pingxiang 0.94 2.03 Jiujiang 4.60 3.41 Xinyu 1.87 3.52

Yingtan 0.48 3.50 Ganzhou 2.11 5.94 Yichun 5.25 3.37

Shangrao 0.80 2.90 Ji’an 2.76 5.86

Fuzhou 6.07 6.63 Note: the figures for the prefecture cities include counties only. Data source: provided by the Jiangxi Provincial Department of Forestry.

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Second, new style of rural cooperatives has been rising. There were 30.7% townships in Jiangxi that had established rural cooperatives by 2006 according to the 2nd agricultural census (Table 4). There were 1664 rural cooperatives in Jiangxi in 2007, of which 34.4% provided comprehensive services in production, processing and sales, 23.3% provided technical and information services for their members, 19.9% worked in agricultural production, 15.5% provided processing services and 7% in transportation and storage. In general, the rural cooperatives in Jiangxi were mainly concentrated in the areas of higher specification and higher marketing risks involved, including livestock, aquatic products, flowers and seeding, vegetable and fruit. The field survey data evidenced that 22.22% sample villages with cooperatives, and 45.63% of the farmers’ households in the villages with cooperatives participated in cooperatives.

Table 4: Cooperative development in Jiangxi and other central provinces in 2006

% townships with

agricultural cooperatives

% townships with

agricultural cooperative

entities

% villages producing and selling products via “firm plus farmers” coordination

% farmers involved in “firm plus farmers”

connection National 36.6 16.2 10.6 3.53

Shanxi 26.4 14.9 4.8 1.53

Anhui 49.0 23.6 10.1 2.28

Jiangxi 30.7 13.4 10.0 1.94

Henan 34.4 16.0 9.9 2.54

Hubei 38.7 19.2 9.8 3.18

Hunan 39.2 17.6 10.3 2.92

Central region 36.6 17.4 9.2 2.50

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press. Third, vertical linkage of farmers’ households with agricultural processing firms in Jiangxi has been strengthened. There were 10% villages involved in the linkage of farmers with agricultural processing and sales firms, which covered 1.94% of the total farmers’ households in the province in 2006 according the Agricultural Census. The affected scope of the vertical

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linkage observed from the field survey data was much larger. There were 28.5% sample villages involved in the vertical linkage with the dragon head enterprises defined by county and above governments. Around 19% of households in the affected villages were involved in the linkage. The statistics provided by Jiangxi Provincial Department of Agriculture on the dragon-head agricultural industrialization enterprises shows that there were 4.6 million farmers’ households involved in the vertical linkage with the provincial and national dragon-head enterprises in 2008 in Jiangxi, of which 3.36 million households being linked in the form of contracted purchasing. The difference emerged in the estimation of different sources may be mainly owing to the definition of the linkages and the methods employed to estimate the number of beneficiaries. The number of beneficiary households in the statistics by the department of agriculture may include all households living in the affected areas, which will overestimate the beneficiaries. 1.1.4 Land Productivity of Agriculture in Jiangxi Most of major agricultural products in Jiangxi except for cereal, cotton and tobacco were lower than national average in terms of land productivity. Cereal, accounting for 61.7% of the total sowing areas in Jiangxi had a productivity of 5696 kg per hectare in 2008 (Table 5), which was 2.68% higher than the national average but lower than that in Hubei and Hunan which are located in the latitude same as Jiangxi. The second largest crop in terms of sowing areas in Jiangxi, rape seed, had a yield of 1062 kg per hectare, which was only 57.8% of the national average and fewer than one half of that in Henan. The cotton and tobacco in Jiangxi had the land productivity higher than national average though their sowing areas only accounted for 1.2% and 0.3% in the province. The yields per hectare of cotton and tobacco in Jiangxi were 31.2% and 10.7% higher than the national average. In particular, the yield of cotton per hectare in Jiangxi ranked number five in the country and number one in the central region.

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Table 5: Yield of Major Agricultural products per hectare in 2008 (kg)

Region Cereal Cotton Peanut Rape seed Sesame Sugar

cane Tobacco

National 5,548 6,563 1,302 3,365 1,835 3,217 71,210

Shanxi 3,709 1,228 1,114 2,122 1,448 - -

Anhui 5,347 6,235 1,950 4,004 2,092 3,354 42,976

Jiangxi 5,696 5,720 1,708 2,592 1,062 4,011 45,862

Henan 5,865 7,328 2,040 4,020 2,578 3,847 59,426

Hubei 6,031 7,750 1,087 3,267 1,972 4,482 39,986

Hunan 6,329 6,429 839 2,434 1,328 2,468 53,683 Data source: NBS. 2009. China Statistics Yearbook 2009. China Statistics Press. 1.1.5 Regional concentration of major agricultural products in Jiangxi Two methods are employed to analyze the regional concentration of agricultural products in Jiangxi. One is to compute the concentration of major agricultural products in the regions with yield higher than the threshold yield. Another is to compute the location quotient of major agricultural products in Jiangxi. Four major agricultural crops, two of which are the two largest ones in terms of sowing areas, rice and rape seed, two of which are of higher yield compared with the national average, cotton and tobacco, are selected to analyze the regional concentration. The threshold yields are selected arbitrary mainly based on their actual yields and the national average yields of the crops. For example, the threshold yield for selecting rice production regions is set at 6 ton per hectare; those for rape seed, cotton and tobacco are 1.5, 1.5 and 2 tons per hectare respectively. Based on the set threshold, there are 29 counties assumed as rice high yield regions, 38 counties as rape seed regions, 19 counties as cotton regions and 17 counties as tobacco regions. The regional concentration indices are presented in Table 6.

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Table 6: Regional Concentration of Major Agricultural Products in Jiangxi (2007)

Product Threshold (ton/ha）

Number of counties included

% of the sowing areas in the

province

% of the total output in the

province Rice 6 29 40.77 44.71 Rape seed 1.5 38 32.33 43.91 Cotton 1.5 19 50.03 61.72 Tobacco 2 17 78.72 82.83

Data source: Jiangxi Bureau of Statistics. 2008. Jiangxi Statistics Yearbook 2008. China Statistics Press. Among the four major agricultural crops in Jiangxi, tobacco has highest regional concentration with 17 counties occupying 82.83% of total tobacco output in Jiangxi; cotton is the second crop in terms of regional concentration with 19 counties producing 61.72% of the total cotton output; rice stands at number three with 29 counties producing 44.71% of the total rice output; rape send is the last one with 38 counties producing 43.91% of the total rape seed output in the province.

The location quotients of 13 major agricultural products in Jiangxi were computed and the top 20 counties in terms of location quotient are listed in Table 7. The results show that Jiangxi has higher regional concentration in fruit, tea, tobacco, cotton, milk, sugarcane and eggs: (i) Fruit. Nanfeng county has a location quotient in fruit production as high as 32.33, followed by Xunwu, Jing’an and An’yuan with location quotient of 17.82, 10.1 and 9.94 respectively. The fruit production in Jiangxi is highly regional concentrated; (ii) Tea. Wuyuan has a location quotient of 32.04 in tea production, followed by Fuliang and Jinxi with the quotient of 13.67% and 7.03 respectively; (iii) Milk. Yudu has a location quotient of 27.13, followed by Luxi, Xinjian and Guangchang with the quotient of 7.66, 5.75 and 5.21 respectively; (iv) Tobacco. Xiajiang, Guangchang, Shicheng and Lichuan all have location quotient over 10 with jiajiang as high as 24.58; and (v) Cotton. Pengze, Jiujiang, De’an, Yongxiu and Hukou all have location quotient over 10 with Pengze as high as 23.32.

The regional concentrations of the three largest crops in terms of sowing area in Jiangxi, rice, rape seed and vegetable, are relatively small. The largest quotient in rice production was 2.81 though all 20 top counties have location quotient over 1. The location quotients of three top counties are 3.14, 3 and 2.96 respectively. The top three counties in terms of vegetable location quotient have the value of 3.71, 3.1 and 2.8 respectively. Eggs have largest regional concentration in the livestock products in Jiangxi. The top four counties have the quotients of over 3 with Nanchang and De’an of 9.81 and 8.06 respectively. The top three counties in meat production quotient have the value of 3.67, 3.63 and 3.07.

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Aquatic products which are supposed to be of high regional concentration have no significant regional concentration. The top three counties in aquatic production in Jiangxi have the quotient of 2.62, 2.48 and 2.46 respectively. The forestry products were replaced with forestry land areas in computing location quotient because of data availability. The 20 top counties all have location quotient over 2.

In general, the agricultural products with relatively smaller size and high commercialization in Jiangxi are of high regional concentration while the products of largest sowing areas and lower commercialization are of relatively weak regional concentration.

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Table 7: Top 20 counties of major agricultural products in term of location quotient in Jiangxi in 2007 Grain Rape seed Cotton Sugarcane Tobacco Vegetable Tea

Rank LQName of county LQ

Name of county LQ

Name of county LQ

Name of county LQ

Name of county LQ

Name of county LQ

Name of county

1 2.8 xiajiang 3.1 xingan 23.3 pengze 10.5 congren 24.6 xiajiang 3.7 quannan 32.0 wuyuan

2 2.1 jinxi 3.0 zhangshu 13.7 jiujiang 8.4 taihe 19.3 guangchang 3.1 leping 13.7 fuliang

3 2.1 zhangshu 3.0 Gao’an 13.6 De’an 7.0 shanggao 17.3 shicheng 2.8 longnan 7.0 jinxi

4 2.1 yifeng 2.5 pengze 11.8 yongxiu 4.1 yujiang 10.4 lichuan 2.3 dayu 3.5 wuning

5 2.0 fengxin 2.5 hukou 11.6 hukou 4.0 yongfeng 7.4 huichang 2.2 nanchang 2.9 shangyou

6 2.0 xingan 2.4 An’yi 4.7 xingzi 3.3 yihuang 6.6 Le’an 2.1 taihe 2.9 shuishui

7 1.9 shanggao 2.4 An’fu 3.3 ruichang 3.1 xiajiang 4.9 zixi 2.1 yongfeng 2.3 suichuan

8 1.8 jishui 2.4 jinxian 3.3 Gao’an 2.9 nanfeng 3.6 ruijin 1.9 nancheng 1.9 quannan

9 1.8 Gao’an 2.4 congren 3.0 congren 2.3 dexing 3.5 xingguo 1.9 lianhua 1.7 yongxiu

10 1.8 nanchang 2.3 jiujiang 2.6 poyang 2.2 fengcheng 3.5 yihuang 1.8 nanfeng 1.6 tonggu

11 1.8 Ji’an 2.3 shanggao 1.7 wuning 2.1 yugan 3.4 xinfeng 1.8 zixi 1.4 congren

12 1.7 xinjian 2.1 poyang 1.7 Jing’an 1.8 lichuan 2.9 ganxian 1.7 qianshan 1.3 congyi

13 1.7 nancheng 1.9 Ji’an 1.6 fengxin 1.8 nancheng 2.5 An’fu 1.6 yihuang 1.2 jingangshan

14 1.6 An’fu 1.8 xiajiang 1.0 duchang 1.7 Ji’an 1.7 quannan 1.6 jiujiang 1.1 shanggao

15 1.5 Congren 1.8 taihe 0.7 shanggao 1.6 hengfeng 1.2 ningdu 1.5 Gao’an 1.1 dexing

16 1.5 Wan’an 1.7 Jing’an 0.7 An’yi 1.6 shangyou 0.6 nanfeng 1.5 xingan 1.1 dingnan

17 1.5 taihe 1.6 xinjian 0.3 xingan 1.6 zixi 0.4 guangfeng 1.5 lichuan 1.0 yushan

18 1.5 nanfeng 1.6 ruichang 0.3 yifeng 1.6 leping 0.3 lianhua 1.4 jinxi 1.0 taihe

19 1.4 fengcheng 1.6 fengxin 0.3 leping 1.5 jinxian 0.3 yongfeng 1.4 yongxiu 1.0 yiyang

20 1.4 dongxiang 1.6 yongxin 0.2 nancheng 1.5 wannian 0.3 An’yuan 1.3 wuning 1.0 nanchang

Note: LQ denotes for location quotient.

Data source: Jiangxi Bureau of Statistics. 2008. Jiangxi Statistics Yearbook 2008. China Statistics Press.

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(continued) Fruit Meat Milk Eggs Aquatic product Forestry areas

LQName of county LQ

Name of county LQ

Name of county LQ

Name of county LQ

Name of county LQ

Name of county

1 32.33 nanfeng 3.67 xingan 27.13 yudu 9.81 nanchang 2.64 nanchang 4.83 tonggu

2 17.82 xunwu 3.63 shanggao 7.66 luxi 8.06 De’an 2.48 yongxiu 4.77 zixi

3 10.10 Jing’an 3.07 dingnan 5.75 xinjian 3.55 An’yi 2.46 jinxian 4.15 Jing’an

4 9.94 An’yuan 2.46 dongxiang 5.21 guangchang 3.27 longnan 2.36 shanggao 3.44 congyi

5 4.02 quannan 2.45 zhangshu 0.89 jinxi 2.98 taihe 2.31 hukou 3.24 quannan

6 2.93 jinxi 2.26 congren 0.73 lichuan 2.56 yifeng 2.16 jiujiang 3.12 fuliang

7 2.91 yongxiu 2.24 yujiang 0.67 huichang 2.31 jinxian 1.99 pengze 2.89 jingangshan

8 2.80 xinfeng 2.22 nanchang 0.56 ningdu 2.31 nancheng 1.97 xinjian 2.77 fuyuan

9 1.97 xingan 2.08 Gao’an 0.40 zhangshu 2.25 guangfeng 1.97 xingzi 2.51 yihuang

10 1.72 congyi 1.85 yifeng 0.37 jinxian 1.96 yujiang 1.92 An’yi 2.34 yifeng

11 1.70 dayu 1.61 dayu 0.32 guangfeng 1.71 congren 1.84 xiajiang 2.31 dexing

12 1.57 ningdu 1.56 ningdu 0.29 ruijin 1.70 fengcheng 1.73 zhangshu 2.21 wuning

13 1.53 ruijin 1.48 longnan 0.29 fengyi 1.45 guixi 1.71 duchang 2.15 An’yuan

14 1.40 longnan 1.45 An’yi 0.25 longnan 1.36 xinjian 1.68 wuning 2.12 dingnan

15 1.37 nancheng 1.42 taihe 0.24 tonggu 1.22 An’yuan 1.64 ruichang 2.12 xunwu

16 1.28 huichang 1.39 xinjian 0.23 huichang 1.22 fengyi 1.64 poyang 2.04 An’fu

17 0.89 yudu 1.39 xunwu 0.18 nanfeng 1.18 dongxiang 1.57 zixi 1.88 Le’an

18 0.79 dingnan 1.32 An’fu 0.17 yiyang 1.13 zhangshu 1.55 nancheng 1.87 xiajiang

19 0.77 xiajiang 1.28 fenyi 0.13 nancheng 1.11 nanfeng 1.51 lichuan 1.87 nanfeng

20 0.77 fengxin 1.26 jishui 0.09 yujiang 1.02 shanggao 1.41 fengcheng 1.87 lichuan

Note: LQ denotes for location quotient.

Data source: Jiangxi Bureau of Statistics. 2008. Jiangxi Statistics Yearbook 2008. China Statistics Press.

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1.1.6 Quality control and safety of agricultural products in Jiangxi Jiangxi province has been making efforts to improve the quality and safety of agricultural products. By the end of 2008, there had been over 300 provincial level agricultural standards, 250 prefecture level agricultural standardized technical specifications, and 500 industrial standards of agricultural products being developed to control and guarantee the quality and safety of agricultural products and the processing in the process from agricultural product production, to processing, packing, and sales. In addition, a series of agricultural product quality standards in accordance with the national industrial and corporate standards, including grain, oil crops, cotton, jut, tobacco, fruits, tea, vegetables, livestock, poultry and aquatic products, have been implemented in agricultural production of Jiangxi Province. Comprehensive standardized management has been practiced for a group of products of local specialties including Nanfeng tangerine, Xinfeng navel orange, Guangchang white lotus, and Congren chicken.

In order to demonstrate the application and extension of the developed standards, more than 50 agricultural standardization demonstration zones, including 28 national level demonstration projects, being established in Jiangxi. In 2008, 150 agricultural production areas were selected to be built into agricultural standardization demonstration zones, among which 82 were for crop farming, 23 for pig raising, 6 for cattle (sheep and goats) raising, 16 for poultry raising, 23 for aquatic product raising. Advanced international agricultural standardized technologies such as GAP have been actively applied to raise the level of agricultural standardization. At the end of 2008, the number of production bases of pollution-free agricultural products increased to 676 covering 200 thousand farmers’ households. The efforts made by Jiangxi come up with fruitful results. Jiangxi ranked number 1 in the number of organic food in the country and number 7 in the number of green food in the country. Jiangxi has also PRC’s largest production base of organic green tea, organic Camellia Oil, green food navel orange, green food fresh water products, green organic mineral water and purified water. There’re now more than 442 green and organic food production bases with environmental supervision coverage of 43 million mu, and 31 standardized production bases of green food raw materials covering 8.5 million mu land areas and 1 million farmers’ households. Moreover, the contribution of green food to the agricultural income growth and upgrading of the industry has also increased accordingly. At the end of 2007, the sales income of green food amounted CNY13.17 billion, accounting for 8% of the gross agricultural output value and the food industry output value (excluding tobacco industry output value) together. The green food contributed to the foreign exchange by CNY140 million. By the end of 2007, 91 green food enterprises had become the provincial leading enterprises of agricultural industrialization,

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accounting for 33.2% of the total provincial leading enterprises. Among them 10 enterprises had become the national leading enterprises of agricultural industrialization, accounting for 66.7% of the total national leading enterprises in the province. It is expected that the green food would play more important roles in the agricultural development in Jiangxi in the coming years. In the “five years” plan for Agricultural Industrialization in Jiangxi, the government planed to develop ten agricultural industrialization enterprises with sales income over CNY1 billion and one hundred enterprises with sales income more than CNY100 million. It was planned that green food enterprises would account for 70% of the ten enterprises with sales income over CNY1 billion, and 39% of the 100 enterprises with sales income more than CNY100 million.

In 2008, 96.7% of the monitored vegetables met the standard as for the content of agricultural chemical residue; 100% of the monitored fruits met the standard as for the content of heavy metal and farm chemical residue, and100% of the monitored live pigs met the standard as for the content of clenobuterol and ractopamine.

1.2 Non-agricultural sector development in rural Jiangxi The investigation of the development of non-agricultural sectors in rural

Jiangxi confronts with the constraints on data availability. There are only limited data available for the study.

1.2.1 Employment in the non-agricultural sectors in rural Jiangxi There exists no special statistics on rural non-agricultural sector

employment available in the PRC. The alternative way to estimate the scope of non-agricultural sector employment in rural areas is to use concerned data in the study. The official statistics yearbook published the employment data on rural enterprises. It is possible to use the employment data for rural enterprises to estimate the employment of non-agricultural sectors in rural Jiangxi because there have been only very small part of the rural enterprises working in agriculture based on the historic data available.

The employment in rural enterprises in Jiangxi had increased from 5.663 million in 1995 to 6.032 million in 2007, or 6.51% (Table 8). The change in rural enterprise employment has been the results of a series of factors. The privatalization of the township and village enterprises (TVEs) started from 1996. In only one year the employment in TVEs in Jiangxi declined from 4.4 million in 1995 to 3.09 million in 1996, which recovered after 2006. The employment in the private enterprises in rural Jiangxi since 1995 has been increasing in general but fluctuated over time because of the effects of the change in macro economic policies and environments. There had been two big shocks in the employment of rural private enterprises from 1995 to 2008 in Jiangxi. One was in 1998 and another in 2004. The employment in rural private enterprises in Jiangxi in the two years reduced

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38,000 and 123,000 respectively, or 19.8% and 24.3%. The change in the employment of individual enterprises in Jiangxi during the period has experienced a long period of steadily declining from 1997 to 2004 and a recovery since 2005. The number of employment in the individual enterprises in rural Jiangxi peaked in 1997 when the enterprises provided employment 1.18 million and dropped down to 623,000 by 2004. It increased to 776,000 in 2008. There has been somehow linkage between the change in the employment of rural individual enterprises and the movement of rural migrants. When rural migrants increased the employment in rural individual enterprises declined and when rural migrants stabilized more new individual enterprises increased.

Table 8: Chang in employees of rural enterprises in Jiangxi over

1995-2008 Employees Proportion of total rural labors

Rural enterpr

ises

Of which TVEs

PEs IEs Rural

enterprises

Of whichTVEs

PEs IEs

1995 566.3 440.1 13.9 112.3 36.39 28.28 0.89 7.22 1996 443.0 308.8 17.9 116.3 28.70 20.01 1.16 7.54 1997 446.7 309.7 19.2 117.8 28.81 19.98 1.24 7.60 1998 411.9 303.2 15.4 93.3 26.72 19.67 1.00 6.05 1999 433.0 306.9 20.6 105.5 28.01 19.85 1.33 6.83 2000 405.7 307.2 20.1 78.4 26.22 19.86 1.30 5.07 2001 411.2 309.6 22.8 78.8 26.49 19.95 1.47 5.08 2002 438.2 330.8 29.6 77.8 27.78 20.97 1.88 4.93 2003 466.1 346.1 50.6 69.4 29.34 21.79 3.19 4.37 2004 459.8 359.2 38.3 62.3 28.64 22.37 2.39 3.88 2005 503.7 394.9 45.2 63.6 30.73 24.09 2.76 3.88 2006 562.7 442.1 52.6 68.1 34.04 26.74 3.18 4.12 2007 603.2 472.9 58.0 72.2 35.93 28.17 3.46 4.30 2008 588.2 417.0 93.6 77.6 34.50 24.46 5.49 4.55

Note: TVE: township and village enterprise; PE: private enterprise; IE: individual enterprise. Data source: NBS. China Statistics Yearbook. 1996 through 2009. China Statistics Press. As the consequence of the development in rural enterprises in Jiangxi, the change in the proportion of employment of rural enterprises to rural labor force has also undergone the similar change. The proportion of rural enterprises employment declined in 1996 and had been relatively stable in

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eight years since 1996. It got recovery in 2006 and restored to the level in 1995 by 2007. The employment in rural enterprises accounted for 35.93% of the total rural labor in Jiangxi in 2007. The change in the employment in TVEs has played a dominating role in the movement of the proportion of rural enterprises in Jiangxi.

Compared with the national average and other central provinces, the growth of employment in rural enterprises in Jiangxi from 1995 to 2008 had been very slow. During the period, the employment in rural enterprises in the country as a whole had increased 24.48%, which was 5.3 times as high as that for Jiangxi (Table 9).

Table 9: Growth rate of employees of rural enterprises in central region

in 1995-2008(%)

Rural

enterprises

Of which TVEs PEs IEs

The country as a whole 24.48 17.32 467.30 -28.39 Shanxi 4.72 0.76 261.58 -32.67 Anhui 8.71 -4.01 1,075.94 9.54 Jiangxi 3.87 7.46 317.43 -35.67 Henan 53.91 48.10 351.82 8.82 Hubei 2.12 -17.21 135.63 -58.44 Hunan 23.29 35.95 278.50 -65.07

Data source: NBS. 2009. China Statistics Yearbook. China Statistics Press. The estimation on the employment in non-agricultural sectors in rural Jiangxi presented above was based on the data in the China Statistics Yearbook. It will be cross checked using the national 2nd agricultural census data. It showed that there were 68.45% farmers’ households in Jiangxi engaged in full time agriculture in 2006 (Table 10), which means there were at most 31.55% farmers’ households likely engaging non-agricultural employment.

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Table 10: Composition of farmers’ households by employment in 2006 (%)

Region

Full time self-employ

ed farmer

Self-employed farming for most

of the time

Self-employed off-farm for most of the

time

Full time self-emplo

yed off-farm

Employed

National 75.30 4.31 9.53 3.68 7.18 Shanxi 71.91 2.76 13.16 3.70 8.47 Anhui 76.41 3.24 12.73 2.80 4.83 Jiangxi 68.45 9.15 13.22 4.22 4.97 Henan 80.72 5.64 10.19 1.35 2.10 Hubei 75.69 4.87 9.51 4.04 5.89 Hunan 69.64 9.18 13.10 3.38 4.69 Central region 75.08 5.85 11.69 2.89 4.50

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press. It was known from the census that there were 57.13% rural labors in Jiangxi engaged in full time agricultural employment and 33.31% in migrating of which 73.9% migrated for over ten months in 2006. The employment in non-agricultural sectors in rural Jiangxi at most could be 17% of the total rural labors. If all migrating employment were assumed working in non-agricultural sectors, the total employment in non-agricultural sectors in rural Jiangxi, including locally employed and the migrated, accounted for about 43% of the total rural labors in 2006. It is not fore sure whether 57.13% rural labors engaged full time in agricultural employment.

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Table 11: Employment composition by sectors of rural labors in 2006 (%) Jiangxi Shanxi Anhui Henan Hubei Hunan Central region National Crop planting 55.2 58.5 51.9 61.2 57.6 57.5 57.4 57.5 forestry 0.5 0.3 0.4 0.1 0.2 0.5 0.3 0.4 livestock 1.1 1.6 0.6 2.1 0.9 2.5 1.6 2.5 Fishery 0.2 0.0 0.2 0.1 0.8 0.3 0.3 0.5 Agricultural service 0.1 0.1 0.1 0.2 0.2 0.1 0.2 0.2 Mining 0.9 4.2 0.6 1.0 1.0 1.0 1.2 0.9 manufacture 19.7 5.9 12.2 9.9 14.3 15.1 12.8 13.0 Electricity, gas and water 0.3 0.6 0.4 0.3 0.3 0.3 0.4 0.4 Construction 6.1 4.9 10.7 8.8 6.6 4.8 7.4 7.0 Transportation, storage and post service 1.3 4.6 2.2 1.8 1.5 1.5 1.9 2.0 Wholesale and retail 2.0 3.4 4.6 2.5 2.1 2.0 2.8 3.0 Hotel and restaurant 0.9 2.8 2.5 1.5 1.5 1.2 1.6 1.7 Residence service and other services 3.5 7.0 6.7 4.7 6.3 5.5 5.5 5.3 others 8.2 6.1 6.9 5.8 6.8 7.7 6.8 5.7 Migration 33.3 15.3 36.5 22.9 32.6 31.1 29.0 23.8

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press.

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1.2.2 The contribution of non-agricultural sectors in rural Jiangxi to farmers’ income The net income sources of farmers’ households are regrouped to estimate the contribution of local non-agricultural sectors. We take the income from household run non-agricultural activities and that from employment provided for the enterprises within the resident townships and resident counties as income contributed by rural non-agricultural sectors. After the regrouping, the non-agricultural sectors in rural Jiangxi contributed 15.16% of the net income in 2008 (Table 12), which was the third largest source of income following the income in agriculture and that from migrated employment. In addition, a part of the income which was included in the employment earnings earned within province but out of the resident counties can be also from the non-agricultural sectors in rural Jiangxi. Assuming 50% of that income was from rural non-agricultural sectors, the total contribution of non-agricultural sectors in rural Jiangxi to farmers’ net income in 2008 would be 16.08%. Table 12: Sources and composition of farmers’ net income in Jiangxi in

2008 Sources Amount (CNY) Composition (%) Agriculture within the county 2086.01 44.41 Non-agriculture within the county 712.23 15.16 Other earnings from within township 335.11 7.13 Migrating employment 1,105.86 23.54 Government services 180.18 3.84 Government transfer payment 100.44 2.14 Others 177.35 3.78 Total 4,697.19 100.00

Data source: Jiangxi General Survey Department. 2009. Annual Report of Farmers’ Households in Jiangxi. 1.2.3 The development of agricultural industrialization dragon head enterprises in Jiangxi In recent PRC, agricultural industrialization dragon head enterprises has been popularly used as a term to refer to the leading enterprises that have vertical linkage with farmers’ households and agricultural companies by providing services such as information, technologies, sales, processing and logistics. The dragon head enterprises are titled as national, provincial, prefecture or county depending on their scales. In 2008 there have been 407 provincial and national level dragon head enterprises in Jiangxi, of which 27 was of national title. These large dragon head enterprises with

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fixed capital amounted CNY19.1 billion had sales income of CNY106 billion in 2008, of which 86 billion were related to agriculture. Among 407 enterprises, there were 18 enterprises with sales income over CNY1 billion and 160 enterprises with sales income over CNY100 million.

There have been 4.6 million farmers’ households being linked with the 407 dragon head enterprises in 2008, 3.36 million of which were linked by means of contracted purchasing. It was estimated by the concerned government department that about a half of the farmers’ households in Jiangxi had been directly or indirectly linked to dragon head enterprises.

There exist some problems in the agro-business development in Jiangxi. First, Jiangxi has fewer number of national level agro-industrialization dragon-head enterprises. There were 872 nationally identified dragon-head enterprises in the PRC in 2007. In average, each province had 28.12 national dragon-head enterprises then. But Jiangxi province had only 15 national ones. In addition, Jiangxi has had much fewer dragon-head enterprises of larger size than other provinces. For instance, Jiangxi had only 1,350 dragon–head enterprises with sales income over CNY5 million while Shandong and Henan had 8,790 and 5,000 respectively in 2007. Second, no well functioned mechanisms have been established for linking the development of dragon-head enterprises to the farmers’ households in Jiangxi. Only less than 40% of dragon-head enterprises linking with farmers take the form of formal contracts. Third, most dragon-head enterprises in Jiangxi have been in lower procession levels, therefore, the value added generated by the enterprises was very limited. For instance, over 90% of the rice processed by the dragon-head enterprises has been simply preliminary processing. Fourth, most so called dragon-head enterprises are of similarity in terms of production size and technology cannot support one another. For instance, Fuliang and Wuyuan are two largest counties in tea production geographically closing to each other. There have been a dozen of small dragon heads in tea production in the two counties. The case for dragon-head enterprises for processing camellia seed oil in Jiangxi indicated that the development of dragon-head enterprises has been in disorder in some areas. The annual output of camellia seed is about 200,000 ton in the province. But the enterprises have had capacities for processing the camellia seed one time more than the output.

1.3 Rural labor mobility and vocational training 1.3.1 The features of rural labor mobility in Jiangxi Jiangxi had 33.1% of rural labors migrating in 2006 (Table 13), which

was ranked number 2 in the country. Compared with the national average and other central provinces, the rural labor mobility in Jiangxi has some obvious features.

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Table 13: Migrating employment of rural Jiangxi and other central provinces (2006)

PRC Shanxi Anhui Jiangxi Henan Hubei Hunan Central region 1. Geographic distribution Out of residence township within the county 19.18 47.16 9.32 12.09 16.47 9.56 12.45 13.53

Out of residence county within the prefecture 13.76 25.68 6.86 5.86 12.38 9.78 10.14 9.91

Out of the residence prefecture with the province 17.65 17.39 6.08 4.11 12.19 11.46 8.32 9.03

Other provinces 49.01 9.75 77.65 77.84 58.78 69.07 68.90 67.40 Overseas 0.41 0.01 0.10 0.10 0.18 0.12 0.19 0.14 2. Distribution of migrating time Within 1 month 0.37 0.44 0.25 0.30 0.36 0.38 0.41 0.34 2-3 months 3.12 5.36 2.94 1.99 3.72 2.00 2.45 2.84 4-6 months 12.68 23.01 14.55 9.00 19.15 8.84 10.36 13.44 7-9 months 21.61 31.21 28.20 14.78 31.57 18.28 13.99 22.82 Over 10 months 62.21 39.97 54.06 73.92 45.21 70.50 72.79 60.56 3. Distribution by sectors Agriculture 2.74 1.72 1.70 2.57 2.31 2.07 2.37 2.15 Mining 1.84 7.97 0.69 1.35 1.59 2.21 1.25 1.64 manufacture 32.23 9.42 27.28 49.66 27.32 39.44 41.31 34.38 Electricity, gas and water 0.95 1.80 0.82 0.60 0.84 0.81 0.83 0.83 Construction 21.74 17.75 24.30 14.76 28.25 17.14 13.13 20.26 Transportation, storage and post service 3.72 8.55 3.95 1.97 3.43 2.36 2.71 3.23

Wholesale and retail 5.28 7.38 8.01 2.95 4.82 3.39 3.64 4.93 Hotel and restaurant 4.85 11.52 5.55 1.89 4.14 3.60 2.99 4.13

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Residence service and other services 12.61 18.98 14.17 7.05 11.91 13.89 12.85 12.58

others 14.03 14.90 13.53 17.22 15.38 15.09 18.93 15.86 4. Distribution of migrants by ages 20 years old and below 16.16 16.16 15.51 16.56 18.50 20.91 17.50 17.66 21-30 36.47 33.56 34.20 41.06 35.40 37.31 37.78 36.60 31-40 29.49 27.37 32.79 29.86 27.55 27.35 29.10 29.32 41-50 12.76 15.87 12.31 9.77 12.61 11.17 11.62 11.86 51-60 4.42 6.14 4.31 2.43 5.16 2.81 3.45 3.91 Over 60 0.71 0.89 0.87 0.33 0.79 0.46 0.56 0.65 5. Distribution by education attained Illiterate 1.22 0.44 2.61 0.70 0.90 0.74 0.43 1.12 Primary school 18.73 13.43 20.46 22.68 11.92 16.70 13.53 16.45 Junior high school 70.06 76.14 71.31 68.71 77.55 72.45 72.12 72.97 Senior high school 8.72 8.96 4.84 7.07 8.31 9.24 12.56 8.40 College and above 1.27 1.02 0.78 0.84 1.31 0.87 1.36 1.05

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press.

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First, more rural migrants migrated out of the province. There were 77.84% of rural migrants in Jiangxi migrating out of the province, ranked position two just after Guizhou. The proportion of rural migrants migrating out of the province in Jiangxi was 28.8 percentage points higher than the national average and 10.4 percentage points higher than the average of central regions. Higher proportion of rural migrant migrating out of the province in Jiangxi, demonstrated that the rural labors in Jiangxi had relatively higher capacities in finding jobs outside in the one hand, which is likely associated with the location of Jiangxi closing to the two largest economic growth zones, the Yangtze River Delta economic zone and the Pear River Delta economic zone. It also makes the employment in rural Jiangxi highly dependent on the demand of other provinces for rural labors and therefore more fluctuating. Second, more rural migrants living out of home. There were 88.7% of rural migrants in Jiangxi living out of home for over seven months in 2006, 73.92% rural migrants living our of home for more than ten months. The proportion of rural migrants living out of home over ten months in Jiangxi was 13.4 percentage points higher than the average of central region. Third, migrating employment in Jiangxi was highly concentrated in the manufactory sector. There were about one half (49.92%) rural migrants in Jiangxi employed in manufactory sectors, which were 17.4 and 15.3 percentage points higher than the national average and the average of central region. Such a sector distribution of rural migrant’s employment in Jiangxi may help the migrants accumulate techniques and experiences which may be useful when they go home for business in the one hand. It may enable the employment of rural migrants in Jiangxi be easily affected by the change of other provinces in manufactory sector development in the other hand. The change in international market also affects the demands for migrant employment in Jiangxi because a large part of migrated employment has been in the coastal regions where economies have been export dependent. Fourth, rural migrants in Jiangxi are of younger age in average and retired earlier. The rural migrants with age from 20 to 40 years old accounted for 87.5% of the total rural migrants in Jiangxi, which was higher than any other central provinces. The migrants aged 20-40 accounted for 43.4% of the rural labors with same age in rural Jiangxi. If the labors with the same age working in the local non-agricultural enterprises are counted in the remained labors in rural areas in Jiangxi must compose mainly of the old age labors. It may influence the application of new agricultural technologies and the improvement in the competitive capacities of agriculture in Jiangxi. Another issue coexisted with the younger age of rural migrants in Jiangxi is that the rural migrants retired earlier from the migrating labor market. In spite of lacking lifecycle data on migrants, it is possible to use the cross section data to estimate the retiring age of the rural migrants. There were only

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12.53% rural migrants with age older than 40 years old and the migrants with age over 50 accounted for only 2.76% in Jiangxi. This implies that most of the rural migrants in Jiangxi retired from migrating labor market after they were over 40 years old and had to go back home in Jiangxi. It will bring about two issues. One is the government should be ready for dealing with the livelihood, employment, social service and social protection of the retired migrants in the near future. Another is how to make use of the retired and experienced rural migrants to serve for the rural development in Jiangxi. Fifth, the majority of rural migrants in Jiangxi had attained education in primary school or junior high school. The rural migrants with primary and junior high school education attainment accounted for 22.68% and 68.71% of the total rural migrants in Jiangxi in 2006. These rural migrants had almost had not any professional skills before they migrated and therefore their jobs can easily be replaced. Providing vocational training services for these rural migrants does not only affect the employment and living of them but also influence the choice of rural development strategy in Jiangxi. 1.3.2 The effects of financial crisis on rural migrated employment in Jiangxi

Affected by the recent financial crisis, some rural migrant workers from Jiangxi province begin to return home. According to the estimation by the Office of Labor and Social Security of Jiangxi Province, from the beginning of the financial crisis in September 2008 to 22 January 2009, 1,554,800 migrants returned home, accounting for 23.54% of the total migrants. Among the 5,286,100 rural migrant workers who work outside the province, 1,385,500 of them returned home, accounting for 26.21%. The survey found that among the returned laborers, those who came back as a result of the temporary shutting down of the enterprises made up one third of the total number of returned labors. 10.2% of the returned laborers was attracted back by the favorable policy of promoting employment in Jiangxi province; 4.84% of the returned laborers planned to start their own business at home; and 55.35% came back mainly for the Spring Festival.

1.3.3 Current situation of Vocational Training for Rural Laborers in

Jiangxi Province The data from the Jiangxi General Survey Department showed that

17.3% of the rural laborers took part in vocational trainings for rural laborers in 2008. It is found that 46.76% of the rural laborers that have not participated in the vocational training are willing to receive vocational training (Figure 4). Around 23% of them thought that the vocational training was unnecessary; 22% of them claim that there were no vocational trainings provided at their localities; and 5.5%, 4% and 2.3% of them responded that they had no spare time, or that the content of the vocational training was not

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needed or that they couldn’t afford the training fee.

Figure 4: Causes for Not Particiapting in Training

27%

4%

5%

22%2%

40%

No need

Unsuitable training contents

Time not available

Inaccessible locally

Not afford to pay the cost

Others

Data source: own survey.

It is found that 63.3% of the vocational training had been initiated by the

rural labors themselves. About 16.6% of the trainings were organized by the government and 20% of them were organized by the enterprises.

Considering the time of the various vocational trainings for the rural laborers, the research team found out that, on-the-job training is the one with the longest time. There are in all 217 days (Table 14), which almost equals to the number of working days of one year. So it can be understood that rural laborers are learning by doing, or that they being trained by their mentors.

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Table 14: Time spent on the training programs Training program Respondents

% Time for training

(days) 1. Training Program for Rural Migrating labors 5.71 41.25

2. Training Program for Rural Applied Technologies 4.29 6

3. Sunshine Training Program 2.86 30 4. On the Spot Training 15.71 217.11 5. Other training 71.43 103.87 Total 100.00 Data source: own survey.

Using 10 points scale for evaluating the roles of training, it is found from the field survey that the training received by the rural labors was more useful for finding a job than for doing business, farming, or earning higher wages, and 4.05% of the respondents thought training had little effect (Table 15).

Table 15: Perception of the respondents of the roles of training Helpful for business

Helpful for farming

Helpful for acquiring jobs

Helpful for earning higher wage

Useless

% Average score % Average

score % Average score % Average

score %

22.97 4.96 14.86 3.85 51.35 7.42 6.76 6.94 4.05 Data source: own survey.

1.3.4 Characteristics of Rural Vocation Training in Jiangxi Establishing leadership of the organization in rural vocation training. In

2007, the provincial joint conference of rural laborers’ transfer employment headed by a deputy governor and composed of 33 member departments has been founded by the provincial government. The Conference makes overall plans for the provincial policy-making of rural laborers’ transfer, organization and coordination. The joint conference mechanism helped the training achieve so called “Six Unifications,” which refers to the unification of transfer training plans, the unification of recognition and authorization of training institutions, the unification of fund arrangements, the unification of the printing and utilization of training coupons, the unification of skill appraisal, and the unification of supervision and management.

Coordinating the funds for rural vocation training. Following the principle of “Unchanging Fund Source, Unchanging Fund Utilization,” joint conferences of the same level government coordinates the fund arrangement plans and prints and distributes unified training coupons. Provincial departments determine the amount of training coupon of local cities and counties, according to the average subsidies standard of CNY300

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per person. Strengthening the supervision mechanism of vocational training. A set

of policies and documents have been formulated to specify the procedures and requirements of the printing, distribution, utilization, supervision and management of the training coupons and to establish the working system of social publicity, class opening and verification, graduation and examination, employment tracking and account management.

Carrying out the unified recognition system for rural laborers’ training institutions.

Carrying out the bidding system for rural vocational training. 1.4 Current status of logistics of agricultural products in Jiangxi Development of rural logistics can create jobs for rural working age

population in the one hand, and facilitate and support the development of agriculture by expanding the borders of market and reducing the transaction costs in the other hand. Here the analysis on rural logistics development for this study is focusing on the logistics of agricultural products, in particular, the fresh fruit and vegetable.

1.4.1 Participators The logistics of fresh agricultural products are of unique features in

production and consumption, and therefore, involve multi-participators, multi-channels. Based on the field survey, there were multiple actors participating in the logistics of agricultural products in Jiangxi, including farmers, agents, processing enterprises, producers’ cooperatives, wholesalers, retailers, transporters, and other logistics services providers.

Farmers are not only the major producers of agricultural products but also the start point of the agricultural product logistics (APL). In the PRC, household farms are the main producers, which causes disperse small-scale, homogeneous production within restricted area. But the economies of scale only achieved by large scale or efficient and effective conjunction of partners in value chain of agricultural products, since lack of information exists, farmers make decisions on experiences instead of under the direction of market demand forecasting, passively attend logistics after harvest, possible result in disorder if variety, output or quality is out of control, for example, in 2006, 2007, the difficulty in selling of the citrus in south of Ganzhou City emerged, in 2008, culling sow in Shanggao County appears because of meat price volatility.

Agents played very important roles in the APL in Jiangxi by visiting each farmer’s households to reduce individual farmer’s transaction cost and logistics cost. According to the household questionnaire survey specially made for this study, 67.7% of farmers sold their products through the agents, 7.5% sold the products in the local fair, only 0.86% of farmers sold their

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products via contracted purchase of processing firms. Wholesalers in production place or sales places play important role in

current fresh fruits and vegetables logistics system, as the mainstream of logistics model, by means of organizing small-scales supply to meet large-scale market demand, and minimizing the time from farmers to consumers to decrease decay possibility. Since the two factors won’t change in short-term, wholesalers will be important in long-term, even if specialized cold storage, cold transport get more developed. For example, 90% fresh fruits and vegetables in Nanchang city is supplied through the Shenzhen Agricultural products’ wholesale Markets.

All kinds of retailers such as supermarkets, greengrocers’ shops, are responsible for delivering agricultural products to final consumers. Although bazaars in counties and cities are still the main channel for urban residents’ procurements, supermarkets will eventually become the dominant participator because of its advantages.

1.4.2 Channels At present every logistics channel is spontaneously formed with proper

reasons and environment, taking an overview of the current fresh fruits and vegetables logistics channels, the following types can be summarized:

Random type Random type of the APL refers to the unstable relationship existed

between the participators, including “farmers--bazaars”, “farmers--bazaars in production origin—bazaars in sales markets — all kinds of retailers”, “farmers —agents--retailers”, “farmers—agents—wholesalers in sales markets--retailers”, etc.

“Farmers--bazaars” is the most traditional way of the APL, after picking fresh fruits or vegetables, farmers send their products to nearby bazaar and directly sale to consumer, no logistics equipment or technology is necessary in this case, which can be completed by farmers own, since supermarket expand move slowly into counties, and traditional purchasing habits support, “Farmers--bazaars” will continuously exist for some time.

Contract type Contract type of the APL refers to the stable relationship built between

the participators by signing contracts, including “farmers—cooperation organizations—wholesalers in sales market--retailers”, “farmers — cooperatives -- retailers”, “farmers--processing enterprises--retailers”, “farmers—cooperation organizations--processing enterprises--retailers”, etc. This type of channels exists widely in the food processing chain using agricultural products as raw materials because it reduce marketing risk for farmers and other participators. It’s worth noting that when market risk is beyond expectation, enterprises with higher control ability will unilateral break the contract to avoid risks but bring more risks to farmers. For

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example, in Xinfeng County, in 2008, because of “Maggots event”, financial crisis and increase of supply, export of citrus declined, price went down, some processing enterprises, wholesalers and retailers gave up home procurement and broke the contract, farmers have to self-transport goods to markets and suffered lower price caused by competition among farmers, the price reduced to lowest point of history damaged benefits of farmers.

TLP type TLP (Chart 1) stands for third party logistics which provide professional

logistics services for farmers and other participators in the food value chain. But professional TLP in Jiangxi still rarely exists.

Chart 1: TLP in fresh fruits and vegetables logistics system

Note: C.O refers to cooperatives; P.B refers to production bases; P.E refers to processing enterprises.

1.4.3 Functional business The function business of the fresh fruits and vegetables logistics,

including picking, sorting, grading, packaging, transportation, distribution, loading and unloading, handling, processing, distribution, and other functional activities, exist in every part of logistics.

In Jiangxi, these businesses are accomplished by single participator independently at a separation status without account of the maximization of interests for the whole industry chain. For example, vegetables flow out of

Farmers

TLP

TLP

Retailers

P.B

P.E

Wholesaler

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Jiangxi usually stack directly on the agriculture vehicles to bazaars or wholesales market after simple banding or plastic packaging by employed drivers, if the transaction didn’t go well (time wasted), the price will drop sharply because of no storage equipment, the flexibility left to farmers is restricted. Another example is from the interview of the Shenzhen agricultural products wholesale market in Nanchang, one market manager said “if one truck of fresh pepper arrived at market before 8:00, the profit will be CNY 10-20 thousand, if arrived later than 8:00, the loss will be CNY10-20 thousand.” So the integration of every logistics business is vital to value keeping or increasing during logistics process.

2. Rural Physical Infrastructure and Village Renovation 2.1. Rural physical infrastructure 2.1.1 Irrigation and water supply infrastructure in rural Jiangxi Jiangxi has been of relatively better irrigation infrastructure in terms of

the sources of irrigation water, the safety of irrigation provided in normal years and the sources of investment of irrigation infrastructure in 2006 compared with most other central provinces (Table 16). There were only 1.2% villages without sources of irrigation in Jiangxi. Around 87.6% of the villages in Jiangxi can access to reliable irrigation water.

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Table 16: Rural irrigation and water supply infrastructure in Jiangxi and other central provinces in 2006（%）

PRC Shanxi Anhui Jiangxi Henan Hubei Hunan Central region

% village with Water source mainly from surface 61.2 17.5 70.0 93.8 23.0 87.5 91.3 59.9 % village with water mainly from underground 27.8 31.9 28.3 5.0 67.6 4.6 5.0 27.8 % village without reliable water sources 11.0 50.6 1.7 1.2 9.4 7.8 3.7 12.4 % village with reliable irrigation 79.48 41.21 92.18 87.57 84.31 80.47 78.89 77.17 % village with pumping well 37.37 37.59 30.46 12.00 76.68 11.21 13.87 34.93 % village with ponds for irrigation 36.31 5.16 68.05 71.20 20.31 61.79 69.51 46.06 % village with pump station 18.02 4.97 29.39 31.12 7.48 38.98 26.03 20.81 Sources of irrigation infrastructure investment: Of which: mainly from the government 9.56 5.36 8.28 17.43 8.83 9.36 12.69 10.05

From collectives 13.39 9.82 16.64 17.89 10.70 17.58 13.52 13.59 From other sources 6.63 4.96 11.42 10.25 7.84 10.63 11.46 9.31 None 70.42 79.85 63.65 54.43 72.62 62.43 62.32 67.05 % households with tap water 48.6 68.1 19.5 17.6 27.7 28.6 25.6 28.5 % households with difficult in fetching water 10.3 14.4 3.9 6.5 5.0 18.5 15.0 9.6 Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press.

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Own field survey data showed that river and reservoir had contributed 35.1% and 30.7% of the irrigation water respectively (Figure 5). But the operation of the irrigation infrastructure in villages in Jiangxi seems not good because of lacking care and management. It is found from the village survey that 53.1% the irrigation infrastructure had been ageing and were lacking maintenance. There have been management arrangements made for the village irrigation infrastructure in 60% villages. It was reported that 11.11% villages had established special water management committees, 22.22% villages had assigned special persons to taking care of the irrigation facilities, 33.33% villages had signed contracts with specific farmers to take care of the irrigation facilities.

Data source: own survey.

Another survey of 160 farmers in 32 villages in 16 counties on the

opinion of farmers for investment for irrigation facilities showed that 40.04% of the respondents hope the government to take charge of the investment in irrigation infrastructure. 42.25% of the respondents thought it can be built by raising funds among villagers.

2.1.2 Rural transport and communication infrastructure In general, the rural transport and communication infrastructure in

Jiangxi has been in a better position compared with the national average and central province average. There were 97.7% villages and 82.8% natural villages accessible to motorable roads (Table 17) in 2006. Ninety five percent of the village roads connecting to other villages had been paved in Jiangxi, which was higher than any other provinces in central region. Around 99.4% villages and 95.9% natural villages had been connected to telephone in Jiangxi. Cell phones have been very popular in rural Jiangxi. Every 100 farmers’ households in Jiangxi had 65.6 cell phones and 93 telephones.

Figure 5: sources of irrigation water in Jiangxi35.10%

30.70%17.73%

14.00%

2.50% River Reservoir Ponds & dam Channels Pumping well

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Table 17: Rural transport and energy infrastructure in Jiangxi and other central provinces in 2006（%） PRC Shanxi Anhui Jiangxi Henan Hubei Hunan Central region

% village accessible to motorable roads 95.5 96.1 96.0 97.7 95.6 96.3 96.1 96.1

% natural village accessible to motorable roads 82.6 87.0 80.9 82.8 75.1 80.3 85.2 81.1

% villages with lights in the main roads 21.8 25.6 6.1 6.6 25.5 4.5 2.7 13.0

% Materials of village road surface Cement 35.2 40.7 23.4 59.7 34.8 42.6 32.1 37.2 Asphalt 26.3 32.0 30.4 7.4 51.2 19.7 7.3 26.7 Sand and stone 25.7 12.3 39.2 27.6 5.0 28.0 50.2 26.3 Bricks and stone 1.1 1.8 1.4 0.1 1.7 0.9 0.4 1.1 Others 11.7 13.2 5.6 5.2 7.3 8.8 10.0 8.7

% village connected with telephone 97.6 95.3 99.9 99.4 99.4 99.0 98.7 98.6

% natural villages connected with telephone 93.7 85.6 98.1 95.9 94.9 93.9 95.2 95.2

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press.

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The findings from the field survey are that almost all respondents (93%)

thought the investment for the roads linking villages should be provided by local governments. There were about 29% respondents willing to make contribution to the construction of roads within village.

2.1.3 Energy infrastructure There were 99.9% villages and 99.3% natural villages in Jiangxi

connected by electricity grid in 2006. But the fuel for cooking of farmers in Jiangxi was still dominated by firewood. Around 69% of farmers used firewood mainly as fuel for cooking. There were 25.1% and 5.1% households that mainly used coal and natural gas as fuel for cooking. Very few households used electricity and biogas for cooking in Jiangxi.

2.1.4 Housing infrastructure in rural Jiangxi The farmers’ households in Jiangxi had 37.6 square meters housing per

capita in 2008. About 64.8% housing in rural Jiangxi were reinforced concrete structure. There were only 0.4% farmers’ households in Jiangxi living in the leased houses.

2.2 Village renovation Village renovation in Jiangxi mainly refers to the improvement in the

physical infrastructure, living conditions and rearrangement of rural settlements within villages according to the agreed village development plans.

2.2.1 Waste treatment The waste in rural Jiangxi used to be put in wish before the NCCP.

With the sustained efforts made in village renovation in the NCCP villages, there have been obvious changes occurred. Most waste in the NCCP villages has been treated in one or other ways. Only 3.45% households still put waste without treatment (Figure 6). Around 52% waste has been collected by village cleaning persons and treated. There were 13.79% villages in which waste had been collected by garbage treatment station.

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Figure 6: Change in the Ways for Gabbage Disposal after NCCP

01020304050607080

Put at wish Collected fordisposal

Put tegether orin station

Burning Others

%

Before NCCP After NCCP

Data source: own survey.

It was reported that each village had 3.3 cleaning persons in charge of waste treatment and cleaning in the villages where waste had been collected by cleaning persons. The arrangement for wages of the village cleaning persons varies with villages. 59.67% villages collect money from each farmer’s household to pay the wages, 21% villages paid the wages with village collective income. The remained villages did not provide certainty answers on the source of funds. The garbage disposal is very important for keeping healthy environment in villages. Over a half of villages buried the collected garbage in villages (Figure 7).

Figure 7: Ways for Gabbage Disposal after Collection

0

10

20

30

40

50

60

Put together Bury aftercollection

Burn aftercollection

Other

%

61

Data source: own survey.

2.2.2 Roads connecting villages The inter-village road conditions in Jiangxi had been quite poor before

the NCCP started in 2005. Two thirds of the inter-village roads were soil roads. The situations have been changed significantly after 2005. It is found from the village questionnaire survey that 87.5% of the interviewed villages have upgraded the inter-village roads after the NCCP. Each village made investment CNY790,000 in the road improvement. 50.4% of the investments for roads came from the local government. About a half of the upgraded inter-village roads has been maintained by village committee or villagers’ groups.

2.2.3 Drinking water The change in drinking water in the NCCP villages after 2005 has been

in the largely increase of tap water. The investments made in improving drinking water supplying facilities were shared by the government, village collectives and farmers. Farmers have made about 40% contribution to the investments while local government provided 37.5% of the investment. The remained investments were from village committee and donations. About a half of the water supply facilities have been maintained by special persons or water users’ association. Farmers in the villages had to share the costs, which led to the increase of costs for drinking water.

2.2.4 Rural toilets There emerged significant change in the types and quality of toilets in

the NCCP villages. 99.33% of the interviewed households have used water flush toilets. The quality of toilets have also been improved by adopting the recommended structure equipped with septic tanks by the NCCP Leading Group offices, by which there is no longer stink smells in the toilets, and the fertilizer can also be used.

2.2.5 Decision making on village public affairs

There were more farmers participating in the decision making on village public affairs through the form “special discussions arranged for any special affairs”. It was reported that there were 47.06% interviewed farmers had participated in the discussion of public affairs in 2008.

3. The Status Quo of the Rural Public Service System 3.1 The supply of rural public service system and its overall

effectiveness With the implementation of long-term agricultural policies in favor of farmers and the promotion of rural development, supply of basic public services in rural Jiangxi has been greatly improved. At present, the main supply entities of public services in PRC's rural areas are government

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at all levels. Most of them are the functional departments of the grassroots level government (county and township).

In particular, the current system of rural public services, such as basic education, basic health, family planning, rural minimum living protection (Dibao), working skills training and provision of employment opportunities, work injury insurance system, has a strong regional spillover character. Infrastructure, cultural facilities, agricultural services, veterinary services, legal services, the protection of the rights and interests which have regional characteristics as public goods, should be provided and funded by local governments, especially county-level government. Farmers would be free of charge, but more of these services provided by the township government or village committee (group), such as transport services, passenger transport in rural areas should be guided by local governments, and funded by farmer groups or private sectors.

In order to learn the situations of the public services provided for farmers and the demands of farmers for the public services, a set of questions had been designed to capture the results which are presented in Table 18. It is found that the beneficial coverage of basic education, basic health care, rural minimum living protection, for which the state is the major provider, is relatively wide while the beneficial coverage of work skills training, work-related injury insurance system, employment opportunities is narrow. Infrastructure, agricultural services, veterinary services which mainly provided by local governments have a relatively broad beneficial coverage, the beneficial coverage of legal services, and the protection of the benefits is relatively narrow. The transport services and rural passenger services which guided by the local government, funded by farmers or private have a broad benefit coverage.

Analysis from the satisfaction degree of the received service, ranking from high to low take turns from rights and interests protection, work-related injury insurance, transportation services, essential education, veterinary services, employment opportunities, cultural facilities, cooperation in health care, rural subsistence allowances, legal services, infrastructure, agricultural technical services. From the priority order of the demand for services (the questionnaire assigns ordinal number, then the smaller the weighted average value is, the higher priority the farmers demand for), the order of demand for basic public services from farmers’ point is cooperative medical care, agricultural services, infrastructure, passenger transport in rural areas, rural subsistence allowances, compulsory education, transport services, cultural facilities, veterinary services, rights and interests protection, legal services, industrial injury insurance.

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Table 18: Utilization of and demand for public services in rural Jiangxi

Whether receive the services %

Whether are Satisfied % Demand priority Type of Public

Services yes no yes no score rank Veterinary services 39.70 60.30 39.70 60.30 7.50 11 Legal services 12.80 87.20 12.80 87.20 8.20 13 Agricultural technical services

50.76 49.24 50.76 49.24 2.94 2

Cooperative medical system

98.92 1.08 98.92 1.08 2.32 1

Passenger transport in rural areas

77.87 22.13 77.87 22.13 4.35 6

Employment opportunities

16.05 83.95 16.05 83.95 3.25 3

Work skills training 5.64 94.36 5.64 94.36 4.06 5 Transport services 40.56 59.44 40.56 59.44 5.56 9 Physical infrastructure

84.38 15.62 84.38 15.62 3.29 4

Cultural facilities 29.93 70.07 29.93 70.07 6.08 10 Dibao 36.44 63.56 36.44 63.56 4.45 6 Compulsory education

78.09 21.91 78.09 21.91 4.77 8

Work injury insurance system

7.81 92.19 7.81 92.19 8.48 14

Protection of the rights and interests

8.89 91.11 8.89 91.11 8.16 12

Data source: own survey. From the data we can find that, the public services that the villagers

have received insufficient mainly are those relating to right protection, such as work-related injury insurance, transportation services, veterinary services, employment opportunities, cultural facilities and other services, received higher degrees of satisfaction. This can be confirmed with the order that the cooperation of medical, agricultural services and infrastructure are still farmers most needed of public services. In addition, passenger transport services in rural areas, rural subsistence allowances, and transportation services for rural households have become the new aspects of demands for public services to the farmers.

3.2 The status quo of sector based public services in rural areas In order to avoid duplicating the analyses made in other sectors, it

focuses on public health service, emergency management and infrastructure.

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3.2.1 The operations status of rural public health services system The rural health management system construction has been

strengthened, and township medical institutions operating mechanism was reformed. In each township a government-organized prevention stations has been set up. The spatial distribution of hospital resources has been adjusted by strengthening the linkage of rural hospitals with county town and other central hospitals. At the end of 2005, the township level in Jiangxi Province had 19,587 hospital beds, 30,764 health workers, including 8,495 physicians with licenses.

The structure of public financial investment for public health services was adjusted, with the development of the New Type of Rural Cooperative Medical System (hereinafter referred to as "NRCMS"). In 2006, Jiangxi Province, the "NRCMS" has covered 84.95% farmers, higher than the national average and central province average. The "NRCMS" has raised funds of CNY575,494,500, of which government at varied levels covered 75.3% and farmers contributed 24.7%.

It is found from the survey that the main reasons for farmers not seeing timely see doctors incase of being sick are relating to local health conditions (including the level of bad doctors, medical inconvenient), medical charges and the arrangement of the "NRCMS" in reimbursement (Table 19).

Table 19: Reasons about "Why family did not see a doctor promptly"

Options Frequency(1) Frequency(2) Frequency(3) Went to hospital as soon as being sick 8.56% - -

In case of minor illness, just bought and had pills. If have big illness, the local hospitals can not cure

21.82% 6.77% 15.79%

Medical expenses are too high 42.54% 22.56% - The medical expenses not reimbursed by the "NRCMS" 3.31% 28.57% 21.05%

Lacking qualified doctors 0.83% 12.78% 5.26% Inconvenient medical service 13.26% 18.80% 36.84% Lacking trust in the local doctors - - 10.52%

Others 9.68% 10.52% 10.52% Note: respondents are required to present three most important reasons. Data source: own survey.

There have been 17.10% respondents unsatisfied with the "NRCMS". The main reasons include including low reimbursement level (Table 20), coverage of reimbursement, inconvenience for visiting the designated hospitals or clinics, etc.

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Table 20: The reasons about "Unsatisfied with NRCMS" (%) Options Frequency(1) Frequency(2) Frequency(3)

Reimbursement is too low 37.06 3.88 2.00 Cap lines too low, and only guarantee serious illness

11.18 15.53 6.00

Hospitals charge high 8.82 5.83 10.00 Only to reimbursement of hospitalization, out-patient non-reimbursement

21.18 36.89 10.00

The threshold is too high 2.35 6.80 8.00 Fewer hospitals, medical treatment is not convenient

7.65 7.77 8.00

Sentinel hospital standard deviation

1.76 2.91 42.00

Inconvenient reimbursement procedures

8.82 15.53 15.53

Poor attitude of doctors - - 8.00 The rising price of medicines which may not be reimbursed

- - 2.00

The same disease, somebody can be reimbursed, and somebody was not reimbursed

- - 2.00

The maximum amount of reimbursement is too low

- - 2.00

Others 1.18 4.85 - Data source: own survey.

3.2.2 Rural public security and emergency There were 36.8% of the respondents who reported there had been

emergent cases in recent three years. Unexpected events occurred in the villages, are mainly flood, livestock disease, landslides, forest and residential fires, drought and so on (Table 21).

There were two unexpected events in Jiangxi Province among the investigation: mountainous district at south of Jiangxi have winter drought, where the frequency of fire, had spread to several surrounding counties, lost great property; lack of basis water conservancy facilities, the winter drought-induced frost orange disaster losses even greater than last year's losses of frozen, but no agriculture, water conservancy, the importance attached to the fruit industry sector.

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Table 21: Rural public security and emergency (%)

Emergency Frequency(1) Frequency(2) Frequency(3) None 63.20 - - Forest fires 9.96 9.68 - Residential fires 0.65 12.90 - Landslides 1.30 6.45 14.29 Flood 12.55 22.58 28.57 Earthquake 1.30 - Acute infectious disease - 6.45 - Appeal to the higherauthorities for help

1.08 3.23 14.29

Livestock disease 3.25 19.35 28.57 Large-scale fights - - Snowstorm 4.33 3.23 - Drought 1.08 6.45 14.29 Wild boar damage 0.43 3.23 - Hurricane 0.65 - - Frost 0.22 3.23 - Others - 3.23 -

Data source: own survey.

3.2.3 The preference of demand for rural infrastructure construction and management

Jiangxi has made impressive improvement in its rural infrastructure in recent years. But there are still big gaps existed in the demands. The priorities of the farmers’ demand for rural infrastructure vary with the current situations and among varied components. Table 22 presents the results of the reference ranking (by ordinal number assignment, then the smaller the weighted average value of the note after the farmers need more high order, that is, the more necessary) . Roads are ranked first in the preference, followed by irrigation works, tap-water, CATV, cultural facilities, public toilets, and biogas.

In infrastructure construction, more than half of the respondents are willing to pay for irrigation, roads, tap-water and CATV rather than pay for cultural facilities, public toilets and biogas, which peasants in infrastructure needs the priority order to confirm each other. In infrastructure maintenance, more than half of the respondents are willing to pay for irrigation, roads, tap-water and cable construction, and do not want to pay for public toilets. The data also show that if the government or other organizations built the cultural facilities and the construction of biogas, the peasants interviewed would be willing to pay for maintenance. It is shows that with the

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construction of agricultural infrastructure and promote the building of new countryside, in construction and maintenance of the facilities should be formulated according to different local conditions of construction and maintenance programs to promote the construction of infrastructure and long-term efficient use.

Table 22: Preference of demands for rural infrastructure

Priority Are willing to pay part of the cost (%)

For construction For maintenance

Type of infrastructure

Weighted average scores

Priority needs yes no yes no

Tap-water 2.62 3 68.04 31.96 76.60 23.40 Irrigation 2.22 2 79.00 21.00 77.66 22.34 Roads 2.06 1 78.08 21.92 73.68 26.32% Biogas 4.72 7 39.73 60.27 50.00 50.00 Public toilets 4.45 6 43.53 56.47 44.26 55.74 CATV 3.92 4 50.00 50.00 60.71 39.29 Cultural facilities

4.29 5 38.27 61.73 54.41 45.59

Data source: own survey. 3.3. The problems in Public Service System in Rural Jiangxi Jiangxi has made marked progress in improving the public services in

rural areas since 2000 especially after the new countryside construction pilots initiated and expanded. With the development of villagers’ council and innovation in funds and project coordination, Jiangxi has already explored some effective ways for involving rural residents in the supply and management of rural public goods and for putting together the earmark funds from varied channels for construction of rural public infrastructure in rural communities. However, the supply and management of rural public services in Jiangxi is far from meeting the needs of farmers. There are some problems existed to be addressed through institutional innovations and policy adjustments.

3.3.1. The division of labors for responsibilities among the

government at varied levels has not yet clearly identified on rural public service supply in Jiangxi

The government has made efforts to improve the efficiency and effectiveness of administrative management on rural public service supply by means of administrative management system reform and fiscal reform. However, the division of labors for responsibilities among the government at varied levels has not yet clearly identified on rural public service supply in Jiangxi. Especially after the rural taxation reform in 2006, township

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governments no longer have their own financial capacities to supply rural public services, but they are required to act as the agent of higher level governments to take charge of supply and management of rural public services.

3.3.2. Rural public service platform at community level should be

strengthened to increase the quality and cost efficiency of the public services supplied to rural residents

Establishing rural community service centers proved to be one effective way for rural residents receiving public services when farmers’ households are living scatter and quite far away from central towns. The centers can supply public services, such as primary education, clinic, commercial, information, cultural services, library, etc., in one platform. It does not only save the time and costs of the rural residents, but also helps increase the quality and cost efficiency of the public services supplied. Jiangxi Province has still been in an underdeveloped position in supplying public services through rural community platforms because of inadequate investment and uncoordinated planning for rural public infrastructure existed in current department based planning system.

3.3.3. The existing decision making mechanisms for allocation of

rural public resources in Jiangxi easily lead to mismatch of supply with the real needs of rural residents. In spite of efforts made in involving farmers’ participation in the planning of rural public services in the past few years, the top-down departmental based decision making for rural public resources still dominates in Jiangxi. The new countryside construction pilots have partly increased the participation of rural residents in the planning of rural public goods, such as paved village roads, tap water supply and garbage disposal, which helps improve the quality and targeting of the public resources in the benefiting villages. However, the planning for supply of most of other public resources still follows the top-down decision making tradition. Mismatch of the supply with the real needs of rural residents gives rise to the distortion and misuse of the resources available.

3.3.4. Rural public resources in Jiangxi have not been integrated

and utilized effectively. Owing to departmental based planning and management system, rural public resources in Jiangxi have not been integrated effectively. It is obviously reflected in the coexistence of redundant resource allocation in some areas with insufficient investment in other areas. Another related problem is the adequate utilization of the existing resources has not been emphasized while attention is more attached to construction of new infrastructure and facilities.

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4. The Status Quo of Grassroots Organizations 4.1 The status quo of grass-roots political organizations In the New Countryside Construction Program, the operation of local

administrative organizations at grass-roots level in Jiangxi province presented a number of new features. The comprehensive reform implemented in township and village characterized by greatly reducing the administrative organizations and lying off administrative employees generated great benefits but also carried out some problems.

4.1.1 The Reduction and integration in administrative organs at

grass-roots level and lay-off of administrative employees From 2003, Jiangxi Province carried out reforms in eight areas, which

focused on reducing the number of townships and villages, imposing compulsory education in rural areas and carrying out finance system in counties and townships. These reforms cut the number and simplified the levels of administrative organs in local community, laid off extra administrative employees, and thus optimizing the resources by saving administration cost, increasing work efficiency, lowering financial expenditures and alleviating peasants’ burden. By the end of 2006, 398 towns and 4400 villages were eliminated. The number of departments in local governments of townships decreased by 40% and 50,000 of administrative employees including 20,000 temporary employees were laid off.

According to the official statistical data, in 1996, there were 20,925 village committees in Jiangxi Province. By the end of 2006, this number was reduced to 17,145, dropped by 18.06% compared with the number in 1996.

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Figure 8: The change in the number of villagers’ committees in Jiangxi Province (1996-2005)

0

5000

10000

15000

20000

25000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: NBS. 2007. China Rural Statistical Yearbook. China Statistics Press.

In our sample survey on 35 villages in 7 counties, we found that the

average number of members of Chinese Communist Party (CCP) in each village is 41 with the highest reaching 103 and the lowest 5. The average number of CCP members whose ages exceed 50 in each village is 24, accounting for 57.49% of total CCP members. The aging trend on CCP members in village is becoming distinct. Moreover, the level of education of these CCP members is relatively low, with 39.61% just completing primary school education, 30.85% middle school education, 17.23% high school education and only 2.89% having technical degree or above. The percentage of male and female CPP members in village is 83.24% and 16.58% respectively.

In each village, there are 5 villagers on average joining in villagers’ committee and CPP branch committee. These members usually had much better education background with more than 90% completing middle school education or above and 90% of them are CCP members. Some villages even employed university graduates as officials. Moreover, the family income of the villagers’ committee is much higher than the average income level.

Up to now, as the extension of political authority, the villagers’ committee has been playing a vital role in administration management such as explaining policies from governments at upper level to villagers, maintaining social security, implementing family planning control policy.

In the New Countryside Construction Program, many locals voluntarily

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established the villagers’ councils, which are rural non-governmental organizations welcomed by government and established by rural residents. In the recent few years since its establishment, the villagers’ council has shown strong vitality and exerted great influence. These councils crossed the border of village and came to integration across villages. As villagers-elected and non-profit organizations, the villagers’ councils played an important role in economic, political, cultural and social construction.

According to the survey on the operation of the villagers’ council as well as the evolution of the democracy system, 51.3% of the surveyed villages established the villagers’ council (Table 23). The components of members in the villagers’ council are described in the following table. Three kinds of members are most welcomed by villagers, the respectable villagers, representatives elected by villagers and the villagers’ committee members. This reflects the villagers’ demand for agents who invest voluntarily in public utility construction, engage in public utility management and improve the environment and image of village.

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Table 23: Villagers’ expectation on member compositions of the villagers’ council (%)

Option Frequency 1

Frequency 2

Frequency 3

Frequency 4

Villagers committee member 9.96 1.08 0.43 0.22

Respectable villagers 22.51 9.09 0.22 0.22 Member of CPP 2.16 4.33 2.60 - Member designated by governments at upper level

0.87 0.87 0.43 1.08

Representatives elected by villagers 13.42 12.34 4.55 -

Member with high literacy level

- 0.22 - -

Member with rich social experience

- - 0.22 -

The competent - 0.22 - - Member that do real work for villagers 0.43 0.65 - -

Member skillful at agricultural techniques

- 0.22 - -

Member who lead by example and do real work for villagers

- 0.22

- -

Impartial person (representing interests of different parties)

0.65 0.65 0.22 -

Honest person - 0.22 - - Candid person - 0.22 - - Stable residents - - - 0.22 No idea 2.16 0.43 0.22 - Other 0.43 0.22 0.22 0.22 Data source: own survey.

The villagers’ council with high expectation by villagers should fully play the following functions: assisting the villagers’ committee and CCP branch committee in rural governance; monitoring the construction and implementation of public utility projects; supervising the public expenditures; coordinating the decision-making and implementation of projects regarding New Countryside Construction Program; monitoring and managing public affairs in village and helping villagers improve livelihood and increase household income. These functions become the areas in which the villager’ council is highly expected and also indicate the future focuses of the villagers’ council after the finish of New Countryside Construction Program.

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Table 24: Villagers’ expectation for the functions played by the villagers’ council (%)

Functions available Frequency (1)

Frequency (2)

Frequency (3)

Frequency (4)

Assisting village committee and CCP branch committee in rural governance

23.38 1.73 0.65 0.65

Monitoring the construction and implementation of public projects

10.82 10.82 1.52 0.22

Monitoring the use of public funds 3.03 8.01 5.41 0.22

Leading villagers become rich 3.03 6.06 1.30 1.08

Coordinating the decision making and implementation of projects regarding the NRCP

5.19 6.28 4.33 0.65

Monitoring and managing public affairs 1.95 4.33 8.44 3.25

Negotiating as representative of villagers with government on issues concerned by villagers such as compensation for land expropriation

1.95 1.95 1.95 1.52

Setting good example 0.22 0.22 - - Advising on decision making of village issues - - 0.22 -

Serving in the interests of villagers 0.22 - - -

Technical consultation - - - - No idea 2.60 - 0.22 - Others 0.22 - - 0.43 Data source: own survey.

In the New Countryside Construction Program, compared with village

committee, the villagers’ council contributes to the integration of the villagers’ interests, effectively achieving the self-management, self-discipline and self-development of villagers. Through developing top-down network with clear responsibility among villagers and the holding of regular council meetings, the villagers’ council acts as a communication bridge between the government and the villagers. It not only realizes the rural democratic governance but also guarantees the implementation of the New Countryside Construction Program. The villagers’ council has become a favorable

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alternative to improve the rural governance. In spite of the huge potentials in the future development of the villagers’ council, its work is presently focusing on assisting the villagers’ committee and CCP branch committee in decision-making on public utility projects regarding the New Countryside Construction Program.

4.1.2 Relationship between reform on “Seven Stations and Eight

Offices” and the status quo of public governance “Seven Stations and Eight Offices” is a general term that refers to all the

organizations detached to townships by government departments at upper level. The main functions of these organizations are to provide social services on rural education, technological training, cultural development, public health and so on. Prior to the implementation of the Rural Tax and Fee Reform, the rigid combination of management by “Seven Stations and Eight Offices” and management by local township government characterize the rural public governance structure. The “Seven Stations and Eight Offices” play a very important role in the rural public governance and are responsible for providing the majority of public services in rural areas. Generally, the “Seven Stations and Eight Offices” consists of around 20 institutions in rural areas and this number is going to be reduced greatly due to the requirements of the Rural Tax and Fee Reform. For example, the Seven Stations and Eight Offices in Jiangsu Province are integrated and reduced to 6 to 8 departments. A great number of towns are undergoing this integration of “Seven Stations and Eight Offices” across the PRC. However, through our survey, we find Jiangxi Province presents a different picture. Although the “Seven Stations and Eight Offices” in most towns experience transformation, the number of institutions increases instead of decreasing in some places with the retention of existing institutions such as Land Management Station, Police Station, Station of Family Planning Control, Finance Station, Station of Business Administration, Tax Station, Broadcasting Station, Irrigation Works Office, Seeds station, Veterinarian Station, Agricultural Machine Station, Agricultural Technology Office, Justice Office, Power Supply Station, Education Office, Marketing Cooperatives, Health Station, Economic Management Office etc. and the establishment of new organizations such as Rural Cooperative Office and Social Security Office etc.. Hand in hand with local governments of township, these organizations participate in the public governance and provide a great amount of public services.

4.2 Relationship between new rural NGOs and the status quo of

public governance 4.2.1 Relationship between new rural cooperatives and public

governance After the completion of the Rural Tax and Fee Reform, the new

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commonwealth organizations in Jiangxi Province undergo rapid development. The survey of 7 counties and 35 villages in Jiangxi Province indicates that 22.22% of surveyed villages established new commonwealth organizations. For example, at the end of 2008, Suichuan County has developed 52 Farmers’ cooperatives with peasants’ investment of CNY30.5 million and 967 members including 906 peasants, affecting 43930 non-member peasants. At the same time, the number of registered Farmers’ cooperative reached 59 in Xinfeng County involving 496 peasant members and affecting 21,490 non-member peasants.

Table 25: Development and Components of peasants-related NGO in

county of Suichuan, Xinfeng and Chongyi Suichuan Xinfeng Chongyi

Farmers’ cooperative 52 59 Type of organs Societal Organization 79 - 34

Crop Farming 33 50 - Animal Husbandry 11 4 - Mix of crop farming and animal husbandry

5 2 -

Processing industry of agricultural products

2 2 -

Industrial components of farmers’ cooperatives

Service on agricultural machinery

1 1 -

Data source: own survey. The growth and development of new types of commonweal organization

not only encourages the innovation vitality in rural society, but also contributes to the development of rural market economy, sharing of information technology and increase of peasants’ income.

Currently, the Farmers’ cooperatives in Jiangxi Province are established on highly specialized and high risk industries such as animal husbandry, fishery, flowers and trees plantation, fruit and vegetables plantation for which Jiangxi Province has competitive advantage. The cooperation is non-diversified and concentrates on production technology and information sharing. The exciting message is that new opportunities of cooperation are being fostered which transform cooperation centering around production, primary processing and marketing to cooperation focusing on brand, circulation and value-added processing. According to statistical data, among the 1664 Farmers’ cooperatives in Jiangxi Province on 2007, 34.4% of which operates on comprehensive services combining production, primary processing and marketing, 23.3% operates on providing technology and information service, 19.9% operates on production service, 15.5% operates on processing service and 7% operates on transportation and storage service.

Despite the continuous broadening of cooperation forms and areas

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experienced by Farmers’ cooperative in Jiangxi Province, potential risks also exist in the new Commonwealth Organizations, including the lack of reliable and effective institutional arrangement, lack of management and supervision on areas of public governance, and inability to prevent and control risk.

4.2.2 NGOs in rural Jiangxi The rural NGOs in Jiangxi Province are at grass roots levels and formed

by peasants spontaneously with the capable persons and the elites being their cores. These new organizations concentrate on providing public service and occasionally carrying out public governance activities. Its distinct character increases the peasants’ initiative not only to participate in the production but also to provide public goods, which improves the social management function. In the absence of local governments at grass-roots level, these organizations voluntarily shoulder the responsibility to supply and manage the public goods regarding education, health, road building and so on in the New Countryside Construction Program.

4.3 Democratization process and institutional restriction in rural

public governance 4.3.1 Democratization process in rural public governance The democratization and institutional restriction in rural public

governance are mainly realized through the direct election of village committee and the system “One Issue, One Discussion” that require each issue concerning peasants’ interest to be discussed. Started in 1988, the election system has been in effect for 20 years contributing greatly to the improvement of public governance in villages, highlighted by the fact that village officials become more responsible for peasants. It also increases the percentage of public expenditures in total village expenditures and lowers the percentage of administration expenses and village officials’ salary payment, laying a solid foundation for improvement in rural public governance. After the implementation of Rural Tax and Fee Reform, the system “One Issue, One Discussion” in village committee has become an important financing channel for public governance and public service projects based on the principle that reconciles right and obligation and emphasizes expenditures being born by beneficiaries. This will help accelerate the procedure of self-management by villagers and improve the livelihood of villagers, avoiding the rebound of villagers’ burden.

Although the policy of self-governance has been implemented in villages for many years, the democratization process for public governance is not quite sound and the election of village committee is unregulated yet, which is acknowledged by 23.81% of surveyed villagers. Typical problems include soliciting votes through offering meals, member designation by township officials, open purchase of votes with cash, inappropriate voting

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procedure and seeking votes by promising in appropriate future benefits (Table 26).

Table 26: The existing problems in election of village committee

viewed by the interviewed peasants (%) Options (1) (2) (3)

Purchase of votes with cash 2.16 0.22 - Seeking votes by offering meals 5.84 1.73 - Seeking votes by promising inappropriate future benefits 1.30 2.81 0.65 Seeking votes by threatens 0.87 0.65 0.22 Member designation by township officials 2.81 0.22 - Lacking transparency in voting 0.22 - - Existence of formalism 1.08 0.43 - Voting for someone who has good relationship with you 0.22 - - Purchase of position from town government 0.22 - - Voting for relatives 0.87 - - Absence of democracy 0.87 - - Lack of full coverage by votes 0.87 0.22 - Lack of supervision on vote counting 0.22 0.22 - Lack of supervision on voting consequence 0.22 - - Giving up vote because of working outsides 0.43 - - inappropriate voting procedure 1.30 - - No voting at all 0.65 - - other 1.52 - - Data source: own survey.

In the latest two elections inquired about in our survey, 80% of villages

didn’t prepare booths for voters to make their choice in private (Table 27). The number of villages that didn’t call out the names voted on public doubled compared with that in 2005. Through talking with village officials about the latest two elections, we find that, due to the increasing number of laborers who are employed outside village, the voters’ turnover declined by 25% compared with that in 2005. As a result, the percentage of votes won by chairmen of villagers committee in total votes increased, but the actual number of votes won dropped at the same time.

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Table 27: Summary on the latest two elections of villagers committee in the surveyed villages (%) Voting year 2005 2008

Voter turnover 99 74.46 Percent of votes won by chairman 69.7 82.88

yes 20.59 17.65 Establishing private booths for voters to make a decision no 79.41 82.35

yes 29.41 14.71 The two positions of chairman occupied by the same person no 70.59 85.29

yes 85.29 61.76 Whether to call out the names voted on public no 14.71 38.24

yes 79.41 79.17 Existence of democratic financing team

no 20.59 20.83 Data source: own survey.

As the main decision and supervision mechanism in the management of

rural public affairs, the system “one issue, one discussion” face many problems in practice and frequently goes to two extreme situations: excessive emphasis on democracy leading to many obstacles in discussing public issues and the absolute dictation of all affairs by village officials. Based on our survey, the following problems are very common (Table 28). It’s difficult to call the villagers together for discussion sometimes. What’s more, some villages even have to pay the villagers for their participation in discussion. Even if the villagers participate actively, they frequently diverge on some minutia and are unable to come to an agreement with the simple majority of voters. The system “One Issue, One Discussion” required 2/3 of total votes to pass a proposal, which make the passing of proposals more difficult and result in lots of pending proposals. With the increasing meeting cost, villagers cast doubt on the rationality of “One Issue, One Discussion”. According to our survey, nearly half of villages surveyed didn’t implement the policy in any form in 2008.

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Table 28: Situations of implementation of “One Issue, One Discussion”

in the surveyed villages in 2008 Times Frequency Percentage

(%) Times Frequency Percentage (%)

0 213 46.10 7 7 1.52 1 48 10.39 8 6 1.30 2 78 16.88 9 13 2.81 3 42 9.09 10 1 0.22 4 17 3.68 12 2 0.43 5 19 4.11 15 1 0.22 6 6 1.30 20 1 0.22

Data source: own survey. At the same time, the phenomenon that proposals are passed and

implemented without discussion by villagers is not rare. For example, some villages raise money directly from villagers without passing the budget plans in the villager’s congress. Moreover, the discussion process of some village is not legal. They carried out discussion after the implementation of an issue. According to feedback from our questionnaire, 25.21% of villagers surveyed are unsatisfactory with the procedures of “One Issue, One Discussion”, advising improvements on discussion procedure, supervision, effect of implementation, fund use and votes-casting mechanism (Table 29).

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Table 29: Suggestions of Villagers on “One Issue, One Discussion” Suggestions Frequencies Percentages (%)

(1) (2) (1) (2) (1) (2) Improving discussion procedure

98 2 2 21.21 0.43 0.43

Improving votes-casting mechanism

14 20 1 3.03 4.33 0.22

Improving supervision 53 37 13 11.47 8.01 2.81

Improving fund use 23 44 15 4.98 9.52 3.25

Improving effect of implementation

36 30 20 7.79 6.49 4.33

No need for improvement 34 1 - 7.36 0.22 -

Attention to villagers’ advices

- - 1 - - 0.22

No idea 15 1 - 3.25 0.22 - Don’t care 2 - - 0.43 - - Others 3 - - 0.65 - -

Data source: own survey.

4.3.2 Institutional restrictions in rural public governance In our survey on the specific items included in the disclosure board of

public affairs, the answers of surveyed villagers show that 26% of villagers are indifferent to all items in the disclosure board, explaining the gap between the disclosed items and the villagers’ expectations (Table 30). We find the list that the villagers care the most includes village finance, family planning, infrastructure project development and poverty relief works, reflecting villagers’ attention to democratic management of village, village finance and interests of their own. It must be emphasized that village head and chairman assume the responsibility to promote the disclosure of village affairs and democratic construction through standardizing the disclosed items, updating disclosures, increasing work transparency, accepting supervision from government at upper level and villagers.

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Table 30: Disclosed items of public affairs concerned by surveyed villagers (%)

Item Frequency (1)

Frequency (2)

Frequency (3)

Frequency (4)

Election procedure of villagers committee 25.76 2.81 0.65 -

Village finance 22.73 23.38 1.08 - Family planning 5.19 6.93 12.34 0.22 Poverty alleviation works 1.08 3.90 3.68 3.68 Approval of relief application 0.87 1.73 3.90 2.16

Infrastructure project development 1.52 6.49 4.33 3.25

State policy 3.25 - 0.22 - Allowance - - 0.22 - Knowledge of laws - - 0.22 - Security education - - 0.22 - Cultural activities - 0.22 - - No item cared about 25.97 0.22 0.22 -

Data source: own survey. Ranked second in the disclosed items of public affairs concerned by

villagers, disclosure of finance has always been important and requires the inclusion of current income, expenditure, receivables and payables. At the same time, the subsidiary books have to be disclosed too. Considering 44.16% of surveyed villagers at an age of fifty or above and 47.40% with primary school education or even being illiterates, only 40.69% of surveyed villagers is able to read and understand the item of village finance, while the remaining 60% can’t understand, or don’t read at all, or can’t explain clearly or live in village without board of disclosed village affairs. Finance issue has always been a crux in rural democratic management that villagers care about the most. Poor management of rural collective fiancé will do damage to the rural social stabilization and become the breeding ground for corruption so that we have to improve financial transparency of village from multiple aspects, perfect financial regulations and endeavor to make financial information understandable, ensuring the healthy operation of financial disclosure.

4.4 The Advantages and Constraints for Public Governance at

Rural Grass-roots Level in Jiangxi 4.4.1 Advantageous experiments in Jiangxi on rural grassroots

governance Jiangxi has piloted some innovative ways for improving the rural

governance in recent years, which will bring about some advantages for the progress in rural governance in the province. The innovations made in

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Jiangxi on rural governance are mainly in two areas. The first one is that villagers’ councils have been formed and in operation in around 40,000 rural communities (natural villages) in Jiangxi Province during the process of new countryside construction since 2004. In contrary to the existing rural grassroots organizations, the villagers’ councils are formed and managed by villagers themselves in steady of initiation and nomination by the government. The villagers’ councils usually are formed by the capable villagers with good reputation and high prestige and also with more free time and willingness to work for their villagers because they work without pay. Most of the council members are retired teachers, doctors, cadres, or old farmers with high prestige either because of their capacities and reputation or because of their position in their patriarchal clans. The villagers’ councils are playing active roles in improving rural grassroots governance and promoting the democracy in rural communities by more effectively listening to and serving for rural residents, and by mobilizing and organizing the participation of villagers in the planning making, funding and construction of local public goods, such as village roads, water supply, garbage and sewage treatment as well as cultural centers.

Another innovated pilot in rural grassroots governance is to explore the effective partnership of government with civil organizations in the village development planning for poverty alleviation. From 2005 to 2008, the ADB had assisted Jiangxi government in cooperation with China Foundation for Poverty Alleviation piloting government partnership with NGOs for village development planning in 22 poor villages in three counties in Jiangxi. The pilot aimed to improve the effectiveness of village development planning for poverty alleviation by involving NGOs in mobilizing and organizing rural residents to participate in the planning, implementation and monitoring of the village development planning in the piloting villages.

These two innovated experiments have accumulated valuable assets for the improvement in rural grassroots governance in Jiangxi in the future.

4.4.2 Major constraints for rural governance Jiangxi Province has the rural grassroots governance structure similar

to that in other provinces of the country and is also confront with similar challenges because of the dominating administrative hierarchy in operation in the whole country. The major problems existed in rural governance in Jiangxi are in following areas.

First, the division of labors among governments at varied levels on their duties and responsibilities are still not clearly identified, leading to the coexistence of strong central government and relatively weak local governments. The county and township governments in Jiangxi are comparatively weak in terms of the financing and planning capacities and cannot provide sufficient supports for rural community development.

Second, the recent reform on rural financial administration system

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further weakens the capacities of grassroots governments in public administration. In order to strengthen the supervision on finance at rural grassroots, the finance management authorities at townships and villages have been taken over by their upper governments in Jiangxi, therefore, there comes the township finance supervised by county governments and village finance supervised by township governments.

Third, the department based vertical administration system has been restricting the normal functions of rural public administration departments. It is found from own survey of farmers’ households that most of the interviewed farmers have rarely accessed to the services provided by the township departments (Table 31).

Fourth, there are still a lot of institutional barriers which restrict the development of civil organizations in rural areas, including registration, financing, human resources, and supervision of organizations.

Fifth, the rights of villagers’ committee are not fully assured because of the intervention from township governments. According to the existing law, the villagers’ committee is a grass-roots autonomous organization with villagers’ self-management, self-education and self-service. But in fact, the township governments still often interfere the important affairs in villages and make the villagers’ commission lose the complete autonomies. In addition, it is still not clear how the well functioned villagers’ councils continue to play their roles in rural governance after the conclusion of NCCP.

Table 31: Services provided by township organizations

Heard or Not Contact Frequency with the organization Organization

Yes No Never Seldom Always Agricultural Technical Extension Station 77.49 22.29 35.06 23.81 22.94

Forestry Service Station 61.90 37.66 49.57 14.29 4.98 Fruit Service Station 35.06 63.85 36.58 8.66 2.81 Aquatic Product Service Station 32.47 66.67 38.96 5.19 1.30 Water Affairs Management Station 57.58 41.77 46.32 15.58 3.03

Agriculture Machinery Management Station 50.00 49.13 40.48 14.94 2.38

Economic Operating and Management Station 23.38 75.54 31.39 5.84 1.08

Judicial Administrative Stations 56.49 42.42 51.73 11.26 1.95 Cultural Station 56.49 42.21 50.43 9.96 4.11 Broadcasting Station 52.38 46.10 46.75 11.69 2.60 Family Planning service Station 92.42 7.14 33.98 35.71 22.73 Rural Pension Insurance Management Station 42.42 55.19 43.94 5.84 3.68

Data source: own survey

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5. Current Situations of Environmental Protection in Rural Jiangxi 5.1 Natural conservation

There are two general types of natural conservations in Jiangxi Province, land conservation and wetlands conservation. The land conservation started since 1975, when the Jiulianshan Mountain, Guanshan Mountain, and Wuyishan Mountain were set up as natural reserves. Up to June 2008, totally 162 natural reserves, with over one million hectares, have been established, of which 8 are national level, 18 provincial level, 136 city and county level; micro-natural reserves more than 1,000, with 200,000 hectares, have been established;2 99 forest parks with 441,100 hectares, above provincial level, have been established. All of those conservation areas together account for 10.2% of the total areas of the province, forming a quite complete network of natural conservation, and various types of the eco-systems, 90% of the wildlife, 95% of the plants, most of the natural forests, and forests for water conservation in the riverheads are protected.

Jiangxi has a mild weather and abundant rainfall. The unique geographical and geomorphic feature forms the integrated wetland eco-systems. Jiangxi’s wetlands have the following characteristics. First, the area is large, totally 3.65 million hectares, accounting for 5.2% of the country’s total wetlands and 21.87% of the province’s total areas, respectively. Of the total wetlands, water area is 1.65 million hectares, 9.8% of the province’s total areas; natural wetlands are 1.17 million hectares, 6.9% of the province’s total areas. Second, the types are various. According to the cataloguing system in the International Convention on Wetlands, Jiangxi has 23 types of wetlands, 14 natural and 9 artificial, respectively. Third, the biodiversity is abundant. Within the wetlands, there are 705 higher plants, 12 of which are under special state protection; there are 636 vertebrates, of which 17 animals, 332 birds, 40 Amphibians, 44 reptiles, and 208 freshwater fishes; there are 66 wetland animals under special state protection, of which 13 1st class species and 53 2nd class species. In addition, there are 103 shellfish and 24 Shrimps and crabs. Poyang Lake is the largest area in Asia for Migrant birds spending winter. Every year around one million migrant birds spend winter here, of which around 4000 grus leucogeranus, and 2800 Ciconia boyciana, accounting for over 95% and 85% of the total numbers in the world, respectively. Fourth, the function is great. The average volume of water flowing into the Yangtze River from the Poyang Lake is 142.7 billion m3 per year, accounting for 15.5% of the Yangtze River’s annual runoff, playing a great role in water storage during 2 The rural communities have habits to conserve natural forests. By the way of self-establishment, self-management, and self-benefits, the residents establish the natural forests surrounding the villages into micro conservation areas. Those conservation areas are small individually, but many of them together, would have a positive influence on the regional eco-environment.

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flooding period and in the protection of ecological functions. In early 1980s, Jiangxi built the first provincial natural reserve of wetlands, Poyang Lake reserve for migrant birds. Till now there are 23 wetland reserves within the province, with an area of 234,800 hectares, of which one is significant worldwide, two significant nationwide, three provincewide and 18 countywide. There are four built and building national wetland parks, with an area of 51,500 hectares. In addition, there are a group of small areas for wetland protection. A system of natural wetland protection has primarily formed. In October 2006, Jiangxi established the first provincial institution for wetland protection, the office of wetland protection and management, within the Forestry Department of Jiangxi Province, and Issued the Regulations on the Protection of the Poyang Lake Wetland and other rules and policies. On 20 August 2008, the provincial government of Jiangxi issued its Administrative Measures of the Wetland Parks in Jiangxi, which is earlier than the Central government’s Administrative Measures of the Wetland Parks. For this reason, the Jiangxi provincial government earned high marks from the State Forestry Bureau. Regulations on the Wetland Protection in Jiangxi (draft) has been listed in pool of planning and projects of the Social and Legal Affairs Committee, National People's Congress, Jiangxi Province. During the World Wetland Day between 2007 and 2009, Jiangxi conducted three theme publicity activities, “Wetlands support the healthy development of the fishery”, “Healthy wetland, Healthy Human Beings”, and “The Wetland Connecting You and Me, from the Upper Reaches to Lower Reaches”; the Website of Jiangxi Wetlands started operating. In addition, the various publicity activities during “Bird Protection Week” and “Wildlife Protection Month” created a good atmosphere for the wetland protection. By the development of the community economy, the degree of the residents depending on the wetlands is reduced; by the community co-management and strict law enforcement and coordination between the relevant government departments, a composite force is formed for the wetland protection.

The present problem is that, the numbers of the natural reserves are few in the riverheads of the second and third tributaries of the five major rivers, the middle and southern parts of the Wuyishan Mountains, where biodiversity abundant, and Ganzhou, Ji’an, Yichun, and Fuzhou, where the comparative advantage of resources, are obvious. Most of the natural reserves are the major areas for forest ecology and wildlife, but too few for wild plants. This situation does not match reality that Jiangxi has various valuable and rare plants (and plant communities). Only 6% of the natural reserves have management institutions and full time staff; 52% of the natural reserves are managed by the wildlife protection stations, forest stations, forest parks, and town or township governments; and the other 42% have no management agencies. The management of the natural reserves is not listed in the plan of local development, which limits the

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construction and development of the natural reserves. 5.2 Ecological repair During the 11th Five-Year Plan, Jiangxi plans to retire land from

cultivation and plant trees and grass for 147,000 hectares, of which steep farmland over 25 degree is 92,000 hectares, desertification farmland of 51,000 hectares, sloping farmland between 15－25 degree 4100 hectares. During 2010－2020, the planned farmland converted from farming to forests is 187,000 hectares, of which steep farmland over 25 degree is 76,000 hectares, desertification farmland of 20,000 hectares, sloping farmland between 15－25 degree 91,000 hectares.

According to the results of county-level self-survey conducted at the end of 2006, the total project area of converting farmland into forest land is 510,000 ha, of which 98.7% are conserved. The total afforestation within the project area is 200,000 ha, of which 99.7% are conserved. The eco-forests 180,000 ha, accounting for 90.4% of the conserved area, while the economic forests 19,000 ha, accounting for 9.6%. The afforestation on the previous waste mountains and hills is 277,380 ha, of which 98% is conserved. The area closed off for tree growing is 33,000 ha. Totally the trees planted are over 120 species, of which slash pine and liquidambar formosana 27,000 ha, popular, alder, and camellia 13,000-20,000 ha. At present, at present, the citrus trees, gardenia, and other economic forests and double-purpose forests have started coming into play. It is predicted that the unit income will be more than the subsidies for the implementation of the project. For example, the yearly income of camellia oil would be CNY7,500 per hectare.

There are 3 systems worthy of attention in the practice of the project to convert the farmland into forests. The first one is the announcement system. The second one is the supervision system, which is enforced at two government levels, and each has their own responsibilities. The supervision groups from the city government supervise 80% of the project area implemented by towns and townships, of which over 50% must be done on the spots. The supervision groups from the county government must supervise all the afforestation teams on the spots. The third system is the management and protection one. In order to prevent any damage by human beings and domestic animals, there have been more than 1,100 towns and townships within the project area closing off hills and forbidding anyone entering the afforestation areas.

There are also some problems needing attention. The major problem in Jiangxi’s eco-environment is the severe erosion on the forest land, but not the low forest coverage. Therefore, it should make more efforts to manage and protect the present forests, instead of spending much more money to increase one percentage point of forest coverage – the lowest cost to plant

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trees on those hard areas has been over CNY7,500 per hectare, even more than CNY21,000 per hectare in some areas. Because of the abundant rainfall and intense precipitation, sloping farmland is the major source of erosion. Up to now, there has not been much sloping farmland left. In order to maintain the status of major grain areas for the country, also for the residents’ livelihood, it is not proper to simply convert the left sloping farmland into forest land.

5.3 Water and soil conservation Jiangxi is located in the south bank of the middle and lower reaches of

the Yangtze; the soil is red and easy to be eroded by water. According to the data collected by remote sensing in 2000, the total erosion area is 3.35km, accounting for 20.1% of the provincial total area and 33.3% of the provincial mountainous area, respectively. Of the eight south red soil provinces, Jiangxi, Fujian, Zhejiang, Guangdong, Hainan, Hunan, Hubei, and Anhui, Jiangxi ranks third in the erosion area, ranks second in proportion of erosion area in the total area, and ranks first in the erosion intensity, which is 10,800 km. Of the total erosion area, intense erosion and above is 32.3% in area, soil lost 165 million ton per year. Also according to the remote sensing, there are over 48,000 sites collapsing in hill areas in 2000; the erosion area is 21,000 ha, and the direct losses are over CNY2 billion. Of the 42 counties with severe erosion, 35 are poverty counties.

Since the 1980s, Jiangxi has successively implemented a number of soil and water conservation projects, such as one of the eight national priority soil and water conservation projects, major soil and water conservation projects within the upper and middle reaches of the Yangtze watershed, the first period of major soil and water conservation projects within the Poyang Lake watershed, and the pilot project of national soil and water conservation and ecological repair. With the central government’s financial support and promoted by the market mechanism, the treatment and development of the “four barren areas” (barren hills and mountains, barren water, barren beaches, and barren land) are speeding up. The yearly treated area is around 70,000 ha during the period of the 7th Five Year Plan (FYP); 133,000 ha during the 8th FYP; 200,000 ha during the 9th FYP, and more than 200,000 ha during the 10th FYP. During 1991-2007, Jiangxi has totally treated erosion areas over 3.22 million hectare, built nearly 240,000 projects and sites for soil conservation and erosion treatment. There has been a batch of different sized demonstration areas for micro watershed comprehensive treatment and soil and water conservation. The industry of soil and water conservation has formed; navel oranges, tangerine oranges, and camellia oil distribute from the south to north, and have exerted good social and economic benefits.

5.4 Protection of rural environment

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Development of clean energy Up to the end of 2007, the households using methane have reached to

1.34 million; 1218 methane projects have been built in various livestock farms and various processing factories, households demonstrating methane eco-agriculture have reached 450,000. Totally 509 million m3 of methane is produced yearly, equal to producing 360,000 ton standard coal per year. Stoves saving coal and firewood are primarily popularized, saving 740,000 to standard coal per year. By the two items mentioned above, more than CNY1.6 billion can be generated or saved per year.

Garbage treatment In recent years, Jiangxi has implemented the rural environment

improvement project. The contents include cleaning up garbage, dirty mud, and road-blocks, and improving water supply, toilets, and roads. In 2009, in order to further raise the garbage management level, realize the goal of significantly improvement in rural environment" and meet the requirement of “clean and tidy, pollution-free disposal, simple and practical and welcome by the masses" the "3 +5" mode of rural waste-free damage processing was been introduced. The so-called "3+5" model means there are three main bodies of responsibility and five kind of solid waste disposal methods. The three main bodies of responsibilities include farmers, cleaners and villager council. Among them, the responsibilities of the farmers are responsible for general cleaning, green covering and keeping good environment in front of their house, to ensure no garbage and no sewage overflow and sundries piled up neatly in the courtyard, lawn and surrounding their houses; responsible for cleaning health of reservoirs, drain contracted by them in the village or townships; responsible for waste classification and placed in designated locations. The responsibilities of the cleaners are responsible for supervision of waste classification; responsible for health cleaning, garbage removal and regular litter in the designated public places; responsible for collecting the recyclable waste sorted by farmer households and transacting with the personnel of the recycling company. The responsibilities of the villager council are responsible for the management of garbage harmless disposal; responsibility for supervising the daily work of the cleaners.

The five kinds of garbage disposal paths are: (i) kitchen waste, which is made for organic fertilizer or clean fuels through composting; (ii) recyclable waste, which accounted for 60% of rural garbage, including six categories i.e., metal, paper, glass and ceramics, plastics, rubber and hairs; (iii) civil engineering waste, which is dumped by former households to the designated place of the village or town; (iv) hazardous waste, which is transported to the designated place for storage or treatment according to environmental requirements; and (v) the other garbage, which is incinerated. Of which, plant waste such as litter is incinerated in the farm field as ash fertilizer, scrap fabric and other chemical fiber is sent to the high-temperature incinerator to incinerate.

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Till May 2010, the pilots for rural garbage treatment have been expanded to 52,879 villages, 564 townships, accounting for 25% of the total villages and townships in Jiangxi Province.

Enhancement of preventing and controlling agricultural soil contamination

Based on survey of contaminated soil, it should establish the system of soil environment quality assessment and monitoring, enhancing the prevention and control of soil contamination. It should strictly control the behavior of using sewage to irrigate the grains and vegetables in the major production regions. It should demonstrate the repair of contaminated soil. The farmland that have been heavily polluted cannot repaired should change for other purposes. It should establish networks of soil environment monitoring. The monitoring stations at province and city levels should have the necessary equipment for soil sampling, keeping the samples, and pre-processing, advancing their capacity to monitor and analyze the soil.

5.5 Comparative Advantages and Problems in Rural Environmental

Protection in Jiangxi 5.5.1 Comparative advantages in the rural environment Jiangxi has a unique ecological advantage in the central region. Using

an index specially developed for comparing the economical and ecological coordinated development among regions, economic ecologicalization index, which was composed of 12 indicators in three dimensions, i.e., resource consumption, eco-environment, and ability to protect the eco-environment, it is found that Jiangxi ranks first in the economic ecologicalization level in the central region and (Table 32).

Specifically, Jiangxi’s comparative advantages in eco-environment are mainly reflected in the environmental quality and ecological conditions. Jiangxi has comparative advantages in environmental quality in four areas. First, there is better air quality in Jiangxi. The air quality monitoring data of provincial capitals show that the average days with air quality higher than the grade two are 338 days a year in Nanchang, more than those in the other provincial capitals in the central region. Second, there is better water quality in Jiangxi. About 77.2% of the major rivers in Jiangxi are of water quality no lower than grade three, much higher than the national average, 49.9%. Third, Jiangxi Province is of lower intensity of sulfur dioxide. In 2006, the average amount of sulfur dioxide discharged was 3.8kg per square kilometer in Jiangxi, lower than it in the other provinces in the central region. Fourth, losses caused by pollution are less in Jiangxi, too. In 2006, the direct pollution losses per hundred million value of output were CNY120 in Jiangxi, far lower than the country’s average, CNY640, and also lower than that in the other four central provinces, except for Henan.

Jiangxi has also owned better ecological conditions than other provinces in the central region and the country as a whole. First, Jiangxi has

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higher proportion of land covered by wetlands. In 2006, the wetlands in Jiangxi were about 10,000 square kilometers, 5.99% of the province’s area, higher than those in other provinces and in the country. Second, Jiangxi has larger percentage of land covered by forests. In 2006, Jiangxi’s forest coverage accounted for 60.05% of its total land areas, much larger than that in other central provinces and the country’s average. In addition, Jiangxi has area of natural reserves of 9230 square kilometers, accounting for 5.5% of the provincial total areas, which is just lower than Shanxi, ranking second in the central region.

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Table 32: Economic ecologicalization index in Jiangxi and other provinces in the central region, and the country as a whole

(Value of index) Weight National

average Jiangxi Shanxi Anhui Henan Hubei Hunan

1. Resource consumption 30 16.5 15.5 12.8 13.3 14.8 13.9 14.2 (1) Energy consumption per CNY10,000 industrial added value

10 5.0 4.7 2.2 4.4 3.4 3.8 4.6

(2) Water consumption per CNY10,000 total output value

10 2.3 1.4 5.0 1.6 3.4 1.8 1.4

(3) Land areas occupied by industries, mines and residential areas per CNY10,000 total output value

10 5.0 4.5 3.9 2.9 4.2 4.8 4.4

2. Eco-environment 30 16.1 17.6 8.6 11.2 14.3 12.1 13.5 (1) % water with quality higher than grade 3 in themajor rivers

9 3.0 4.7 1.0 1.5 3.2 1.8 5.0

(2) COD discharged per square kilometer 7 4.0 2.1 2.4 1.8 1.4 1.8 1.4 (3) SO2 discharged per square kilometer 7 4.0 2.8 1.1 2.6 1.1 2.6 2.5 (4) Ratio of losses aroused by pollution to the total output value

7 0.6 3.0 0.2 0.5 4.0 1.8 0.5

3. Ability of environmental protection 40 9.5 10.4 8.9 6.3 6.1 8.3 10.3 (1) Ratio of actual farmland areas to the planned 8 (2) % total land areas covered by natural reserves

8 4.0 1.4 1.8 0.9 1.1 1.4 1.3

(3) % total land areas covered by wetlands 8 2.7 4.0 2.1 3.2 2.5 3.3 3.9 (4) % total land areas covered by forests 8 1.3 4.0 1.0 1.7 1.2 1.9 2.9 (5) % water and soil erosion areas being controlled

8

Data source: NBS. 2007. China Statistics Yearbook 2007. China Statistics Press; NBS and National Ministry of Environmental Protection. 2007. China Statistics Yearbook on Environmental Protection. China Statistics Press.

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5.5.2 Major problems in the rural environment protection Overuse of Chemical inputs The development of the arable land in Jiangxi Province is already

nearing its limits. In addition to the rapid expansion of fruits and vegetables that need a lot of chemical fertilizers and pesticides, the agricultural growth is increasingly relying on chemical fertilizers and pesticides. At present, Jiangxi has become one of the provinces that largely use chemical fertilizers and pesticides. The average amount of chemical fertilizers and pesticides used in Jiangxi Province is 52.7 ton/km, over 30% higher than the country’s average, 40 ton/km, and nearly 2.4 times as high as the safety limits defined by the developed countries, 22.5 ton/km. The over-used chemical materials remained in the soils, surface waters and groundwater threaten the survival of the fish, the amphibious animals, and the water fowls.

Irrigation with polluted water There are 482 million hectares of farmland irrigated by polluted water,

accounting for 1.61% of the total farmland in the province, of which 9.59% were irrigated by heavily polluted water. Irrigation with polluted water not only reduces the yields of the agricultural products produced, but also hurts the qualities of the products and the soil.

Contamination of livestock excretion The excrement and urine of livestock’s are produced 60 million ton a

year in Jiangxi. Along with the increase of the animal husbandry of larger scale and less and less livestock excretion returned to the farmland as manure, more and more nitrogen and phosphor are directly released without any disposal and polluted the air and water, and the pathogens in the excretion will threaten the people’s health.

Lower forestry quality In spite of higher forest coverage Jiangxi Province has, the quality of

forestry in the province is still comparatively low. First, the stock volume of forests in Jiangxi is only 31.3 cubic meters per hectare, or 40.8% of the country’s average. Secondly, the structure of the forests in Jiangxi is unreasonable. Most of the forests in the province are planted for timber and few for shelterbelt and special-purpose. In the forests for timber, the majorities are coniferous forests and few are broad-leaved forests, which is not good for the conservation of biodiversity. Third, the forests in Jiangxi are mainly concentrated in mountainous areas and the upper stream areas leaving the central and northern basins and the middle and downstream areas covered with few forests.

Soil Erosion Jiangxi is one of the southern provinces with heavy erosion. After years’

control and treatment, the erosion areas in Jiangxi has declined largely, but still account for 20.1% of the total provincial areas and 33.3% of the mountainous and hill areas. The eroded soil enters into and fills up the rivers,

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lakes, and reservoirs, weakening the function of the water projects for distribution and storage of water resources and the ability of the rivers to discharge flood. Within the past 60 years, the navigable waterway in Jiangxi has shortened for nearly 9000 km. The upper reaches of the five major rivers in Jiangxi, Ganjiang River, Fuhe River, Xinhe River, Raohe River, and Xiuhe River, have almost lost any navigation capacity. The volume of the 9268 reservoirs declines by over 10 million cubic meters per year, which is equivalent to missing a reservoir of middle size every year.

Invasion of exotic species The exotic species in Jiangxi are mainly ragweed, alligator alternanthera, and water hyacinth. The areas invaded are about 7000 hectare by ragweed, 6,000 hectares by alligator alternanthera, and 20 hectares by water hyacinth, respectively.

6. Overall Assessment of the Rural Development in Jiangxi This section is going to provide overall discussion and analyses of the

development status in rural Jiangxi after sector based analyses have been made in the prior sections. The analyses focus on the income and living expenditure of the farmers’ households, the rural development pattern and the change of integrated rural development status in Jiangxi.

6.1 Income and living consumption of farmers’ households in

Jiangxi 6.1.1 Overall situation of income growth of the farmers’

households in Jiangxi The per capita net income of farmers’ households in Jiangxi since the economic reform has increased from CNY141 in 1978 to CNY4,697 in 2008 (Figure 9). It is multiplied by 6.7 times or increased 6.54% annually in real terms. Except for in 1986, 1988, 1989 and 1998, the farmers’ income in Jiangxi has been increasing in absolute term. The growth of farmers’ income Jiangxi in the last three decades has had three periods of steady growth. The first stage is from 1978 to 1985, when the farmers’ income had increased 9.4% annually. The second stage is from 1990 to 1997, when the farmers’ income had increased 6.24% annually. The third stage is from 1999 up to 2008, when the farmers’ income had increased 6.33% annually. The tracks and reasons of growth of farmers’ income in Jiangxi has been consistence with those for the country as a whole. The growth in the first stage was due to the reform of rural economic management system and increase of agricultural inputs such as fertilizers and improved varieties. The growth of farmers’ income in the second stage was related to the increase of purchase prices for agricultural products and the fast growth of TVEs. In the third stage, farmers’ income growth was the results of increase of employment in cities, the increase of minimum purchase prices for major agricultural products, agricultural industrialization and the increase of

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budgetary expenditure in agriculture and farmers’ welfare.

Data source: Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press. Probably it is because the reasons underlining the growth of farmers’ income in Jiangxi have had no difference fro those for the country as a whole, the difference of farmers’ net income per capita between Jiangxi and the national average has almost not changed in the last 30 years. Apart from a few years, the per capita net income of farmers’ households in Jiangxi has been slightly lower than national average (Figure 10). The per capita net income of farmers’ households in Jiangxi in 2008 was 98.66%of the national average.

Figure 9: Change of farmers’ income in Jiangxi in 1978-2008

100

600

1100

1600

2100

2600

3100

3600

4100

4600

5100

1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 Year

CNY

95

Figure 10: Per capita farmer’s net income in Jiangxi and PRC(1978-2008)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

1978 1980 1985 1990 1995 2000 2005 2007 2008

CN

Y

Jiangxi National

Data source: NBS. 2009. China Statistics Yearbook 2009. China Statistics Press; Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press. 6.1.2 Explaining the growth of farmers’ net income in Jiangxi Change in the income sources The change in the income sources of farmers’ households in Jiangxi from 1999 to 2007 has been surprisingly similar to that for the country as a whole. During the period the income from wages and salaries in Jiangxi had increased by 10.96 percentage points, the income from household operation declined by 10.88 percentage points, the property income declined by 3.25 points and the transfer income rose by 3.16 points (Table 33). In summary, the income household operation has contributed over 50% of the farmers’ net income in spite of large reduction of its share. The income from wages and salaries has increased rapidly and contributed about 40% of the farmers’ income. The transfer income has increased very fast though its share has been not very big. Compared with the change in the country as a whole, the reduction of the income share of household operation in Jiangxi has been smaller than the national average and most central provinces.

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Table 33: Change in the farmers income sources in 1999-2007

Income from Wages and

Salaries

Income from Household Operations

Income from Properties

Income from Transfers

1999 National 28.51 65.53 4.53 1.43 Shanxi 38.49 57.19 3.43 0.89 Anhui 24.77 69.45 4.86 0.93 Jiangxi 28.88 65.59 4.63 0.90 Henan 20.96 74.33 3.32 1.40 Hubei 22.39 72.01 4.85 0.74 Hunan 33.22 63.50 2.79 0.50

2007 National 38.55 52.98 3.10 5.37 Shanxi 41.49 50.75 3.70 4.05 Anhui 41.34 51.20 2.87 4.59 Jiangxi 39.84 54.71 1.38 4.07 Henan 32.91 62.27 1.37 3.45 Hubei 36.39 59.53 0.94 3.14 Hunan 43.86 50.30 1.02 4.82

Data source: NBS, 2008, China Survey Yearbook of Rural Households 2008, China Statistics Press. Contribution of different sources of income to income growth The available data for farmers’ household income and expenditure from 2003 to 2008 in Jiangxi can be used to analyze the growth of income by items over time and their contributions. The per capita net income of farmers’ households in Jiangxi has increased 58.15% from 2003 to 2008 (Table 34). The income from household operation, which has been the largest source of income in Jiangxi, has increased 55.6%. The income from wages and salaries, the second largest source of income, has increased 49.14% during the period. The income from properties and from transfer has increased 90.32% and 197.24% respectively over the time.

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Table 34: Growth and sources of farmers’ net income in Jiangxi (2003 – 2008)

Growth rate %

Contribution to income growth %

Total net income 58.15 100.00 i. Income from wages and salaries 49.14 35.15 1. Income from non business 20.02 1.71 (1) salaries of township and village officers 26.59 1.34 (2) salaries of teachers 12.49 0.33 (3) salaries of staff in government organizations 5.01 0.04 2.Income from employment in the resident township 147.32 17.81 (1) from enterprises 111.62 5.43 (2) from capital investment of the government -8.26 -0.02 (3) others 176.83 12.39 3. Income from migrated employment 30.70 15.63 (1) in the resident county 122.86 2.16 (2) in the resident prefecture but out of the resident county 49.47 1.96

(3) in other provinces 25.61 11.49 (4) overseas 4.99 0.02 ii. Income from household operation 55.60 52.81 1. Income from agriculture 57.27 43.99 (1) crop planting 78.68 43.08 (2) forestry 33.51 1.58 (3) livestock -11.82 -1.79 (4) fishery 50.85 1.12 2. Income from non-agricultural sectors 48.52 8.83 A. Secondary industry 88.32 5.15 (1) Industry 99.94 2.43 (2) construction 80.02 2.72 B. tertiary industry 29.77 3.68 iii. Income from property 90.32 1.83 Interest 933.10 0.99

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iv. Income from transfer 297.24 10.21 1. remittance from family member who share same household registration but reside out of home for most of the time in the year

31.81 0.34

2. presents from relatives and friends in cities 43.72 0.12 3. pension 217.73 1.10 4. living support costs offered by relatives in city 160.30 0.12 5. living support costs offered by relatives in rural

areas 81.92 0.33

6. relieves, consolation, disaster relieves, compensation for reforestation and fund for poverty alleviation

-58.93 -0.22

7. reimbursed expense for medicine 1,301.38 0.78 8. compensation -69.16 -0.18 9. others 1,737.01 7.18 Of which: grain production subsidies - 3.44 Subsidies for purchasing agricultural materials - 0.18 Subsidies for using improved varieties - 1.40

Note: the growth rate and contribution are calculated using comparable prices. Data source: Jiangxi General Survey Department. 2009. Annual Report of Rural Households. When income sources in detail are taken into account we can find larger variation involved among different sources: (i) the agricultural income in the income from household operation has increased 57.27% from 2003 to 2008, among which the income from crop planting increased 78.68%, income from forestry and fishery increased 33.51% and 50.85% respectively while the income from livestock declined 11.82%; income from non-agricultural sectors has increased 48.52%, among which the income from secondary industry increased 88.32% and the income from tertiary industry increased 29.77%; (ii) the income from employment within the resident township has increased 147.32% during the period, among which the income from employment provided for others rather than enterprises and state capital investment projects increased 176.83%; the income from migrated employment has increased 30.7% in which the income from employment within the resent counties increased 122.86%; (iii) the interest income increased for 9.3 times during the period; and (iv) the income transferred from the state, including the subsidies on grain production, for purchasing agricultural materials and for using improved varieties, as well as the reimbursement of medicine expenses due to the establishment of rural cooperative medicine system, were not existing in 2003. The crop planting has contributed 43.08% of the growth of farmers’ net

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income from 2003 to 2008. If the subsidies which are directly linking to crop planting are accounted together, the contribution from crop planting to the growth of net income in Jiangxi was about 50%. It indicates the importance of crop planting to the income generation in Jiangxi in the one hand and implies that there involved risks in the continuation of the new round of growth of farmers’ income in Jiangxi because the growth of income in crop planting has been confronting with the natural and market shocks. The second largest contribution of the income growth was from the income from employment provided for others rather than enterprises and state capital investment projects, which mainly refers to the income earned from services provided among farmers, or short agricultural employment within the community. It indicates that the demand of community for agricultural employment has increased largely with the increase of migrating employment. The growth of income from migrated employment has made the third largest contribution to the growth of farmers’ income in Jiangxi from 2003 to 2008. The fourth largest contribution comes from the transfer income from the state on supporting agricultural development. The contribution of the four largest sources accounted for about 3/4 of the growth of farmers’ net income in Jiangxi during the period. The others contributed the remained 1/4 of the income growth. Efforts are further made to explain the sources of income growth of farmers’ households in Jiangxi by looking into the factors underlining the growth of four largest sources of income. The analyses started from the income from crop planting. It is assumed that the growth of income in the crop planting can be attributed to the change in the sowing areas, the change in productivity in terms of yield per unit of land, change in the composition of total sowing areas and the change in prices for produced products. The gross income of crop planting in Jiangxi was used as a proxy for net income to explain the growth of crop planting income because of lacking available break-down data for net incomes of varied crops. It was found that the grain contributed 64.29% of the growth of gross income in crop planting from 2003 to 2008 (Table 35), gardening products contributed 13.34% of the growth in gross income, oil crops and vegetable contributed 6.9% and 6.98% of the growth of gross income during the period. The income from these four crops accounted for 91.5% of the growth of income in crop planting during the period. Therefore, our analyses focus on the growth of income from the four crops.

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Table 35: Growth rate and contribution of gross income of crop planting 2003-2008 (%)

Income sources Growth rate

Contribution to growth of gross income of crop

planting Grain 114.27 64.29 Cotton 117.18 2.12 Oil crops 80.33 6.90 Fiber crops 129.42 -0.07 Sugarcane -88.18 -0.42 Tobacco -47.14 1.73 Vegetable 201.81 6.98 Flower and horticultural products 50.19 3.67 Melon and fruit 1480.81 1.42 Gardening products 78.51 13.34 Tea and other drinking products 556.62 -0.05 Flavors -42.30 0.00 Medicine herbs 0.50 Other crops 40.52 -0.77 Collected wild plants -57.26 0.02 Side products 103.98 0.18 Processing using the crops 12.11 -0.15 Special products -49.67 0.30 Data source: Jiangxi General Survey Department. 2009. Annual Report of Rural Households. For the sake of simplification, only rice has been taken into account among the grain crops because rice accounted for over 90% of the sowing areas and outputs of grain in Jiangxi (Table 36). The sowing areas of rice have increased 19.49% from 2003 to 2008. During the period the yield per mu increased 10.66%, the price for rice increased 164.25%. The contribution of sowing areas, yield per mu and the price to the increase of rice income was 16.63%, 10.87% and 72.5% using the index decomposition method. It means that the rising of rice price was the key factor contributing to the growth of income from rice.

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Table 36: Change in the agricultural production of each household in 2003-2008

2008 2003 Increments Change rate %

Sowing areas (mu) i. Grain 2.22 1.90 0.32 16.78 Of which: rice 2.15 1.80 0.35 19.49 ii. Cash crops 0.54 0.51 0.03 6.20 1.cotton 0.06 0.04 0.03 78.97 2.oil crops 0.24 0.22 0.03 11.54 3.tobacco 0.01 0.01 0.00 24.85 4.vegetables 0.20 0.19 0.00 0.50 5.melon 0.03 0.04 -0.01 -28.91 Yields (kg) 1. cereal 871.47 661.17 210.30 31.81 2. potato 3.67 6.94 -3.28 -47.20 3. beans 5.75 6.52 -0.77 -11.84 4. cotton 12.36 6.36 6.00 94.42 5. rape seeds 35.59 25.66 9.93 38.70 6. sugarcane 11.29 51.02 -39.72 -77.87 7. tobacco 3.20 1.55 1.65 106.69 8. vegetable 207.43 205.18 2.25 1.10 9. melon 45.16 51.75 -6.59 -12.73 10. gardening products and fruits

92.15 17.60 74.55 423.56

Data source: Jiangxi General Survey Department. 2009. Annual Report of Rural Households. The sowing areas of gardening products have increased 59.4% from 2003 to 2008. During the period the yield per mu increased 2.28 times and the average price rose 25.42%. The contribution of the change in sowing areas, yield per mu and price to the growth of income from gardening products in 2003-2008 were 10.67%, 65.42% and 23.91%. The improvement in the productivity has been the key factor for the growth of gardening products. The contribution of the change in sowing areas, yield per mu and price for oil crops to the growth of income from oil crops were 8.92%, 20.99% and 70.09%. The rise of price for vegetable accounted for 97.81% of the growth of the income from vegetable from 2003 to 2008. The contribution of increase in the sowing areas and yield per mu for vegetable has only contributed 1% and 1.19% respectively to the growth of vegetable income. The income from the employment provided for others rather than enterprises and state capital investment project has increased 1.77 times from 2003 to 2008. It is learned that the daily wage rate in rural areas in

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Jiangxi has raised 110% during the period based on some case studies and the data used for computing the costs of agricultural products. The number of days of such employment increased 1/3. It can be estimated that the rising of wage rate contributed 62.21% of the increased income and increase of employment demand contributed the remained 37.79%. The implications behind the facts are that the increasing migration of farmers does not only raised the income of the migrants’ households directly, but also created employment opportunities in rural communities and raised the wage rate of agricultural labors in the sending areas, which makes contribution to the income growth in rural areas. The data of national 2nd agricultural census shows that the proportion of part time hired agricultural labors in Jiangxi in 2006 was 32.4% and 115.2% higher than the national average and central region average respectively. The income from inter-provincial migration in Jiangxi has increased 25.61% from 2003 to 2008. The number of migrants worked over six months out of Jiangxi during the period increased 11.04% and the average wage rate increased 13.12%. After decomposition, the increase of number of migrants and extending of average time of migrated working has contributed 48.77% to the increase of income from inter-provincial migration in Jiangxi. The rising of wage rate contributed 51.23% of the growth of income earned from inter-provincial migration in Jiangxi. If the items of income analyzed above are put together with the state transfer, it is possible to evaluate the sustainability of the growth of farmers income in Jiangxi over 2003-2008. These items of income (income from grain, gardening products, oil crops and vegetable, employment in agriculture in rural community and inter-provincial migration as well as state transfer) accounted for 68.3% of the increased net income in Jiangxi from 2003 to 2008. The factors underlining the growth of income of these items are classified into three types, size or areas, productivity or yield per unit, and prices or rate. The results are presented in Table 37.

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Table 37: Decomposition of the growth of income of major items in Jiangxi (2003-2008)

Sources of increased income (CNY) Category of income

Increased income (CNY) Area/size Productivity Price/rate

Rice 395.78 65.82 43.02 286.94 Gardening products 82.12 8.76 53.73 19.64 Oil crops 42.48 3.79 8.92 29.77 Vegetable 42.97 0.43 0.51 42.03 Employment within village 177.11 66.93 - 110.18 Migrating employment 164.20 80.08 - 84.12 State transfer 71.69 71.69 - - Total 1 (state transfer included) 976.36 297.50 106.17 572.68

Contribution % 100.00 30.47 10.87 58.65 Total 2 (state transfer excluded) 904.67 225.81 106.17 572.68

Contribution % 100.00 24.96 11.74 63.30 Note: the data presented in the table are calculated using comparable price. Data source: Jiangxi General Survey Department. 2009. Annual Report of Rural Households. If state transfer is included as the factor of size, the contribution of change in size, productivity and price to the growth of farmers’ income from 2003 to 2008 was 30.47%, 10.87% and 58.65% respectively. If state transfer is excluded, the change in size, productivity and price has contributed 24.96%, 11.74% and 63.3% respectively to the growth of farmers’ income in Jiangxi during the period. It is clear that the rising of prices or wage rates has been the key source of the growth of farmers’ income in Jiangxi from 2003 to 2008. Without the change in prices or wage rates, the reduction of income in these items would make the annual growth rate of farmers’ income in Jiangxi over the period drop by 2.8 percentage points or the net income decline by 29.2%. It is worth drawing high attention by the Jiangxi government that the growth of farmers’ income may not continue without changing the pattern of farmers’ income growth. 6.1.3 Living Consumption of Farmers in Jiangxi The per capita living consumption expenditure of farmers in Jiangxi has increased 3.98 times from 1978 to 2008. Except for one year of slightly decrease in 1980, the per capita living consumption expenditure of farmers in Jiangxi in the past three decades has been kept increasing (Figure 11). Certainly, the fluctuation of consumption expenditure of farmers in Jiangxi has been much smaller than that for farmers’ income. In the most of the

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years when the income of farmers declined, there had been only slightly slowing down of the growth rate of the consumption expenditure. It indicates that the farmers have had strong consumption smoothing capacity to smooth the consumption by means of mobilizing savings, storages and credit when the income declined.

Figure 11: Growth of Farmers' Per Capita Income and Comsumptionover 1978-2008

90.0

100.0

110.0

120.0

130.0

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Year

Consumption Income

Data source: Jiangxi General Survey Department. 2009. Annual Report of Rural Households. The structure of consumption of farmers in Jiangxi has experienced some change from 2003 to 2008 but seems change not so significantly as in other provinces. The proportion of food in the consumption expenditure in Jiangxi declined from 51.7% in 2003 to 49.4% in 2008 (Figure 12). Among the non-food expenditure of farmers, the expenditure for housing and medicine has increased largely. Their proportion in the consumption expenditure has increased for 3.05 and 1.39 percentage points respectively. Mainly because of the policy of providing free compulsory education since 2005, the proportion of expenditure of the farmers in Jiangxi on education and entertainment has declined 4.6 percentage points. If the tuition was excluded, the expenditure on entertainment has actually increased.

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Figure 12: Change in the consumption structure from 2003 to 2008

0

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2008

Data source: Jiangxi General Survey Department. 2009. Annual Report of Rural Households.

6.2 Types of Rural Economic Development in Jiangxi There exist regional variations among different regions in terms

economic development patterns in Jiangxi. Therefore, it is important to see the difference involved in the rural economic development. Before the rural economic development can be classified, there are two issues needing to be decided. Firstly, the definition of the scope of rural is one issue to be addressed. In the PRC, rural is not an independent statistical unit. Very few economic data are provided for rural. The usual method is to define rural economy by excluding the urban economy from the national economies. Unfortunately, the existing data on urban economies are mainly for cities. Towns are included in the most of the economic data for urban areas. For the sake of simplification, county is used as the analytical unit for rural economic analyses, which is in line with the statistical unit and is also consistence with the facts that most of the economies in counties are related to rural economies.

In general, per capita income of farmers is a good indicator for understand the rural economic development levels. But it is found that the data for the per capita income of farmers in Jiangxi has systematic errors

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after in depth analysis and comparison of varied development related indicators. The per capita income of farmers in Jiangxi in the poor counties is unreasonably set at very low level. The per capita net income of farmers in most of the poor counties has been even lower than the per capita value added of agriculture. Therefore, both per capita net income of farmers and per capita GDP are used to analyze the types of rural economic development in Jiangxi. 6.2.1 The Rural Economic Development Types Defined by Per Capita GDP The 80 counties in Jiangxi have been classified into three types by using per capita GDP as the indication. They are developed counties, middle level counties and underdeveloped counties. The thresholds set for the classification are (i) CNY10,000 for developed counties, (ii) CNY6,000 for underdeveloped counties, and (iii) between CNY6,000 and CNY10,000 for middle level counties. The geographical conditions, resources, population, income, employment and agricultural development of three types of counties are presented in Table 38. Table 38: Types of rural development in Jiangxi based on GDP per capita (2007) Developed

county Middle level

county Underdeveloped

county Threshold (CNY) >10,000 6,000-10,000 <6,000 Number of counties 23 40 17 Population per county (1000) 469.8 381.4 616.5 Proportion of plain county % 26.09 20.00 11.76 Proportion of hilly county % 21.74 30.00 35.29 Proportion of mountainous county % 52.17 50.00 52.94 Per capita cultivated land (mu) 1.13 1.10 0.83 Per capita irrigated land (mu) 0.95 0.89 0.66 % land covered by forest 44.43 56.69 54.15 Per capita GDP(CNY） 14,098 7,839 4,921 Urbanization % 26.00 22.66 29.81 Proportion of agricultural value added in GDP 16.18 23.90 28.57

Proportion of rural labors engaged in agriculture % 48.59 43.68 46.45

Per capita net income of farmers 4,600 3,598 2,329 Per capita fiscal income (CNY) 1,245 680 416 Per capita budgetary income 674 419 261 Per capita value added of agriculture (CNY) 2,938 2,339 1,657

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Of which: crop planting 1,422 1,180 747 Forestry 212 215 122 Livestock 757 592 423 Fishery 499 321 333 Services 49 31 32 Per capita value added of the secondary industry (CNY) 7,826 3,542 1,885

Of which: industry 6,648 2,988 1,438 Per capita value added of the tertiary industry (CNY) 3,991 2,424 1,630

Agricultural productivity (CNY) 11,385 8,293 6,255 Per capita output of grain (kg) 752 625 482 Of which: rice 717 595 459 Per capita output of rape seed 27 28 20 Per capita output of cotton 1 6 2 Per capita output of sugarcane 21 22 10 Per capita of output of vegetable 392 337 167 Per capita output of fruit 91 76 45 Per capita output of meat 91 82 48 Of which: pork 71 60 36 Per capita output of eggs 26 8 4 Per capita output of aquatic products 76 52 50

Data source: NBS. 2008. China Survey Yearbook of Rural Households 2008. China Statistics Press. The developed counties, middle level counties and underdeveloped counties covered 23, 40 and 17 counties respectively. The underdeveloped counties had largest average county size in terms of population, followed by the developed counties and middle level counties. The county size has no decisive effects on the rural economic development. There seem no significant relation between the rural economic development and the topographic conditions. The developed counties had highest proportion of plain counties but had second largest proportion of mountainous counties. The variation of per capita cultivated land areas and irrigated land areas has been in line with the distribution of economic development in three types of counties, which can partly explain the difference of the three types of counties in the agricultural development, including per capita value added of agriculture and per capita output value of crop planting. What is puzzled is that the urbanization and the proportion of non-agricultural employment, which are usually taken as two most powerful explanations for the economic development, seem can not explain the difference of economic development in rural Jiangxi. The underdeveloped

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counties had highest urbanization level and the developed counties ranked the position number two. The deviation of economic development from the urbanization in rural Jiangxi may be associated with the definition of town population and the weakness of the productive capacities in the towns in Jiangxi. The urbanization defined as the proportion of population in cities and towns may only reflect the distribution of the population living in city or towns, which could be mainly related with the control of local government over the changing the rural residency to urban residency rather than the capacity the residents make lives in city or towns. In some poor counties in Jiangxi, there has been one way for poverty alleviation by resettling the poor from the villages where the natural conditions are not suitable for people’s survival in small towns. The increase of urban population in this way did not actually make contribution much to the economic development. More important is the small towns in Jiangxi have not developed modern industries except for traditional and small scale commercial and services. As far as the weak relation existed between the proportion of non-agricultural employment of rural labors and economic development is concerned, there ma be two possible reasons. One is the definition of rural non-agricultural employment. Usually the number of rural non-agricultural employment is estimated by excluding the agricultural labors from the total rural labors, which actually assumes that all labors staying out of home are regarded as non-agricultural labors no matter whether they are really employed or unemployed but did not go home. Another is that there may be difference existed between the no-agricultural employment with the county and those employed out of the resident counties. When the rural non-agricultural employments are in the resident counties, rural non-agricultural employment can make larger contribution to the formation of regional GDP. This argument is supported by the distribution of per capita value added of the secondary industry among three types of counties. Another important result from the study is that agricultural development in the developing economies is playing an important role in the economic development. The developed counties have had better performance in almost all indices regarding agricultural development than other two types of counties. The underdeveloped counties were also standing at the bottom in almost all indices regarding agricultural development. 6.2.2 The Rural Economic Development Types Defined by Per Capita Income of Farmers All counties can also be broken down into three types according to the per capita net income of farmers in 2007. They are rich counties, defined as the net income per capita over CNY4,500, poor counties with net income per capita less than CNY3,500, and middle level counties with per capita net income between CNY3,500-4,500. The rich counties covered 15 counties and their average net income of farmers was CNY4,828 in 2007 (Table 39).

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The middle level counties covered 36 counties with average net income of CNY4,100 and the poor counties covered 29 counties with average net income of CNY2,310. Because of the systematic errors described above, all 21 nationally designated poor counties were in the poor counties. It may indicate the designation of poor counties in 1994 has been correct in the one hand. But this situation may raise the concerns that the efforts made in the last 15 years on poverty alleviation had not worked well. In order to rule out the systematic errors, 21 nationally designated poor counties are excluded. It will leave the poor counties with 8 counties.

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Table 39: Rural economic development types defined by per capita net income of farmers in 2007

Rich county

Middle level county

Poor county

(1)

Poor county

(2) (1) (2) (3) (4) Threshold (CNY) >4,500 3,500-4,500 <3,500 <3,500

Number of counties 15 36 29 8 Population per county (1000) 53.46 38.28 50.84 40.88 Proportion of plain county % 26.67 22.22 10.34 12.50 Proportion of hilly county % 53.33 27.78 17.24 12.50 Proportion of mountainous county % 20.00 50.00 72.41 75.00

Per capita cultivated land (mu) 1.12 1.19 0.84 0.75 Per capita irrigated land (mu) 0.98 0.97 0.65 0.59 % land covered by forest 34.78 53.16 59.61 64.15 Per capita GDP(CNY） 14,640 8,758 5,794 6,449 Urbanization % 21.32 22.06 15.52 17.31 Proportion of agricultural value added in GDP 15.60 22.47 26.38 23.44

Proportion of rural labors engaged in agriculture ％ 53.59 53.71 54.66 52.65

Per capita net income of farmers 4,828 4,100 2,310 3,091 Per capita fiscal income (CNY) 1,280 758 508 605 Per capita budgetary income 690 463 306 338 Per capita value added of agriculture (CNY) 2,283 1,968 1,528 1,512

Of which: crop planting 1075 1016 703 646 Forestry 102 193 137 169 Livestock 678 435 401 372 Fishery 391 299 259 302 Services 38 25 28 23 Per capita value added of industry (CNY) 7,084 3,547 1,819 2,149

Per capita value added of the tertiary industry (CNY) 4,044 2,602 1,961 2,310

Agricultural productivity (CNY) 10,643 9,628 6,570 6,877 Note: the figures in column (4) refer to the poor counties excluding the nationally designated poor counties. Data source: NBS. 2008. China Survey Yearbook of Rural Households 2008. China Statistics Press.

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In order to avoid duplicating the reasons explained in the previous section, the focus of the analysis are put on the differences. What is contrast with the analysis using GDP per capita as the indicator for defining types of rural economic development is that topographic features of counties make difference in the economic development when per capita net income is used for defining types of rural economic development. The distribution of types of economic development is completely in line with the distribution of plain, hilly and mountainous counties. The rich counties had the proportion of hilly counties as high as 53% while the proportion in middle level counties and poor counties were 28% and 17%. The proportion of plain counties was also in order with the rural economic development with the rich counties of largest proportion of plain counties. The proportion of mountainous counties was in reverse order with rural economic development with the poor counties of largest proportion of mountainous counties. The results are also supported by the difference of per capita income and agricultural development among plain counties, hilly counties and mountainous counties (Table 40). The hilly counties have had largest value in the agricultural value added per capita and in crop planting and livestock. The plain counties were in leading position in fishery and the mountainous counties led in forestry. Table 40: Variation of farmers’ income and agricultural income in 2007

(CNY) Plain

counties Hilly counties Mountainous counties

Per capita net income of farmers 4,002 3,962 3,235

Per capita value added of agriculture 2,568 2,603 2,350

Of which: crop planting 1,191 1,241 1,167 Forestry 65 256 338 Livestock 574 763 522 Fishery 695 305 285

Data source: NBS. 2008. China Survey Yearbook of Rural Households 2008. China Statistics Press. The rich counties had more agricultural resources than the poor counties but were not as more as the middle level counties. It is found that the dominant factor led to the difference of rural economic development levels is the industrialization.

6.3 The Overall Status of Rural Development in Jiangxi Rural development is a process of dynamic change of multisector and multidimensions. Up to date there have had no well developed and

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functioned indices for measuring rural development. The full scale well-off society indices (FSWOS) were developed by the China National Bureau of Statistics in 2003 and have been applied in the PRC since then. The indices composed of 18 indicators covering six dimensions such as rural economic development, social development, quality of population, quality of life, democracy and legal system development as well as resources and environment. Because of the extended application, the indices can be used to make interregional comparison over time. In addition, the indices included the targets set for 2020 by the central government. Therefore, it is possible to use the indices to estimate the distance from the targets. 6.3.1 The Progress Made in Rural Development in Terms of FSWOS Indices in Jiangxi Jiangxi had already realized 40.1% of the targets set for rural development in 2020 in terms of FSWOS indices, which raised 21.8 percentage points compared with that in 2004 or raised 6.9 percentage points annually (Table 41). If the progress continues with the race, Jiangxi can come into true the FSWOS targets set for 2020 four or five years earlier than planned. It is noted that the progress in the different dimensions and indicators in Jiangxi varied largely. Among the six dimensions, Jiangxi has made largest progress in the social development. The value of social development indices has raised 36 percentage points from 2004 to 2007. It is mainly because the implementation of many new policies regarding rural social development. There had been higher bases for the resources and environment and the democracy and legal system development in Jiangxi. But the progress made in the two dimensions has been not smoothly and stably. The progress in the rural economic development has been in the same race with the FSWOS indices. The quality of life and quality of population have been two constraints for Jiangxi to achieve the goal of rural development on time in terms of FSWOS indices not only because their progress made in the past three years has been slow but also they cannot be changed in a short period.

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Table 41: Rural development in terms of FSWOS indices in Jiangxi in 2004-2007

Indicators 2004 2005 2006 2007 A. Economic development 18.5 24.0 31.5 38.3 Per capita disposable income of rural residents 11.9 16.9 23.3 31.4 Proportion of agricultural labors 60.0 63.3 72.7 80.0 Proportion of population in small towns 0.0 10.5 21.1 21.1 B. Social development 24.5 31.2 41.8 60.5 % coverage of rural cooperative medicine 0.4 7.0 33.6 80.4 % coverage of rural pension insurance 8.6 8.6 8.4 8.2 Number of agricultural technicians per 10,000 people 33.3 33.3 33.3 33.3 Gini coefficient of rural residents 80.0 100 100 100.0 C. Quality of population 20.7 20.7 20.7 20.7 Average years of education 25.0 25.0 25.0 25.0 Average life expectation 3.6 3.6 3.6 3.6 D. Quality of life -11.3 8.0 14.4 25.0 Engle coefficient -60.0 -1.1 -3.3 -8.9 Housing quality index -2.5 0.9 8.5 17.5 Proportion of culture and entertainment in living consumption expenditure 2.2 6.7 8.2 4.9 ICT coverage in rural areas 0.0 31.9 45.2 80.8 E. Democracy and legal system development

75.0 82.0 80.0 67.7

Degree of the farmers’ satisfaction with the openness of village affairs

50.0 60 60 63.3

Degree of the farmers’ satisfaction with social security

100.0 100 100 72.0

F. Resource and environment 57.1 50.8 54.5 56.6 Change scope of constant cultivated land 0.0 0 0 0.0 Forestry coverage 100.0 100 100 100.0 Water consumption per CNY 10000 GDP 100.0 77.8 90.6 98.1 Index of full scale well-off society 19.3 27 33 40.1

Data source: provided the provincial bureau of statistics in these provinces. 6.3.2 Relative Progress in Rural Development in Terms of FSWOS Indices in Jiangxi The FSWOS indices in Jiangxi ranked on number three in six central provinces in 2007 (Table 42). Among the six dimensions of the indices, Jiangxi ranked the first one in rural economic development and the last one

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in the dimension of democracy and legal system development. The value of quality of life in Jiangxi in 2007 was only higher than that for Hunan.

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Table 42: Rural development in terms of FXWOS indices in Jiangxi and other central provinces in 2007

Absolute value Value of indices Indicators unit

Shanxi Jiangxi Hunan Hubei Anhui Henan Shanxi Jiangxi Hunan Hubei Anhui Henan A. Economic development

24.2 38.3 29.8 28.2 14.8 11.0

Per capita disposable income of rural residents

CNY2,981 3,392 3,160 3,214 2,981 3,085 20.6 31.4 25.3 26.7 20.6 23.3

Proportion of agricultural labors

% 43.6 38.0 44.9 47.5 52 55 42.7 80.0 34.0 16.7 -13.3 -33.3

Proportion of population in small towns

% 19.7 20 25 25.5 20 17 19.5 21.1 47.4 50.0 21.1 5.3

B. Social development

58.6 60.5 62.2 63.1 48.4 72.3

% coverage of rural cooperative medicine

% 76.1 74.3 71 80.8 67.2 74 82.6 80.4 76.3 88.5 71.5 80.0

% coverage of rural pension insurance

% 6.2 6.6 1 12.4 5 2.6 7.6 8.2 -1.4 18.2 5.5 1.4

Number of agricultural technicians per 10,000 people

1.6 2 2.8 1.6 0.8 5 20.0 33.3 60.0 20.3 -6.7 100.0

Gini coefficient of rural residents

0.34 0.3 0.3051 0.31 0.31 0.30 100.0 100.0 100.0 100.0 100.0 100.0

C. Quality of 10.5 20.7 48.4 34.1 27.6 2.0

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population Average years of education

year 7.5 7.8 8.2 8.0 7.8 7.2 6.2 25.0 50.0 38.1 25.0 -12.5

Average life expectation

year 71 69.7 71.8 70.5 71.6 72.8 27.3 3.6 41.8 18.2 38.2 60.0

D. Quality of life 52.2 25.0 23.2 35.3 40.4 41.2 Engle coefficient % 38.5 49.8 49.6 47.7 43.3 38.0 100.0 -8.9 -6.7 14.4 63.3 100.0 Housing quality index

% 32.2 28 26 30.4 26.2 24 24.9 17.5 14.0 21.8 14.4 11.1

Proportion of culture and entertainment in living consumption expenditure

%

6.4 2.72 3.2 3.2 4 3.9 86.7 4.9 15.6 15.1 33.3 31.1

ICT coverage in rural areas

% 45 53.85 51 58.0 54.8 49.3 53.1 80.8 71.9 93.8 83.8 66.6

E. Democracy and legal system development

70.0 67.7 80.3 81.0 71.0 82.0

Degree of the farmers’ satisfaction with the openness of village affairs

%

73 74 84 82 76 79 60.0 63.3 96.7 90.0 70.0 80.0

Degree of the farmers’ satisfaction with social security

%

80 78 76 78 78 81 80.0 72.0 64.0 72.0 72.0 84.0

F. Resource and -24.4 56.6 57.1 43.0 11.7 12.7

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environment Change scope of constant cultivated land

% -0.1 0.77 0.03 -0.1 -0.4 -0.2 -100.0 0.0 0.0 -33.0 -100.0 -100.0

Forestry coverage % 14.2 60.1 40.6 37 26 22.64 -35.4 100.0 100.0 100.0 100.0 94.5 Water consumption per CNY10,000 GDP

M3

1,316 1,521 1,087 1,402 1,600 517 100.0 98.1 100.0 100.0 90.9 100.0

Index of full scale well-off society

34.8 40.1 42.5 41.9 32.5 33.2

Data source: provided the provincial bureau of statistics in these provinces.

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III. Comparative Advantages and Disadvantage Facing to the Rural Economic Development in Jiangxi

1. Locational Conditions and Macro Economic Environments 1.1 Location Conditions

Jiangxi Province has not been included by any national economic zones and reform experimental zones. It seems that Jiangxi had been marginalized. But it is not true at all. Looking around the provinces surrounding Jiangxi, Jiangxi actually has unique location conditions. Three out of four national economic zones and two out of six national reform experimental zones are around Jiangxi. The Yangtze River delta economic zone, the Pear river delta economic zone and the West Coast Strait economic zone, the Wuhan Cities Integrated Reform Experimental Zone and the Changsha-Zhuzhou-Xiangtan Integrated Reform Experimental Zone all are around Jiangxi. It takes less than four hours driving from the nearest borders in Jiangxi to the three national economic zones and two reform experimental zones. Therefore, Jiangxi is able to share the economic benefits and experiences of reform experiments through geographically and culturally closed linkages and trickle down effect. Actually, Jiangxi has already established closed linkages with the five provinces and one municipality in the national economic zones and reform experimental zones. The 5th population census data showed that there were 94.1% migrants from Jiangxi moving to these provinces and municipality. In particular, the three national economic zones accepted 92.43% of the migrants from Jiangxi (Table 43). The geographic proximity of Jiangxi to these provinces will certainly provide advantages more than migration. It can be made use to win more economic and technologic benefits.

Table 43: The regional distribution of migrants from Jiangxi in 2000 Number %

Total migrants from Jiangxi 3,680,346 - Shanghai 190,369 5.17

Jiangxi 88,963 2.42 Zhejiang 840,574 22.84

Fujian 670,725 18.22 Hubei 33,814 0.92 Hunan 28,009 0.76

Guangdong 1,611,252 43.78 Other provinces 216,640 5.89

Data source: NBS. Data for National 5th Population Census. http://www.stats.gov.cn/tjsj/ndsj/renkoupucha/2000pucha/html/t0702.htm

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1.2 Urbanization

The selection of rural development strategy has always been directly or indirectly associated with the path and degree of urbanization. It is necessary to consider the options for rural development in the context of rural and urban integration. A rational rural development strategy should combine the rural development with the reduction of rural population, in particular those living on agriculture. 1.2.1 Urbanization and Rural Urban Disparity in Jiangxi Jiangxi has made large progress in urbanization since 1978. The proportion of urban population has increased from 16.75% in 1978 to 39.8% in 2007 (Table 44). But the proportion of urban population in Jiangxi in 2007 was still lower than national average and neighbor provinces, such as Hubei, Hunan, Guangdong, Fujian and Anhui. The process of urbanization in the last three decades in Jiangxi can be divided into two phases. Before 2000 the race of urbanization in Jiangxi had been very slow, which makes the difference of urbanization rate between Jiangxi and national average have increase from only 0.6 percentage points in 1980 to 8.5 points in 2000. Since 2001 the pace of urbanization in Jiangxi has been faster than the national average. The difference of urbanization rate between Jiangxi and national average has decreased by 2.9 percentage points from 2001 to 2008.

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Table 44: Change of the proportion of urban population in Jiangxi and other provinces in central region

Year Jiangxi Henan Hubei Hunan National average

1978 16.75 13.63 15.09 11.50 17.92 1980 18.79 14.01 16.79 12.71 19.39 1985 19.78 14.84 22.72 16.29 23.71 1990 20.35 15.52 28.52 17.55 26.41 1991 21.08 15.85 26.00 18.61 26.94 1992 21.82 16.18 29.35 19.62 27.46 1993 22.55 16.51 30.63 19.31 27.99 1994 23.29 16.84 28.05 21.52 28.51 1995 23.85 17.19 31.20 24.26 29.04 1996 24.58 18.39 33.74 25.00 30.48 1997 25.32 19.59 31.24 25.20 31.91 1998 26.05 20.79 31.90 25.90 33.35 1999 26.79 21.99 33.52 26.39 34.78 2000 27.69 23.20 40.47 29.75 36.22 2001 30.41 24.43 40.80 30.80 37.66 2002 32.20 25.80 41.40 32.00 39.09 2003 34.02 27.20 42.00 33.50 40.53 2004 35.58 28.90 42.60 35.50 41.76 2005 37.10 30.65 43.20 37.00 42.99 2006 38.68 32.47 43.80 38.71 43.90 2007 39.80 34.30 44.30 40.45 44.94 2008 41.36 36.03 45.20 42.15 45.68

Data source: NBS. 2009. China Statistics Yearbook 2009. China Statistics Press; Jiangxi Bureau of Statistics. 2009, Jiangxi Statistics Yearbook 2009. China Statistics Press; Henan Bureau of Statistics. 2009. Henan Statistics Yearbook 2009. China Statistics Press; Hunan Bureau of Statistics. 2009. Hunan Statistics Yearbook 2009. China Statistics Press; Hubei Bureau of Statistics. 2009. Hubei Statistics Yearbook 2009. China Statistics Press. The rural urban disparity in terms of per capita income and consumption expenditure since 1986 when data were available has been rising (Figure 13). The ratio of per capita income and per capita consumption expenditure in urban to those in rural areas have increased from 1.841׃ and 1.711׃ in 1986 to 2.741׃ and 2.631׃ in 2008 respectively.

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Figure 13: Change in Urban-Rural Disparity over 1986-2008

1.00

1.50

2.00

2.50

3.00

3.50

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Year

Urb

an-ru

ral r

atio

Ratio of per capita income Ratio of per capita living expenditure

Data source: NBS. 2009. China Statistics Yearbook 2009. China Statistics Press; Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press. 1.2.2 The Roles of Urbanization in Rural Development in Jiangxi The scope and pace of urbanization in Jiangxi could not provide the supports needed by the rural development in spite of the rising of the proportion of urban population since 1978 (Table 45). There were about 26% rural labors employed out of the province in Jiangxi in 2006, which implies that the employment and living of 26% rural labors and farmers’ households in Jiangxi had been sustained by the urbanization in other provinces. In other words, the urbanization rate in Jiangxi should rise from existing 39.8% to 55.45% if the farmers’ income level was kept unchanged in case of lacking the supports of urbanization in other provinces. It indicates the urbanization in Jiangxi has been far from sufficiency to support the rural development in the province. Sustaining and accelerating the urbanization of rural population and labors is a very important precondition for achieving rural development in Jiangxi no matter urbanization of rural labors is done within the province or out of the province.

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Table 45: Inter-provincial migrating employment in 2006

Region

Proportion of inter-provincial migrated employment in

total migrated employment

Proportion of inter-provincial migrated employment in total

rural labors Jiangxi 77.84 25.93 Shanxi 9.75 1.49 Anhui 77.65 28.35 Henan 58.78 13.49 Hubei 69.07 22.49 Hunan 68.90 21.46 Central region 67.40 19.52 National average 49.01 11.64

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press.

1.3 Transition of Economic Development Pattern and Its Effects 1.3.1 Change in Economic Development Pattern and Its Effects The PRC has become one of the lower middle income countries in 2001

according to the World Bank criteria set for country classification. It is estimated the PRC will become an upper middle income country by 2015 even based on the conservative projection3. Recently, the government has decided to transform its economic development pattern by increasing the contribution of domestic consumption to the economic growth and developing environmentally friendly economies. It is estimated that the economic structure in the PRC will undergo significant change in the coming decade, which may exert influence to the rural development in some ways. First, the increase in the share of service sector and capital intensive industrial sectors in the national economy with the transformation of economic structure, will influence the demands in amounts and by sectors for rural migrants; second, the change in the food demand of residents in the PRC from mainly concerning the quantity of supplied food to care more for food safety, the nutrition and convenience of food consumption, will require for safer and higher quality food produced and for higher efficiency of food logistics; third, it is estimated that the central government in the PRC will allocate more public resource for the social services, infrastructure and social security in rural areas to further improve the rural-urban coordinated development status.

1.3.2 Accelerating Population Aging and Its Effects

3 The per capita national income in the PRC was $2,940 in 2008 according to the World Bank’s statistics. The PRC will pass the threshold of $3,855 set for upper middle income country by 2015 as long as China can hold annual growth rate of per capita national income.

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The PRC has become a population aging country since 1999 when its population aged over 60 years old climbed up to over 10% of the total population. It was forecast that the proportion of old population aged over 60 years old will increase to 16.61% by 2020 (Table 46). The actual pace of population aging in the PRC, however, seems faster than the expected. There were 169 million senior citizens aged over 60 years old in 2008, accounting for 12.79% of the national total population. If the race of population aging continues as that in the past 10 years, the old population aged over 60 years old will account for over 17% of the national total population by 2020.

All provinces in the PRC except for Qinghai, Xinjiang and Tibet, have stepped into the aging society in 2008. The population aging pace in rural PRC has been even faster than that in cities. There was 9.6% of rural population in the PRC aged over 65 years old in 2005, which was 1.1 percentage points higher than that in cities.

The population aging will bring about significant effects on the rural development in Jiangxi in the coming decade. Firstly, the rising proportion of old age population will increase the dependence rate of active working population. In order to maintain same standard of living, the labor productivity and the income of active working population must be raised. Secondly, the increase of old age population requires the government and households to allocate more resources for care and healthy services for the old population and correspondingly reduce the resources available for others. Thirdly, the rising proportion of old population in households will impose influence on the migration of rural labors. Some rural labors may choose to work at home village or migrate to the towns or cities closing to their home so as to take care of the old parents. Fourthly, the rising proportion of old age population requires more labors engaged in caring and providing healthy services for the old population, which will create a lots new jobs and requires rural labors to timely adjust the areas of migration by learning professional skills to get the new emerged employment opportunities for serving for the old population.

Table 46: The Forecast of Population Aging in the PRC

Over 60 years old Over 65 years old Year Total

population Population % of total population Population % of total

population 2000 1270 131 10.34 91 7.13 2010 1376 173 12.54 115 8.38 2020 1472 245 16.61 174 11.83 2030 1524 355 23.30 244 15.98 2040 1543 409 26.52 324 20.98 2050 1521 438 28.76 332 21.81

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Data Source: China Population Information Research Center. “Trend of China in Population Aging”. http://www.cpirc.org.cn/tjsj/tjsj_cy_detail.asp?id=445

1.3.3 Global Climate Change and Technical Innovation There are many other macro factors which will influence the rural

development in Jiangxi in the future. Global climate change and technical innovation are two of these factors. Warming climate will bring about a series of effects, negative or positive, on the lives of people and economic development in the world according to some empiric studies and projections. The government has also committed to reduce its carbon emission per unit GDP by 45% by 2020 by transforming the economic development pattern and employing environmentally friendly technologies. Both the actual change in climate and the adjustment of concerned national policies will definitely affect the process and directions of rural development in Jiangxi, which should be seriously taken into account when formulating the rural development strategy.

The innovation in sciences and technologies has always been the important source of agricultural and rural development. In particular, the innovation of new technologies in the area of information, energy and biology, will produce significant effects on the rural development in Jiangxi in the coming 10 years. Information technology development combined with the popularization of mobile phone, TV sets and computer in rural areas, will provide a new and more effective platform for the distribution, utilization and management of the information necessary for rural development. Biologic and energy technology may influence the productivity of agricultural production by introducing new seeds and productive techniques and the development of new energies used for production and lives in rural areas.

1.4 Local Fiscal Supporting Capacities The fiscal revenue in Jiangxi has been increasing at a quite higher rate

since 1994 (in particular, after 2001). The total fiscal revenue of Jiangxi Province has risen from CNY8.6 billion in 1994 to CNY81.7 billion in 2008, or increased 16% annually which was much higher than the GDP growth rate during the same period in Jiangxi (Figure 14).The increase of fiscal revenue has ensured the Jiangxi government had necessary fiscal capacity to provide supports for rural development in the province. Since 2001 the proportion of the fiscal expenditure for supporting agriculture and rural development in Jiangxi provincial fiscal expenditure has been increased largely. According to he newly defined scope of fiscal expenditure for supporting agriculture made by the ministry of Finance, the proportion of fiscal expenditure for supporting agriculture in Jiangxi rose from 7.5% in 2003 to 12.1% in 2008.

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Figure 14: Change of Fiscal Revenue in Jiangxi over 1994-2008

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Year

Bill

ion

CN

Y

Total Revenue Budgetary revenue

Data source: Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press. The fiscal supporting capacities per capita in Jiangxi are still very low in spite of the fast growth in the past few years. The per capita fiscal revenue and expenditure in Jiangxi in 2008 was CNY1,870 and CNY1,210 respectively. Its per capita budgetary revenue in 2008 was only equivalent to 43.2% of the national average, lower than all central provinces except for Anhui. Therefore, it will be difficulty for Jiangxi local finance to provide sufficient supports for the rural development in the province even if the proportion of fiscal expenditure on agriculture and rural areas can be raised to some extent.

1.5 Financing

Financing has been the fundamental source of the funds needed for rural development in most countries and regions. The supports from financing on agriculture and rural development in Jiangxi have been improved since 1996 by means of financial institutional reforms and innovation of financial products and services (Table 47). In the end of 2008 the outstanding loans for agriculture were CNY43.2 billion. However, the supports of financing for the agricultural development in Jiangxi have been very weak. Only 10.8% of the outstanding loans in the end of 2007 was allocated to agriculture, which was not only much lower than the proportion of rural population but also 5.6 percentage points lower than the share of

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agricultural value added in the provincial GDP in that year. It is found from the rural household income and expenditure survey by the Jiangxi survey department that only 15.1% of the borrowed funds of farmers’ households in 2008 were from the loans provided by banks and rural credit cooperatives. The farmers had to seek financial support from informal financing channels.

Table 47: Rural Financing in Jiangxi in 2004-2008 (%) 2004 2005 2006 2007 2008

Proportion of outstanding loans for agriculture 8.92 11.75 10.9 10.8 10.77

Proportion of outstanding loans for TVEs 2.61 0.82 0.02 0.01

Proportion of outstanding loans for private sectors 1.08 0.93 1.11 1.33 1.92

Proportion of outstanding agricultural loans from Rural Credit Cooperatives 84.92 88.4 93.82 94.26 98.05

Proportion of RCCs outstanding loans allocated for agricultural 61.15 72.37 68.41 66.99 63.63

Data source: provided by the Nanchang Branch of the People’s Bank of China. Jiangxi Province has made impressive progress in improving the financial services for farmers and for rural development since 2004. First, the outstanding loans of microcredit provided for farmers’ households has increased from CNY4.71 billion in 2004 to CNY8.12 billion. Second, some new financial products have been developed to support the rural development. Except for the microcredit, the innovations of rural financing products in Jiangxi in recent years are the forestry property collateral lending and agricultural insurance. The forestry property collateral lending started in 2005 and had amounted to CNY601.49 million by the end of 2007, of which CNY261.38 million lent to farmers’ households and the rest to enterprises. The RCCs made major contributions in the lending. Among the forestry property collateral loans of CNY472.91 million, RCCs provided CNY285.65 million, the Agricultural Development Bank of China and the Agricultural Bank of China provided CNY113.36 million and CNY73.9 million respectively. The agricultural insurance in Jiangxi obtained breaking through progress in terms of the revenue of insurance in 2008 when insurance were issued to sow, naval orange and forestry fire. Other five products, rice, cotton, oil crops, citrus and fatten pigs were covered in 2009. Thirdly, new rural financial institutions have been developed. Up to end of 2009, two village banks and five microcredit companies have been established in Jiangxi with outstanding loans of CNY137 million and 2 million.

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1.6 Trading Environment

Jiangxi has had a lower foreign trade dependency rate compared with the provinces in coast regions. The import and export in 2008 in Jiangxi accounted for 14.7% of its GDP (Figure 15). However, the low foreign trade dependency rate in Jiangxi may conceal the actual dependency of Jiangxi economies on domestic and foreign trade. In general, Jiangxi has been an economy based on primary products and services. There were only less than 40% of its agricultural products being processed, the rest were either consumed or sold to other provinces. Most the commercial agricultural products in Jiangxi, including rice, live pigs, oranges and aquatic products have been sold in form of the raw products, which makes the value added of the processing of agricultural products be captured by other provinces but also the development of agriculture in Jiangxi highly depend on the final and intermediate demands of other provinces. The industry in Jiangxi has been dominated by heavy industry. The output value of heavy industry accounted for 72.3% of the total industrial output value. Moreover, mining and preliminary processing of mining products, have formed a large part of the heavy industry. Such an agricultural and industrial structure makes the economy in Jiangxi highly depend on the interregional trade terms.

Figure 15: Change in Foreign Trade Dependency Rate over1989-2008

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Year

%

Data source: Jiangxi Bureau of Statistics. 2008. Jiangxi Statistics Yearbook 2008. China Statistics Press.

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2. Comparative Advantages, Constraints and Potentials 2.1 Comparative Advantages of Agriculture in Jiangxi

2.1.1 The Comparative Advantages of Land Resources Jiangxi has cultivated land areas of 2.82 million ha, accounted for

2.32% of the country (Table 48). The location quotient of cultivated land in Jiangxi was 0.65, indicating the cultivated land resources in Jiangxi are of significantly comparative disadvantage in the country. The agricultural development in Jiangxi should control the land intensive products. However, Jiangxi has location quotient of 1.49 and 2.64 in forestry land and inland water, therefore, very large comparative advantages hold for forestry and fishery development. Jiangxi has the location quotient of grassland of 0.31, therefore, is located in disadvantage position in the country. According to the comparative advantages and disadvantages Jiangxi has in varied types of land resources, the strategy for land utilization and agricultural development in Jiangxi should be to largely develop the industries and products relating to forestry land and inland water, and to intensively utilize the cultivated land and grasslands.

Table 48: Comparative advantage of land resources in Jiangxi (2008)

Cultivated land Forestry land Inland water Grassland

Land area (1000 ha) 282.71 1062.70 166.67 444.23 % of the national total 2.32 5.32 9.54 1.11 Location quotient 0.65 1.49 2.64 0.31

Data source: Jiangxi Bureau of Statistics. 2009, Jiangxi Statistics Yearbook 2009, China Statistics Press; NBS. 2009. China Statistics Yearbook 2009. China Statistics Press. 2.1.2 The Relative Position of Sub Sectors of Agriculture of Jiangxi in the Country The agriculture as a whole in Jiangxi once has had a location quotient over 1 in 1980 but has declined to 0.81 in 2008 (Table 49). It is now of comparative disadvantage in the country. But the relative positions of sub sectors of agriculture in Jiangxi vary largely. The forestry in Jiangxi in terms of output value in Jiangxi has had strong comparative advantages though its location quotient has declined from 3.64 in 1978 to 1.96 in 2008. In contrary, the fishery in Jiangxi had been in comparative disadvantage in terms of the output value in most of the years since 1978 but gained comparative advantage after 2005. It had location quotient of 1.14 in 2008. The quotient of crop planting and livestock in Jiangxi has been less than one and is further slowing down recently.

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Table 49: Change in the location quotient of sub sectors of agriculture in Jiangxi in 1978-2008

1978 1980 1990 2000 2008 Gross value of agriculture 1.053 1.061 0.923 0.803 0.810

Crop planting 0.972 0.994 0.673 0.670 0.692 forestry 3.641 3.535 1.639 1.668 1.958

Livestock 0.898 0.805 0.874 0.808 0.755 Fishery 0.865 0.719 0.678 0.994 1.137

Data source: Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press; NBS. 2009. China Statistics Yearbook 2009. China Statistics Press.

2.2 Comparative Advantages and Constraints Facing to Crop

Production in Jiangxi 2.2.1 Comparative Advantages of Major Crops The different crops in Jiangxi have varied comparative advantages although the crop production as a whole in the province in general has been of comparative disadvantages. We investigate the comparative advantages of crops from location quotient, land productivity and cost profitability perspectives. Location quotients The rice, rape seeds, sesame and citrus in Jiangxi has been of comparative advantages among the major agricultural products (Table 50). In particular, the rice and citrus in Jiangxi had location quotient of 2.93 and 3.22 respectively in 2008. Other crops in Jiangxi have had comparative disadvantages with location quotient less than 0.5.

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Table 50: Output of major agricultural products and location quotient in Jiangxi (2008)

Output (1,000 ton)

% of the country

Location quotient

calculated using total population

Location quotient

calculated using rural population

Grain 19,581 3.7 1.1 1.0 Cereal 18,723 3.9 1.2 1.1 #Rice 18,621 9.7 2.9 2.7

Beans 267 1.3 0.4 0.4 Potato 591 2.0 0.6 0.6

Cotton 112 1.5 0.5 0.4 Oil crops 912 3.1 0.9 0.9

#Peanut 368 2.6 0.8 0.7 #Rape seed 516 4.3 1.3 1.2

#Sesame 26 4.5 1.4 1.3 Fiber crops 13 2.1 0.6 0.6 Sugarcane 642 0.5 0.2 0.1 Tobacco 48 1.7 0.5 0.5 Silk worm 8 0.9 0.3 0.2 Tea 23 1.8 0.6 0.5 Fruit 4,445 2.3 0.7 0.6

#Citrus 2,485 10.7 3.2 3.0 #Pear 114 0.8 0.3 0.2

#Grape 16 0.2 0.1 0.1 Data source: Jiangxi Bureau of Statistics. 2009. Jiangxi Statistics Yearbook 2009. China Statistics Press; NBS. 2009. China Statistics Yearbook 2009. China Statistics Press. Productivities of major crops in Jiangxi There are only cereal, cotton and tobacco among the major agricultural products in Jiangxi that have land productivities higher than the national average. But the two largest crops in terms of sowing areas in Jiangxi, rice and rape seeds, were lower in land productivities than the national average. The yield per hectare of rice and rape seeds in Jiangxi in 2008 was 87.2% and 57.8% of the national average respectively. Therefore, it can be

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judged that the comparative advantages in terms of output of Jiangxi in rice and rape seed were achieved by extensive growth of sowing areas. The agricultural labor productivity in Jiangxi can be estimated roughly because no available data existed for detail input and output. Two datasets are used to estimate the labor productivity of agriculture in Jiangxi. One is the dataset from the Statistics Yearbook in which the data are reported by provincial bureau of statistics while another is that based on the national 2nd Agricultural Census. Based on the data in the Statistics Yearbook, the value added generated by each agricultural labor in Jiangxi in 2007 was CNY9,907, 9.1% higher than national average, ranked number 2 in the central region (Table 51). The output value of agriculture, output of grain, meat and aquatic products produced by each labor in Jiangxi in 2007 was also higher than national average. But the results are completely different if the census data are used. The labor productivity of agriculture in Jiangxi in terms of the value added, output value of agriculture, meat and aquatic products produced by each labor was lower than national average and most central provinces. The difference in the agricultural labor productivity in Jiangxi between two datasets stems from the difference in the number of agricultural labors. The number of agricultural labors in Jiangxi based on the yearbook was lower than that based on census data while the number for the country based on the yearbook was higher than that based on census data. The number of agricultural labors based on the census data in Jiangxi was 35.2% higher than that based on the data from the yearbook while the number for the country as a whole based on the data from the yearbook was 2.9% higher than that based on census data. Because of the data sources and the ways for quality control, the census data should be more reliable. The labor productivity of agriculture in Jiangxi using the data on agricultural labors from the census in 2006 ranked at number 20 in the country, not only lower than all eastern provinces and all central provinces but Shanxi, but even lower than Inner Mongolia and Xinjiang in the west.

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Table 51: Productivity of Agriculture in Jiangxi National

average Shanxi Anhui Jiangxi Henan Hubei Hunan

Yearbook for 2007 9,084 4,221 7,268 9,907 7,594 12,867 8,558 Value added per labor (CNY) Agriculture census 2006 8,097 4,601 7,495 6,998 9,198 7,874 7,163

Yearbook for 2007 15,549 7,801 12,535 15,607 13,286 21,446 13,850 Agricultural gross output vale per labor Agriculture census 2006 13,885 8,517 12,968 10,934 16,108 12,919 11,463

Cereal 5,320 3,751 5,158 5,630 5,799 5,787 6,139 Cotton 1,286 1,107 996 1,563 1,071 1,084 1,420 Peanut 3,302 1,942 3,576 2,516 3,942 3,527 2,320 Rape seed 1,874 804 2,096 1,037 2,410 2,085 1,492 Sesame 1,147 602 1,025 751 1,204 1,334 1,350 Jute and Kenaf Fibers 2,969 - 3,419 1,707 3,170 3,615 1,965 Sugarcane 71,228 - 44,300 44,442 54,840 41,389 55,046

Yield per hectare (ton)

Tobacco 2,044 1,934 2,526 2,226 2,354 1,667 2,167 Note: the labor productivity in 2007 calculated using the number of labors presented in the China Statistics Yearbook while that in 2006 using the number of agricultural labors in the Agricultural Census. Data source: NBS. 2008. China Statistics Yearbook 2008. China Statistics Press; NBS, 2008, Outline of the Data for China’s 2nd National Agricultural Census, China Statistics Press.

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Costs and benefits of major agricultural products in Jiangxi There are available data for only the costs and profits of four crops in Jiangxi, cotton, rice (early long-grain rice, late hsien rice) and rape seed. The cotton and late hsien in Jiangxi had land productivities and profitability higher than the national average in 2008 (Table 52). In particular, the yield per mu and profitability of cotton were much higher than the national average and all other central provinces. If there are more suitable lands, it is economically reasonable to expand the production of cotton in Jiangxi. The production of early long-grain rice and rape seed in Jiangxi are also profitable if current cost and price are not changed though the yields are lower than the national average. Without better substitutable crops, it is reasonable to continue the production of the two crops.

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Table 52: Costs and income of rice, cotton and rape seed each mu in Jiangxi (2008)

Items Yield of primary product

Output value

Total costs

Work loads Net

profit Cost

profitability

Unit kg CNY CNY CNY CNY % Cotton

national average 83 1,063 1,080 23 -17 -1.54

Shanxi 67 921 1,038 23 -116 -11.21 Anhui 75 920 1,046 26 -126 -12.07 Jiangxi 99 1,294 1,221 33 72 5.93 Henan 58 791 923 25 -132 -14.29 Hubei 74 948 1,066 26 -117 -10.98 Hunan 81 953 1,102 28 -148 -13.46

Early long-grain rice

National average 401 791 620 9 171 27.64

Anhui 357 626 579 8 47 8.07 Jiangxi 402 768 579 9 189 32.66 Hubei 435 772 563 9 209 37.21 Hunan 410 742 589 8 153 25.91

Late hsien rice national average 415 837 626 8 210 33.59

Anhui 469 864 648 8 216 33.33 Jiangxi 427 819 585 8 235 40.16 Hubei 446 815 617 9 198 32.06 Hunan 435 835 588 7 246 41.88

Rape seed National average 135 702 394 9 308 78.37

Anhui 155 799 395 8 404 102.30 Jiangxi 77 451 321 6 129 40.22 Henan 155 744 354 6 390 110.19 Hubei 132 658 369 7 289 78.20 Hunan 106 593 374 10 219 58.67

Data source: NBS. 2009. Compilation of National Data on Costs and Benefits of Agricultural Products 2009. China Statistics Press. 2.2.2 The Major Problems of Crop Production in Jiangxi Agricultural production pattern of small scale, extensiveness and low efficiency As in other regions in the PRC, the crop production in Jiangxi has been

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small scale production based on farmers’ household. But the scale of crop production in Jiangxi is even much lower that the national average and central region average. The average size in terms of cultivated land areas per farmer’s household in Jiangxi was only 6.94 mu, which was less than 70% of the national average (Table 53). The size and scope of land transfer among households in Jiangxi has been larger than the national average and other central provinces. But about 90% of the cultivated lands were still planted by farmers’ households even if 33% of the total rural labors migrated. Over a half of the cultivated lands were cared by the elderly and women. Their input in agricultural production has been very small because the households with migrants had not very much relied their lives on agricultural production. The input of fertilizers per hectare in Jiangxi in 2006 was lower than the national average and all other central provinces (Table 54).

Table 53: Household land size and land utilization in Jiangxi in 2006 Cultivated land

areas per planting

household (mu)

Cultivated land areas per farmers’

household (mu)

% land transferred

% Contracted, private and cleared land

National average 9.92 9.13 10.8 89.2

Shanxi 12.20 11.68 6.4 93.6 Anhui 8.08 7.75 9.7 90.3 Jiangxi 6.94 6.65 12.3 87.7 Henan 6.76 6.41 4.5 95.5 Hubei 8.78 8.38 8.4 91.6 Hunan 5.53 5.15 11.2 88.8

Central region 7.55 7.18 8.0 92.0

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press.

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Table 54: Agricultural input and machinery utilization each household

Fixed productive

assets (CNY)

Agricultural fixed

productive assets (CNY)

Fertilizer per ha

(kg)

Pesticide per ha

(kg)

% land areas with

tractor plough

% land areas sown with

machine

% land areas

harvested with machin

e National average 8,390 6,006 656 10.6 58.6 30.8 23.3

Shanxi 5,087 2,783 695 4.4 56.7 42.3 16.8 Anhui 8,230 6,431 662 11.6 79.6 36.3 49.4 Jiangxi 5,020 3,681 556 17.9 29.7 0.1 12.8 Henan 7,757 6,084 700 7.6 86.4 48.4 39.3 Hubei 4,996 3,795 859 14.4 34.1 1.3 19.5 Hunan 4,063 3,145 615 17.8 31.4 0.1 18.8 Central region - - 686 12.0 60.2 26.1 30.3

Data source: NBS. 2008. Outline of the Data for China’s 2nd National Agricultural Census. China Statistics Press. Lacking division of labors and professional services for agricultural production Jiangxi has had an advantageous condition to strengthen the division of labor and social services for agricultural production when there have been so many migrating rural labors which has created demands for the professional services. However, the social services for agricultural production have been very low in Jiangxi. There were only 29.7% land areas with tractor ploughed and 12.8% areas harvested with machine in Jiangxi in 2006, both of which were stand in the last position in the central region. There were only 0.1% land areas sown with machine in Jiangxi. The statistics of Jiangxi Provincial Agricultural Machinery Administration shows that 70% of rice areas were ploughed with tractors, 55% of rice areas harvested with machine and 2.5% of rice sown with machine in 2008. The average level of agricultural mechanization of rice reached 42.5% in 2008. The cropping structure is not diversified Jiangxi has a very simplified cropping structure. The rice accounted for 61.07% of its total sowing areas (Table 55), rape seed and vegetable accounted for 12.36% and 9.62% respectively. The three crops constituted 83.1% of the total sowing areas in 2008. Such a cropping structure led to low productivities as analyzed above.

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Table 55: Crop planting structure in terms of sowing areas in Jiangxi and other central provinces in 2008 PRC Shanxi Anhui Jiangxi Henan Hubei Hunan Central region

Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Grain 68.34 83.49 73.09 67.12 67.86 53.53 60.74 66.64

Rice 18.71 0.03 24.72 61.07 4.27 27.12 52.04 25.49 wheat 15.11 18.71 26.14 0.19 37.18 13.71 0.18 19.83

Corn 19.11 36.99 7.85 0.29 19.93 6.44 3.19 11.97 Beans 7.75 9.33 11.90 3.01 3.89 2.83 2.06 5.29 Potato 5.39 5.56 1.88 2.46 2.18 2.96 2.94 2.66

Oil crops 8.21 4.81 10.43 12.36 10.73 18.71 12.30 11.88 Cotton 3.68 2.39 4.35 1.25 4.28 7.44 2.42 3.99 Jute 0.14 0.00 0.12 0.15 0.08 0.32 0.56 0.20 Sugarcane 1.27 0.17 0.08 0.26 0.02 0.09 0.19 0.11 Tobacco 0.85 0.09 0.11 0.38 0.79 0.84 1.17 0.63 Medicine herpes 11.44 6.47 8.01 9.62 12.11 13.92 13.28 11.07 Vegetable 6.07 2.58 3.82 8.85 4.12 5.15 9.34 5.47 Melon and fruit 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Others 68.34 83.49 73.09 67.12 67.86 53.53 60.74 66.64 Data source: NBS. 2009. China Statistics Yearbook 2009. China Statistics Press.

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Few agricultural products being processed The degree of industrialization and commercialization of major agricultural products in Jiangxi has been quite low because two major products, rice, vegetables, were mainly produced for farmers’ own consumption. Except for tobacco and cotton, the linkage of agricultural production with the dragon head enterprises has been mainly confined to provision of technical services and elementary processing of raw agricultural products. 2.2.3 Potentials for Crop Production

The differences and insufficiency existed in Jiangxi’s crop production compared with other comparable provinces as discussed in the previous sections can be taken as potentials in some sense from another angle. The major potentials of crop production in Jiangxi are in following areas. First, there are quite large potentials existing for raising the land productivity. As analyzed in the previous sections, the yields per mu of major agricultural products, except for cotton and tobacco in Jiangxi are lower than the national average and the provinces of similar natural conditions. It implies the yields of the major products, in particular, rice, rapeseed and citrus, can be increased if suitable action is taken. The results of an experiment organized by Jiangxi Department of Agriculture in ten counties on the contribution of applied technology demonstration farmers showed that the demonstration farmers have had 34.6%, 31% and 38.2% higher yields per mu than the control farmers for early long-grain rice, late hsien rice and rapeseed respectively. It means the yields of rice and rapeseed in Jiangxi can be increased by 30% as long as the applied technologies can be extended to all farmers’ households. Second, the income generated by crop production in Jiangxi can be potentially increased largely by means of improving the cropping structure, increasing the input and developing agro-processing.

2.3 Comparative Advantages and Constraints Facing to Forestry

Development in Jiangxi 2.3.1 Comparative Advantages in Forestry Development Jiangxi has had strong comparative advantages in forestry development. Except for that described in prior sector on the forestry lands, Jiangxi has had also strong comparative advantages in timber, camellia seed, bamboo, turpentine, Tung oil seed and raw lacquer (Table 56). In particular, the camellia seed in Jiangxi accounted for 19.33% of the national output in 2008, had absolute advantage in the country.

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Table 56: Location quotient of forestry, livestock and aquatic products in Jiangxi in 2008

Products % of

national output

Location quotient calculated using total

population

Location quotient calculated using rural

population 1. Forestry products Standing volume

stock 2.75 0.83 0.77

Turpentine 5.68 1.71 1.59 Raw lacquer 3.62 1.09 1.01 Tung oil seed 2.12 0.64 0.59 Camellia seed 19.33 5.84 5.41

Timber 0.06 0.02 0.02 Bamboo 7.53 2.27 2.10

2. Livestock products Meat 3.58 1.08 1.00

Pork 4.29 1.29 1.20 3. Aquatic products Aquatic products 3.89 1.17 1.09

Fresh water aquatic products 8.29 2.50 2.32

Natural 10.74 3.24 3.00 Cultured 8.02 2.42 2.24

Fish 8.48 2.56 2.37 Shrimp and crabs 4.86 1.47 1.36

shellfish 13.76 4.15 3.85 Others 10.14 3.06 2.83

Data source: Jiangxi Bureau of Statistics. Jiangxi Statistics Yearbook 2009. China Statistics Press; NBS. 2009. China Statistics Yearbook 2009. China Statistics Press. 2.3.2 Main Constraints Facing to Forestry Development Small scale, scatter and extensive forestry production Jiangxi has 107.9 million mu forestry land areas composed of 10.97 million pieces, which have been allocated among 6 million farmers’ households. Each household has about 16 mu composed of two or more pieces. The forestry production in Jiangxi has been in very small scale and scatter distributing. Moreover, most of the farmers’ households had not taken good care of forestry production without much input made in the forestry production because majority of the farmers do not treat forestry production as a business. Therefore, the productivities in forestry production have been very low in Jiangxi.

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Constraints for the transfer of forestry land property The transfer of forestry land property in Jiangxi still has confronted many constraints though the reform of forestry land property has removed the legal barriers for the transfer. Firstly, most owners of forestry resources treated forestry as a natural reserve rather than a business or industry. They like to neither take care of the forestry nor transfer the property. Secondly, local governments have not been keen to supporting the transfer of forestry land property because they worried about social stability aroused by the loss of forestry lands and insufficient social welfare protection. Thirdly, there had been some cases in which the interests of the forestry resource owners had been harmed after transfer of forestry property, which makes the others dare not to transfer the property. Slow progress made in cooperative development in forestry

A survey organized by the Jiangxi provincial department of Forestry showed that there had been 4245 forestry cooperatives formed by May, 2008. The cooperatives covered 0.95 million members, about one sixths of the total forestry households (Table 57). Among the cooperatives, the association against wind, fire and insects accounted for 85% in terms of number of members. This kind of cooperation has had very limited roles for addressing the diseconomy of scale.

Table 57: Cooperatives development in forestry in Jiangxi (up to May

2008) Number of Coop. Number of Members

Types Number Registered

Funds (CNY 1,000) members Forestry

population

Total 4,245 150 1,040,140 950,849 915,141

Shareholding cooperative forestry farm

2,250 96 988,490 115,592 113,719

Professional planting tree firms 13 2 6,950 1,150 640

Forestry professional association

94 44 34,690 27,822 27,328

Forestry association against wind, fire and insects

1,888 8 10,010 806,285 773,454

Data source: Qiu Shuiwen. “A Report on Survey of the Forestry Professional Cooperative Development in Jiangxi”. 25 May, 2008, http://www.jxly.gov.cn/lyzt/kxfzg/xxydy/200808/t20080825_23157_5.htm

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No effective ways for addressing the financing of forestry development Forestry is a special industry of long production cycle and large investment. Without the financing institutional arrangement adapted to the characteristics of forestry industry, it is very difficult to achieve the forestry development in large scale. Jiangxi provincial government has made policies to address the financing of forestry development since 2007, including supporting the loans with forestry resources as collateral, setting up special guaranty funds for forestry financing, and organizing forestry insurance pilots, etc. However, the progress made up to date in the area has been not very large. 2.3.3 Potentials for forestry development in Jiangxi Forestry will be one of the main sources for farmers’ income generation in the future in Jiangxi because of the comparative advantages owned in terms of land resources and productivities. The major potentials of forestry in Jiangxi are: (i) the output value and income generated by each mu of forestry land in Jiangxi has been lower than the national average and that in most provinces in central region. If efforts are made in strengthening the management and technical progress and in coordinating the relation between protection of forestry resources and improvement of the productivity, the forestry in Jiangxi can make much larger contribution to the increase of farmers’ income; (i) Jiangxi has large potential to develop forestry tourism using its rich forestry tourism resources and good ecological environments; and (iii) Jiangxi is of significant comparative advantage in the production forest, in particular in camellia seed and bamboo. With the increase in modern input and strengthening of management as well as the development of forestry processing industry, Jiangxi has large potential to increase the income from production forestry.

2.4 Comparative Advantages, Constraints and Potentials for Livestock Development in Jiangxi Jiangxi has had no comparative advantages in livestock sector as a whole except for pigs. But relatively livestock in Jiangxi has been a more mature industry compared with other sub-sectors of agriculture. First, 68% of pigs and 66% of poultry in the province have been produced in the livestock farms of economical scale based on the standards set by the government. There were 268 pig farms with over 10,000 heads of pigs and 3100 pig farms with over 1000 head of pigs in 2008. Second, a large proportion of pig raising farmers have been formed into livestock cooperatives. Third, the processing of livestock products has developed well. The processing of livestock products has generated output value of CNY16.5 billion in 2008, which was about 31% of the output value of livestock. The major constrains facing to the livestock development in Jiangxi are:

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(i) the livestock dragon-head enterprises in Jiangxi have been weak in the economic linkage with farmers’ income generation though Jiangxi has had some national wide well known brand of livestock products, including “Huangshanghuang” sauced and halogen products, “Yaya” down garment, and “Wangshi” honey, etc.; (ii) the insurance for livestock has been underdeveloped, which makes the development of livestock in Jiangxi unable to insist the natural and market shocks; and (iii) the capacities of processing and refrigeration for livestock products has been very limited in Jiangxi.

Jiangxi has potentials in livestock in following areas: (i) Jiangxi has been one of the major net exporters of grain in the country and also has rooms for increasing feed crops in the arable lands which are not suitable for grain and cash crop planting and in the grassland. Therefore, it is possible to increase the production of pigs and cattle with the support of feeds; (ii) Jiangxi is a province with large areas of inland water. There are rooms for increasing the ducks and geese production in the province; and (iii) Larger potentials for livestock development in Jiangxi are in the increase of productivity and income of livestock for farmers by means of improving the mode of raising and developing livestock product processing.

2.5 Comparative Advantages, Constraints and Potentials for

Aquatic Products Development in Jiangxi Jiangxi has strong comparative advantages in inland water resources

and aquatic products. In particular, its fresh water aquatic products were of large comparative advantages in the country with location quotient of 2.5.

The further development of aquatic industry in Jiangxi requires overcoming some constraints. Firstly, the strategy for aquatic industry adopted in the past in Jiangxi had been to increase the output mainly by expanding the areas of production and the productivity has been quite low. Secondly, the regional distribution of aquatic products has been relatively scatter, which restricted the increase of productivity and competitive capacities. Thirdly, no unified national brand for aquatic products has been developed, which is not good for market development. Fourthly, only 13.5% of aquatic products in Jiangxi in 2007 had been processed.

2.6 Comparative Advantages and Major Problems in Development

of Safe Agricultural Products in Jiangxi 2.6.1 Comparative Advantage of Agricultural Product Quality Safety of Jiangxi Province

First, Jiangxi is abundant in ecological resources. Compared with other provinces, Jiangxi boasts abundant ecological resources with ecological and commonweal forest covering an area of 3.4 million hectare. Jiangxi has plentiful water resource with high quality. The five rivers of Gan river, Fu river, Xin river, Rao river, and Xiu river, converged in northern Jiangxi, forming

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PRC’s biggest fresh water lake, Poyang Lake, which is a relatively independent water system to block and prevent outside pollution. There’re over 2400 big and small rivers with total water resource of 163 billion cube meters, accounting for 6.4% of the total national water resource, per capita water resource being at 3768.7 cube meters, both ranking the 7th place nationwide. Jiangxi has abundant water resources with excellent quality. In 2007, the percentage of the sections with I-III water quality of the 8 major rivers was 77.2%. Abundant and superior quality water resources have become an advantage for Jiangxi’s ecological environment, providing wonderful natural foundation for the safe production of agricultural products.

Second, Jiangxi enjoys beautiful natural environment. In 2006, the energy and power consumption per CNY10 thousand GDP were 15.2% and 28.9% lower than the national average, which was the lowest in central and eastern regions. Jiangxi’s overall air quality4 is excellent, which is better than the 2nd national level standard. The pollutant emission of daily lives, industrial waste water, gas, and solid substance is lower than the neighboring provinces. Pleasant environment provides a good condition for the development of Jiangxi’s ecological agriculture and green food.

2.6.2 Comparative Disadvantage of Agricultural Product Quality Safety of Jiangxi Province

First, the safe production consciousness of farm households has been relatively weak. Influenced by traditional agricultural production mode, and because of the incompleteness of quality safety inspection and supervision system of the agricultural products, and the imperfection of the traceable system of agricultural product quality safety, many farm households don’t take safe production seriously. According to the survey of the consulting team for this study, 57.4% of the respondents reported there had been ever no any cases where their products had been checked and tested when selling products. Second, the market of agricultural products is not perfect. At present, major exchange mode of agricultural products in Jiangxi Province is still dominated by the exchange of primary products, in which exchanged agricultural products lack necessary commercial package, effective marks for safety and superior quality, and their own brands, making consumers hard to judge the quality of agricultural products via naked eyes and experience. As a result, there’ve appeared free riders in the market, where products of various levels are mixed with one another, making it difficult for consumers to buy agricultural products of truly high quality. Gradually

4 The PRC has a five-grade classification of air quality defined by the concentration of SO2, NO2 and PM10, by which grade one denotes for excellent air quality, grade two for fairly good, grade three for slightly polluted, grade four for poor and grade five for hazardous.

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agricultural products with high quality and safety will recede from the market, leading to the phenomenon of bad money driving good money out of circulation. Finally, the utilization of farm chemicals is not reasonable. Some areas are still using highly toxic farm chemicals such as methamidophos and omethoate, etc.

2.6.3 The Challenges and Problems Faced by Agricultural Product

Quality Safety in Jiangxi Overlapping management results in unclear responsibilities and duties

assigned At present, the administrative powers of agricultural product safety are

in the hands of various departments such as agriculture, commerce, public health, quality inspection, industry and trade, environmental protection, planning and finance, which lead to the situation where these departments rush for interests, and evade without interests, affecting the effectiveness of supervision and law enforcement. The phenomenon of unclear obligation, multi-source policies, contradiction with each other, management overlapping and absence, is very prominent, which often results in the overlapping and inconsistency of administrative activities, instability of law enforcement, and blind areas for administration. In order to better coordinate the work of the above departments, Jiangxi Food and Drug Administration was established, however, which can’t fundamentally solve the problems of overlapping functions and law enforcement of these departments.

The agricultural product quality inspection system needs to be perfected

First, the inspection ability for agricultural products needs to be improved. Most inspection institutions at local levels are small with poor equipments and can only inspect a few simple items, can’t inspect residues of farm chemicals, veterinary drug, hormone, radiation pollution, and toxic substances, which are directly relevant to people’s health.

Second, inspection institutions are not formed in a system. There is no direct communications and share of resources among the inspection institutions at provincial, prefecture and county levels, resulting in inefficiency of the resources allocated for inspection.

Third, the allocation of inspection resources isn’t reasonable. Advanced inspection facilities are almost only concentrated in the provincial (ministerial) level inspection institutions. The inspection institutions at prefecture and county levels, however, usually have laggard inspection facilities, weak technical forces, making it difficult for them to inspect a wide range of items. As for agricultural production bases and key enterprises, the self-inspection measures are even more backward, severely affecting the implementation of total quality safety supervision covering the whole

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production processes. Finally, the quality of inspectors needs to be improved. In general, there

lack inspectors of high quality in Jiangxi. Especially the inspectors at grassroots levels lack professional skills and don’t have enough training and study opportunities, either.

The tracing system of agricultural product quality safety hasn’t been completely established

It’s urgent to establish a set of systems and mechanisms for quality monitoring, investigating, and tracing to guarantee the quality safety of agricultural products. Establishing quality management and traceable systems of whole process of production, including agricultural production environment, production process, product inspection, and package mark, can enhance producers’ awareness of safety and responsibility to earnestly safeguard the quality safety of agricultural products. Agricultural development environment has changed Along with quickening of industrialization and urbanization of Jiangxi Province, three industrial wastes (waste water, gas and solid substances) and urban household wastes pose continuous damaging influence to atmosphere, water, soil that are essential for the existence and development of agriculture; the externalization of agricultural inputs such as seeds, fertilizer, farm chemicals, livestock and poultry fodder, and application of some animal and plant hormone and modifier, the original balance of ecological environment and physiological maturing of plants have been greatly changed, forming new diffused pollution of agriculture, and exerting inhibitive impact on the reproduction of agricultural beneficial organisms. The increasing commercialization of agricultural products, the abolishment of the planned purchasing and supplying system, and the complete opening up of agricultural product market, lead to the diversification of the operators of agricultural products, streamlining of operation processes, strengthened time and space mobility of agricultural products. As a result, quality safety control over agricultural products has become increasingly complicated.

2.7 Advantages and Main Restrictions for the Development of

Modern Agricultural Product Logistics 2.7.1 Jiangxi is rich in agriculture resources but lacks distinct

advantages because of the similarity in the agricultural products in the central region

Jiangxi has rich agricultural resources in forestry, aquaculture and ecologic environment, which generates large demands for modern agricultural logistics. However, it is worth noting that Jiangxi does not occupy much distinct advantage over other central provinces. Most of the agricultural products produced in Jiangxi are same as or similar to those in other provinces in central region. Therefore, with fasten development of

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agricultural product logistics (APL), severe competition and challenges emerge. Jiangxi Province has 20 agricultural products included in the lists announced by the Ministry of Agriculture in “The regional planning of agricultural products of distinct characteristic (2006-2015)" in 2007, ranking 4th in the central region.

2.7.2 Jiangxi Has a Geographical Location in Favor of the

Development of Modern APL The opportunities produced from Jiangxi unique geographic location for

modernizing the APL are in two aspects: (i) expansion of food export. The increase of foods gathering, processing, and export in coastal area pull the movement of agricultural products from inland to coastal region. According to a survey on 10 export firms with more than $20 million of agricultural products processing in Fujian and Zhejiang province, the raw materials of processing from outside accounted for more than 50% of the total, to which Jiangxi Province contributed more than 50%; and (ii) increasing demand for agricultural products. With fast industrialization in the coast region, the land resources available for agricultural production decline, leading to shortage of local supply of agricultural products. Data show that Zhejiang, Fujian, Guangdong and Hainan can only supply 76.2% of total demand for grain of four provinces locally, which provide large demand for Jiangxi agricultural products. In recent years, Jiangxi sold live pigs of 10 million to Guangdong and Fujian annually.

2.7.3 Jiangxi Has Established a Road Transport Network Good for

APL Development but Accessibility Needs to Be Improved Further According to the 2nd National agricultural census, as of 2006, the

percentage of villages with road to the total number of villages in Jiangxi is 97.7%, ranking the 1st in the central six provinces, and the percentage of nature villages with road is 82.8%, ranking the 3rd in the central region, which illustrate the advantages in rural road network of Jiangxi compared with other central provinces. However, the percentage of villages with less than 5km distances to the nearest station or port to the total number of villages was 80.3%, ranking the 5th; the one with less than 10km is 93.7%, ranking the 3rd, the percentage of township with specific market to the total number of townships show the similar result, the one with specialized market, foods market, vegetables market and fruits market was 23.4%, 4.9%, 19.4% and 6.6% respectively, all ranking the 5th of the central provinces. These indicators reflect convenience degree of transport, the gathering and distribution capacity of agricultural products, the basic conditions of modern logistics equipment, etc, needing to be improved further.

2.7.4 Lagging in Information Infrastructure and Management would

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Be Key Constraints to Modernizing APL Jiangxi Province has made marked progress in rural information

infrastructure construction and utilization since 2000. There are 11.82 million mobile phone users and 4,927,000 internet users in 2008. An interactive information network linked with 89 cities and counties (districts) has been formed for farmers to obtain relevant agricultural information with wide ranges of services, such as “121” telephone, rural economic television network, broadcasting, information blackboard, and other forms, to assure prompt delivery to farmers. In spite of these performances, the APL information system is still lagging behind of the needs of modern APL. Mainly, (i) the utilization of information is still inefficient. Because the coordination and management mechanism has not yet been set up and no unified standard system on information classification and grading developed, the level of information sharing and utilization is still low; (ii) timeliness of information provision and processing is still poor. The information system on agriculture and rural development in Jiangxi cannot provide timely information on technologies, marketing and others; and (iii) the information technology is lagging behind. It is found that advanced logistics information technologies, such as POS, EDI, GPS, GIS, Barcode, has not yet been fully applied, although these technologies is essential to the efficient operation of APL.

2.7.5 Insufficient Professional Equipment Restricts Logistics Efficiency and Effectiveness of Rural Logistics Development in Jiangxi

It is found from the study that there lack professional equipment for rural logistics in Jiangxi, in particular, at village level. There are few, if any, villages equipped with cold storage. Refrigerated trucks or special vehicles are lacking in the transportation of fresh agricultural products. Testing equipment is rare either, even in the largest wholesale market, the Nanchang Shenzhen agricultural product wholesale market, only low-level testing equipment exists without function of batches testing. Because of lagging behind of professional technology and equipment, logistics of agricultural products, especially raw and fresh ones, can not be guaranteed of quality and safety, which might result in damage of value, even in some cases harm customers’ health, such as exceed pesticide residues, food deterioration, etc.

2.7.6 Lack of Logistics Talents Restricts the Development of APL The rapid development of modern logistics industry creates huge

demand which can’t be satisfied by the current education and training institutions in Jiangxi, especially in logistics planning, logistics, information technology, human resources, logistics system design, export-oriented international trade, etc. Serious shortage of logistics management and technical personnel may be the bottleneck which will restricts the

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development of modern agricultural logistics in Jiangxi. 2.8 Opportunities and Challenges for the Vocational Training in

Jiangxi 2.8.1 Opportunities Nowadays, Jiangxi is facing the following opportunities for promoting

rural vocational trainings: (i) The governments at all levels in Jiangxi Province have attached great importance to vocational training for rural labors; (ii) the joint conference system for rural labors transfer training of the whole province has been set up and is now being improved continuously, all departments concerning rural labors transfer trainings are now in close cooperation and coordination，and this has provided a powerful guarantee of system for developing rural labors transfer training work; (iii) in order to give an active response to the financial crisis, and further stabilize and expand employment, both the central government and Jiangxi Provincial government have established and issued many policies and measures for promoting employment, which will provide powerful policy support to Jiangxi in developing transfer training work for rural labors; (iv) apart from a great amount of the capital the state invests every year, the finance departments of various level in Jiangxi Province also arrange special funds for the work of rural labors transfer training closely connecting to the actual demands of the economic development of the local industrial park and transfer training for rural labors; (v) Jiangxi is of advantageous location geographically closing to the developed areas in the east coast region like Guangdong, Fujian, Shanghai and Zhejiang, etc., which will provide broad space for rural labors to get employment in other provinces through transfer training; (vi) the export-oriented economy and economy of industrial park of Jiangxi Province is developing very fast，which has further increased the capability to absorb rural labors for transfer employment，and will provide convenience to rural labors to get employment without leaving their home place; and (vii) with publicity of policies for rural redundant labors’ local transfer employment becoming more and more strengthened, and various preferential policies for transfer trainings being thoroughly implemented, rural labors will get more boon from the trainings and their consciousness of participating in transfer training will get enhanced.

2.8.2 Challenges and Constraints Difficulties and challenges Jiangxi Province facing to the transfer

trainings to rural labors are mainly as follows： Decrease of employment opportunities due to the financial crisis

produces more pressure on transfer trainings With the international financial crisis further extending and stratagem of

“double transfer” deeply developing in the main labor output places such as

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Guangdong, etc.，employment in out of the province becomes more and more difficult. In addition, three difficulties are in pile that university graduates are difficult to get employed, migrant workers are difficult to get jobs and disadvantaged groups of people are difficult to get employment，which has made it much more difficult for Jiangxi to show the timely effect of its transfer training work for rural labors.

Part of rural labors having no strong desire for trainings Since many rural labors have low education attainment and think more

about the vested interests，they are not very active in participating in transfer training, what they think of most is that they have to pay for the training such as for teaching materials, food, and dormitory, etc.，and have to pay every month. Even if in the situation that the government pays all the expenses of the training, they still think that their net monthly income is zero, so, many of them do not like to participate in trainings. According to the survey, 13% of the rural labors think they do not need trainings.

Inadequate capital for transfer training Although more and more rural labors have the demand and the desire

for training and employment，the present subsidy capital can not meet the demands of broad masses of rural labors for transfer training. With publicity of the economic development situation and the policy of subsidy for trainings more and more deeply developed, redundant rural labors inside the province and rural labors, who are working outside the province, have greater enthusiasm to serve the economic construction of their home place and return back home to participate in the training and get employed locally in the nearby industrial park. Besides, affected by the international financial crisis, there are also some migrant workers, who have returned back home, they are eager to heighten their vocational skill level through trainings, so that they can improve their competitive power. But the CNY300 subsidy for each person for rural labor training is rather little, which can not meet the trainings for some jobs with longer training time and higher skill level.

Unsound training system The public rural employment service system is still unsound and

comparatively lags behind in Jiangxi Province, which has caused many difficulties in carrying out rural labors transfer trainings，and made the policies issued by the central government and the province about promoting rural labors transfer trainings difficult to get implemented； the training resources in existence is dispersed and their integration is not yet ideal. In some areas, departments of labor securities, agriculture, and poverty alleviation, etc. are still work separately, and the interlocking among training, regional economy and industrial economic development has not yet formed. Training by placing order, training for specific posts, and training by cooperation between schools and enterprises are still not very satisfactory, and disjoint phenomena still exists between training and take-over.

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2.9 Problems existed in Jiangxi Rural Land Property Rights System 2.9.1 Problems in the Implementation of the Right to Cultivated

Land and Water Contractual Management The transaction of property rights to cultivated land and aquaculture

water area is restricted by the existing legislations. The Rural Land Contract Law in the PRC permits the transaction of contracted rural lands by means of bidding auction, pooling of rights as shares, mortgage when the lands are still used for agriculture and among rural residents. Enterprises, urban resident and foreign tradesman are forbidden to be the assignee. In addition, the right to land contractual management may not be mortgaged according to the Property Law and the Guaranty Law.

The implementation of the existing law should be strengthened. There are no specific regulations specifying the implementation of concerned laws though the existing laws have identified some legal transaction means of the right to land contractual management, such as subcontracting, leasing, exchanging, transferring and cooperative equity.

The regulations on supervision of trading, intermediaries and dispute resolution regarding the trade of property rights to contracted rural lands should be made to improve the implementation of the concerned laws.

No regulations or legislations regarding the transaction of the property rights to the contracted aquaculture water area have been made up to date.

The transaction of property rights to contracted rural lands in Jiangxi is still underdeveloped. First, subcontracting and leasing are the principal means of land property right transaction, accounting for over 60% of the deals; second, short-term transaction of land property rights dominated in Jiangxi with the term as short as one or two years; third, the trade market and intermediaries of transaction are underdeveloped. The land trade market has not been established in most counties in the province. The intermediaries for assessment, consulting, notary and arbitration related to land transaction have not yet been developed. Fourth, the ways of transaction have not been standardized in terms of procedures and formats. Most farmers circulate their right to others in private without registration, even lack of written agreement. So, there are many problems and hidden troubles involved in the formalities and procedures of transaction.

There still exist cases in which the contracted lands of farmers are re-distributed within the villages although the concerned law guarantees the contracted lands of farmers being unchanged in 50 years.

The rural women’s true right of contracting of land is significantly less than that in their name though rural women have equal right to obtain the initial land under contracted management by law. Firstly, the contracted land of the married women in their home villages are usually taken back by her village or left to her parents or brothers to use when they got married while

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the contracted lands in her husband’s family could not be distributed to married women for a long time or forever. Secondly, women’s rights for contracted lands are hardly guaranteed in case of remarriage of the divorced and the widowed.

2.9.2 Problems in the Implementation of the Right to Forestlands

Contractual Management There seems inconsistence existed between new policies and

concerned laws regarding the property rights of forestlands. The Property Law and Rural Land Contract Law regulates that transaction of contracted forestlands should be agreed with the collective of farmers of a village (contract-issuing party) and the assignee should be a farmer, and the right to the use of the contracted land owned by the collective can not be used as mortgage. However, some policies such as “CPC Central Committee and State Council's Decision on Acceleration of Forestry Development”, “CPC Central Committee and State Council's Suggestion on Promoting Reformation of System of Collective Forest Rights Comprehensively”, permit the contracted forestland to be mortgaged and be transferred without agreement of the collective of farmers of a village.

The system of forestland transaction is not perfect. Although Exchange Center of Forestry property Right has been established in 70 countries (cities), the proportion of forestland transaction through the market is still few up to date. Firstly, there are no clear regulations identifying the responsibilities for assessment organization of forest resource and few licensed personnel working in the area. Secondly, the registration system of forest trading should be improved, which should be coordinate with Property Law.

The related systems of forestry right transaction should be improved further. Besides establishment of Exchange Market of Property, some related systems should also be developed, such as arbitration system of forestland transaction dispute, mediation mechanism of forestland dispute.

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IV. Strategies Proposed for Rural Development in Jiangxi Province

1. Overall Strategic Goals for Rural Development in Jiangxi by

2020 1.1 Principles for Determining the Overall Strategic Goals Six principles are employed to determine the overall strategic goals. (i)

The proposed goals and actions should be in accordance with the decided national, ministerial and Jiangxi provincial government long-run strategies and plans made for rural development; (ii) the rural development strategies should be designed in the context of coordinated rural-urban development; (iii) the proposed rural development strategies in Jiangxi Province should be able to take full advantage of the comparative advantages in Jiangxi and adapt to the context of Jiangxi; (iv) the proposed strategic goals and actions should be supported by the resources and institutions available in Jiangxi; (v) co-ordinations should be put among the proposed goals and between the proposed goals and actions, and (vi) the proposed rural development strategy should be based on sustainable development principle.

1.2 Prerequisites for Setting up Goals for Rural Development

Strategy in Jiangxi Reducing the numbers of population that live on agriculture through

urbanization has been proved to be a principal successful development mode in most countries. The PRC is standing in the fast urbanization stage now. The targets and path of urbanization are of indispensable effects on determination of the goals of rural development strategy. In other word, the strategic goals and action plans for rural development in Jiangxi in next 10 years cannot be decided without clearly identification of the strategic objectives and measures of urbanization. In this sense, identification the targets and strategy of urbanization in Jiangxi by 2020 is the prerequisite for planning the goals of rural development strategy. According to the analyses of the growth of population, the pace of urbanization in the past decade, the economic development stage and the urbanization plan made in Jiangxi, it is forecasted that the proportion of urban population in Jiangxi by 2020 will increase up to 58%.

The urbanization strategy in Jiangxi by 2020 based on the features of urban system in Jiangxi are (i) to optimize the urban hierarchical system by facilitating the development of county towns and central towns which will be developed as the important spatial junctures linking rural communities with cities, (ii) to improve the quality of urbanization by increasing the function of cities and central towns in providing off-farm jobs and in serving for the socioeconomic development, and (iii) to coordinate the urban-rural development by exploring urban and rural interactive and mutually supporting development manners.

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1.3 Overall Strategic Goals for Rural Development in Jiangxi by

2020 The proposed overall strategic goals for rural development in Jiangxi

are to build rural Jiangxi into a prosperous and civilized green rural society of affluence, harmony, and full of vitality by 2020. They are elaborated below.

i. Building an affluent rural Jiangxi is the central and fundamental strategic goal for Jiangxi rural development by 2020. The targets set for building an affluent rural Jiangxi are (i) the productive capacities for food and other major agricultural products are improved largely; (ii) the per capita net income of rural residents in Jiangxi by 2020 will grow up to CNY10,000 or by more than one fold than that in 2008; and (iii) the income inequality among rural residents will be controlled and absolute rural poverty will be eradicated fundamentally. These targets will be elaborated and explained in the coming sections.

ii. Building a harmonious rural Jiangxi is to adopt inclusive and coordinated rural development approach. It compose of: (i) building up harmonious relation between urban and rural areas by equalizing the primary public services, (ii) building up harmonious relations among rural areas and rural residents by equalizing the access to primary public services and social security, and (iii) building up more mutually trustable relation between grassroots government and rural residents by transforming the grassroots governments and organizations into ones centered on supplying services needed.

iii. Building a civilized rural Jiangxi is to improve the grassroots democracy and governance by moving forward the grassroots democracy and autonomous administration, to establish healthy and lively rural society by increasing the quality of living of rural residents and developing rural cultural and sport undertakings, and to promote conservation culture by improving the living and ecological environment of rural residents.

iv. Building a green rural Jiangxi should be taken not only as one goal for the rural development in Jiangxi but also as a core value which will be adhered to through the whole process of rural development. The green rural development includes the adoption of environmentally friendly production and technologies and low-carbon lifestyle, and generation and maintenance of sustainable eco-system.

v. Rural Jiangxi will be full of vitality socio-economically and politically as long as rural Jiangxi has been built into a prosperous and civilized green rural society of affluence and harmony.

2. Strategy for Income Growth of Rural Residents in Jiangxi Strategic goals set for income growth of rural residents in Jiangxi by

2020 are to establish the institutions and infrastructure necessary for

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sustained income growth of rural residents, to transform the ways for income growth, and to increase the per capita net income of rural residents to over CNY10,000, and to control the rising income disparity as well as to fundamentally eradicate rural absolute poverty.

2.1 Rational for Suggesting the Objectives of Income Growth of

Rural Residents in Jiangxi The central government has decided in 2008 that the per capita net

income of national rural residents would double from 2008 to 2020, which means it must grow 5.95% annually over the period. In 2008 the per capita net income of rural residents in Jiangxi was 98.65% of the national average. If the per capita net income of rural residents in Jiangxi reaches the level same as the national average by 2020, Jiangxi must keep its per capita net income of rural residents growing over 6.1% annually. The per capita net income of rural residents in Jiangxi can reach to CNY10,000 as long as it grows at the rate of 6.5% annually. Such a growth rate is in line with the overall strategy the central government set for central region development and the strategic goals Jiangxi provincial planed to reach. It is also of feasibility based on this study.

First, there are large potentials existed for the income growth in the province. As analyzed in the prior section, the productivities of major agricultural products, including rice, rape seeds, bamboo, camellia oil, pigs and aquatic products, are lower than the national average in terms of yield per hectare. They can be increased in short time with the increased input of applied new technologies. Jiangxi can also take advantage of its good ecologic conditions to facilitate the development of green agriculture and eco-tourism to increase the income. Farmers there can increase their gains from raising the standardized production and therefore the quality of agricultural products and share the profit by developing the agro-business and enhancing the linkage of farmers with agro-processing enterprises. In addition, the rural residents in Jiangxi can increase their income from remittances of migrating labors by improving the professional skills of the migrants through vocational training and therefore the wage rates.

Second, the rural development in the past 10 years in Jiangxi has set up good bases for future development in terms of physical and social infrastructure, technical extension and industrial organizations.

Third, the foreseeable national policies in favorable of agricultural development and farmer’s income growth in the coming decade will provide enable environment for Jiangxi to achieve the objectives of income growth of rural residents. Such an expectation made on policy directions is made based on following considerations: (i) there come always with significant institutional innovation or policy supports when the PRC achieved over 5% growth rate of farmers’ per capita net income in more than five years according to the records of historic statistics. The national rural

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development strategy plans to double per capita net income of rural residents from 2008 to 2020 or increase 5.94% annually. Therefore, favorable policies can be foreseen to come out; (ii) transforming the modes of economic growth and increasing domestic demands will be the main strategy for the PRC to achieve sustainable economic development. It can be sure that increasing the farmers’ income and the expenditure on rural social security will no doubt be included; and (iii) the increasing natural disasters in recent years requires the central government to review and evaluate its agricultural investment policies in the past 30 years, which will lead to the increase of national investment in agricultural infrastructure, in particular in water conservancy and irrigation.

Fourth, the per capita net income of rural residents in Jiangxi had grown with annual rate 0.9 percentage points higher than the national average from 2000 to 2008, which indicates Jiangxi is able to achieve growth of per capita net income of rural residents higher than national average.

2.2 Priorities for Income Growth Strategy Priorities proposed to accomplish the targets set for income growth of

rural residents in Jiangxi are to transform the ways for income generation, including: (i) transforming the low-efficiency ways for agricultural income generation to higher efficient ones by increasing agricultural productivities; (ii) transforming the income growth in agriculture from mainly depending on the increase in the output to that with more dependence on the improvement in the quality and standards of agricultural products; (iii) transforming the income generation earned mainly from raw agricultural production to that earned from both agricultural production and increased value added by extending the industry chain to include grading, package, transportation and processing of agricultural products; (iv) transforming the income generation of the rural migrants from mainly relying on unskilled and unprofessional employment to increasing the migrants’ income by improving their professional skills; (v) developing the small businesses in rural areas to make it become the third largest income growth point after agriculture and migration; and (vi) increasing the income of rural residents from land property owned by supporting the transfer of cultivated lands and forestry lands in Jiangxi.

2.3 Expected Change in Income Sources It is forecasted the per capita net income of rural residents in Jiangxi

based on the projection and assumption made for rural industries strategy, employment strategy and policy change, will increase to CNY10,162 in 2008 price, among which 41.6% will be from agricultural income, off-farm business and migration will contribute 11% and 36% respectively, the income from property, direct transfer from government and social welfare together will contribute 7.3% of the total net income (Table 58). Based on

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the forecasted income change in rural Jiangxi by 2020, the shares in forestry and fishery and from property income and social welfare transfer will rise largely while those in crop production and livestock will decrease.

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Table 58: Projection of per capita net income of rural residents in Jiangxi in 2020

2003 2008 2020 (projected) Annual growth

rate %

Income source

Amount (CNY) % Amount

(CNY) % Amount(CNY) % 2003

- 2008

2008 -

2020 Household run agriculture 1,097 44.66 2,086 44.41 4,213 41.46 7.92 6.03

(1) Crop planting 782 31.84 1690 35.97 2705 26.62 10.24 4.00

(2) Forestry 67 2.73 108 2.31 794 7.81 5.02 18.05

(3) Livestock 216 8.81 231 4.91 461 4.54 -2 5.94

(4) Fishery 31 1.28 57 1.22 253 2.49 7.18 13.17

Household run off farm business 260 10.58 467 9.93 1,086 10.72 6.9 7.29

(1) Industry 35 1.41 84 1.79 210 2.06 12.33 7.93

(2) Construction 49 1.98 106 2.25 159 1.56 10.38 3.44

(3) Transportation, communication 42 1.69 61 1.31 123 1.21 3.47 5.95

(4) Commerce and Restaurant 54 2.19 107 2.27 320 3.15 8.67 9.59

(5) Social service 39 1.57 48 1.02 153 1.51 0.49 10.18

(6) Others 43 1.73 61 1.3 125 1.23 2.99 6.16

Wages from within township 100 4.08 335 7.13 737 7.25 18.59 6.79

Wages from within province out of the township 151 6.16 348 7.41 870 8.56 11.4 7.93

Wages from out of the province 661 26.9 1004 21.37 2,007 19.75 3.95 5.95

Government subsidies 5 0.22 100 2.14 211 2.08 57.98 6.38

Income from providing services for government 125 5.08 180 3.84 360 3.55 3.07 5.95

Property income 29 1.18 67 1.42 266 2.62 11.41 12.25

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Social welfare 8 0.33 42 0.9 274 2.70 27.74 16.89

Other income 20 0.83 69 1.46 137 1.35 18.79 5.95

Net income per capita of rural residents 2,458 100 4,697 100 10,162 100.00 8.02 6.64 Notes: (i) The growth rate is in comparable price, the income in 2003 and 2008 is in current prices and that in 2020 is in 2008 price; (ii) The net income from agricultural sector in 2020 is estimated using the figures for major agricultural products included in the sector development strategy by 2020 and the coefficients in 2008; the off-farm income and wages in 2020 are estimated based on the projected employment structure of rural labors and the estimated wage rate; the property income estimated in 2020 mainly take account of the increase of income from transfer of land property; the income from social welfare is assuming pension insurance will cover all eligible beneficiaries and others increase normally; other income assumes to grow at the rate as national average of income growth; and (iii) The rural population in 2020 in Jiangxi is based on the projection by which the total population in the province will be 48 million and the urban population will account for 58% of the total population. Data source: the data for 2003 and 2008 from Jiangxi General Survey Team. “Annual Report on Rural Household Survey”.

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2.4 Reducing Income Disparity and Rural Poverty There was 4.3% and 9.9% of rural population with per capita net income

less than CNY800 and CNY1,500 in Jiangxi in 2008. Reducing rural poverty and income inequality is one important challenge facing to the accomplishment of income growth strategy and whole rural development strategy in Jiangxi. It is found that the incidence of poverty of two types of rural households, those living mainly on subsistence agriculture and those living with income transfer, was 24.23% and 27.36% respectively, and ranked the top two categories of all rural households. An integrated poverty reduction strategy is suggested for rural Jiangxi according to the characteristics of rural poverty and the context for rural poverty reduction in Jiangxi. The suggested strategic approaches are (i) adoption of pro-poor rural economic growth strategy, (ii) innovation in the development oriented poverty reduction interventions according to the characteristics and causes of poverty, (iii) coordination of multi-sectorial interventions for poverty reduction, and (iv) making improvement in rural social security system and agricultural insurance.

3. Strategy for Rural Industries Development in Jiangxi 3.1 Overall Strategy for Rural Industries Development in Jiangxi The overall strategic goals are to largely increase the productive

capacities of food and other agricultural products of importance for national food security and to steadily raise the income of rural residents in Jiangxi by improving the ways for rural industries development.

Overall strategic approaches proposed for supporting rural industries development in Jiangxi are: (i) applying industry chain oriented rural industries development strategy to optimize the production, logistics and processing of the major agricultural products which are of comparative advantage in Jiangxi; (ii) adopting green agricultural development strategy to take better use of the eco-environmental advantage in Jiangxi and to generate value added from the production of safe agricultural products; (iii) adopting agricultural development strategy with higher economy of scale and specialization by accelerating the development of farmers’ cooperatives and specialized commercial farms; (iv) undertaking brands based agricultural development strategy by supporting the development of the product brands with comparative advantages in Jiangxi to increase the productivity of agricultural production and the competitiveness of agricultural products and the processed products in the market; and (v) adopting economically efficient agricultural development strategy by enhancing the extension of new applicable technologies and improvement in the production and marketing management.

3.2 Strategies for Development of Key Rural Industries

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3.2.1 Food Industry Food production in Jiangxi has been playing important roles in

protecting the national food security, in particular, rice security, and in income generation for farmers in the province. Based on the national strategy for long term food security and the potentials for food production in Jiangxi, the strategy proposed for food industry in Jiangxi by 2020 is to raise the quality and safety standards of food, to increase the output of grain to 25 million ton or increase 18% more than that in 2008, and to largely improve the economical efficiency of food industry by application of applicable technologies and increasing the scale of food production.

3.2.2 Edible Oil Industry The edible oil products in Jiangxi mainly compose of rapeseeds,

sesame seeds and camellia seeds. Rapeseeds and camellia seeds in Jiangxi are of significantly comparative advantage in the country. Edible oil industry has been thought as one of the most potential industries in the province according to the natural conditions and the possible contribution to income growth of farmers.

It is expected that the output of edible oil in Jiangxi will increase to 900,000 ton by 2020 or 3.5 times as high as that in 2008, by which the output value of edible oil industry in the province will grow up to CNY28 billion by 2020.

The major strategic measures proposed to achieve the goals set for edible oil industry development are to develop high yield camellia seed planting lands of 982,700 hectares, which will produce 558,700 ton camellia oil and generate output value of CNY25 billion, and to increase the productivity of rapeseed by application of new seeds and technologies and by increasing the specification and scale of production.

3.2.3 Fruit and Vegetable Fruit and vegetable are two types of fresh agricultural products of large

potentials in Jiangxi. Jiangxi provincial government has formulated the Planning of High Quality Vegetable in the Poyang Lake Ecological Economic Zone covering 62 counties (districts) with total investment of CNY6.07 billion, by which the vegetable in Jiangxi Province will generate gross output value of CNY40 billion by 2020 and raise the per capita income of vegetable farmers by over CNY1,500.

Citrus in Jiangxi is of absolute advantage in terms of the natural conditions and output in the country. According to the land resources availability and cost-benefit analysis, it is suggested that the output of citrus in Jiangxi by 2020 will increase to four million ton, which will generate output value of CNY20 billion in 2008’s price. It is suggested that top priority for citrus development in Jiangxi be given to increasing the quality and standardization of the products and to development of citrus processing by

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increasing the output of citrus suitable for processing and strengthening the R&D capacities.

3.2.4 Forestry The 61% of Jiangxi lands are covered by forestry, which makes Jiangxi

Province one of the provinces with best living environment in the country. But the forestry in Jiangxi has not yet been transformed into economic asset and a large industry. The strategy proposed for forestry development in Jiangxi is to foster the development of forestry industry and to double the contribution of forestry industry to farmers’ income while efforts continue to be made on stabilizing and strengthening the function of forestry ecologic system.

In order to realize the strategy for forestry development in Jiangxi, four transformations are recommended in the forestry development in the next 10 years. They are: (i) transforming the priority of forestry production from planting tress and increasing the areas of forestation to increasing the quality of forestry and drawing attention to nurture of planted trees; (ii) transforming the situation in which almost every farmers in the mountainous areas owned and contracted a small piece of forestry land but no, if any farmers really take care of the forestry management, to another situation where a small part of farmers and enterprises are specialized at managing the forestry and all owners of the forestry land can benefit from the forestry development by transfer of contracted forestry land property and specification of forestry management, which will generate a win-win mechanism; (iii) transforming the scatter distribution of small forestry processing enterprises to relatively concentration of forestry processing; and (iv) transforming the forestry production and processing from traditional technology based status to higher technological levels by enhancing the R&D of forestry production and processing.

3.2.5 Livestock Livestock has been the second largest sources of agricultural income in

Jiangxi. Pig and waterfowl are two types of livestock of comparative advantage in the country, contributing 95% of the meat in the province. In particular, the number of waterfowls, mainly ducks and gooses in Jiangxi stand on the top eight provinces in the country. The strategic goals for livestock development in Jiangxi are recommended to steadily increase the production of livestock products while attention is drawn to the improvement in the quality and safety standard of livestock products and to increase the contribution of livestock to income generation of farmers. It is suggested that efforts be made to improve the quality and safety of livestock products by enlarging the scale of livestock production and to facilitate the processing and refrigeration of livestock products.

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3.2.6 Aquatic Products The aquatic product development in Jiangxi is of large potential in terms

of the market share and inland fresh water resources. But it is also confronting with the challenge in water body pollution and low productivity. It is recommended that green and high efficiency aquatic product development system is established in Jiangxi to increase the competitive strength of the aquatic products and to double the share of aquatic product production income in the farmers’ income by 2020.

3.2.7 Rural Logistics The underdevelopment of rural logistics has been one bottleneck for the

rural industries development in Jiangxi, which has increased the transaction costs of agricultural products production and marketing and reduced the competitive power of the agricultural products. Establishing a modern rural logistics system is the solution proposed to address the logistics constraint in rural Jiangxi.

Efforts should be made in (i) facilitating the logistics infrastructure development, in particular, locating logistics parks, logistics centers and distribution centers; (ii) establishing and improving the information platform for rural logistics; (iii) developing collaborative urban-rural logistics system to strengthen the logistics linkage between rural and urban areas; (iv) promoting the development farmers cooperatives; (v) supporting the training and development of human resources needed for rural logistics development, and (vi) developing direct logistics models for green agricultural products.

3.3 Strategy for Employment of Rural Labors in Jiangxi 3.3.1 Strategy for Employment of Rural Labors in Jiangxi The employment of rural labors has been of vital importance for the

well-beings of rural residents and for rural development planning making. The rural working age population in Jiangxi by 2020 will reduce to 14.72 million from 18.84 million in 2008 according to the projection of population growth, urbanization and population age structure. Moreover, the structure and quality of rural labors in Jiangxi will change with the aging of old generation of farmers. A striking change is the new generation of rural labors may not be able to operate agricultural activities.

On-farm self-employment and migrated employment has been two primary forms of employment of rural labors in Jiangxi in recent years. However, the on-farm self-employment of rural labors in Jiangxi has mainly been in mixed subsistence agriculture with low productivity. The migrated rural labors usually lacked professional skills and were employed in the assembly factories and construction sector in which there are no requirement for professional skill and therefore the employment can be replaced easily by others.

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A new strategy for employment of rural labors is recommended to Jiangxi based on the change in labor market demand and the supply of labor resources. The priorities suggested for employment of rural labors in Jiangxi are to reduce the proportion of labors engaged in self-employment in subsistence agriculture and increase the share of labors in running businesses as well as to improve the stability and quality of migrated employment.

Employment in Agriculture will still be one of the main employment forms by 2020. Attention should be drawn to (i) increasing the employment of rural labors engaged in production of camellia oil, bamboo, vegetable and fruit and correspondingly reducing the number of labors working for subsistence food production; (ii) increasing the degree of specialization of employment in agriculture by developing specialized farms and farmers’ cooperatives. It is noted that there will coexist employment and self-employment in agriculture.

Employment in off-farm sectors will increase significantly as the result of declining demands for employment in agriculture and the incoming of retired migrants with skills and capital. It is estimated that there will be over 2 million migrants aged 45-64 in Jiangxi who may retire from their migrated posts. Quite a large part of them will select to come back to the home areas that they are familiar. They are willing and capable to run businesses using their experiences, skills and capitals accumulated if enabling investment environment is created for starting up new businesses.

Migrated employment will tend to relatively stabilize in numbers but change in the sectors and ways. Three strategic measures are recommended for migrated employment of rural labors in Jiangxi. They are (i) making efforts to increase the proportion of migrated employment in service sectors, in particular, those for caring the elderly and the sick, and housekeeping; (ii) strengthening the skill training and vocational education program for rural labors to cover all the newly increased migrated rural labors; and (iii) assisting in developing regional migrant brands by supporting enterprises or groups led employment to increase the competitive strengths of migrated labors.

3.3.2 Strategy for Vocational Training of Rural Labors The strategic goals proposed for vocational training are to establish a

well functioned vocational training system for rural labors and raise the quality and skills of rural labor in Jiangxi Province. The strategy will focus on establishing vocational training system opened for all rural labors, intensifying the roles of townships in organizing training and distribution training information, and developing vocational training models adapted to the context of Jiangxi. It is suggested that all new rural labors after graduation from junior or senior high school will receive vocational training and occupy one skill before entering labor market.

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4. Strategy for Rural Public Services Development It is believed that the national strategic objectives set up for rural public

service development by 2020 are applicable to Jiangxi. They are to promote the equalization of basic public services in urban and rural areas, to prosperity the rural cultures a step further and protect the basic culture rights of the farmers, to assure every people in the rural areas will enjoy the opportunity of receiving good education, to improve the rural basic social-security system and the basic health care system, and to further improve the rural social management system. In order to achieve the objectives, main recommended measures are (i) enlarging the coverage of rural public services to improve the accessibility and availability of all rural residents; (ii) improving the quality of the rural public services stably; (iii) continuing the reform of the financial system below the provincial level with the guidance of the equalization of basic public services; (iv) establishing a “bottom-up” and “top-down” combined mechanisms of decision-making and performance evaluation for the public services in rural areas in Jiangxi to improve the quality of public services; (v) Strengthening the platform of rural community centers in providing rural public services by integrating the resources available for public service development; and (vi) Setting up an effective supply system for the rural public services which is demand-oriented.

5. Strategy for Rural Environment Protection The strategic objectives suggested for rural environment protection in

Jiangxi by 2020 are: rural production and living pollution will have been effectively curbed, production and living environment of the farmers significantly improved, ecological conditions in rural areas further optimized, the environmental supervision capacity of rural areas observably increased, the relationship between economic and social development and ecological and environmental protection more harmonious and become the country's leading green province.

In order to realize the objectives, special programs should be formulated for ecological demonstration area construction, ecological agriculture development, rural drinking water quality assurance, rural cleanness assurance, natural resources protection, agricultural non-point source pollution control and treatment, pollution prevention and control for livestock and aquaculture, pollution control for rural industrial and mining enterprises, and rural environmental education and promotion. Special efforts should be made for the rural environment protection in Poyang Lake Ecological Economic Zone.

6. Strategy for Rural Governance The strategic objectives for rural governance in Jiangxi are to effectively

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protect the democratic rights of rural residents by improving the governance of grassroots organizations and perfecting the villagers’ autonomy system.

In order to realize the strategic objectives for rural governance suggested fro Jiangxi, following measures are recommended: (i) decentralizing the power for decision making and management of rural public administration down to county government; (ii) strengthening the rural democratic system by taking the lead in electing county People’s Congress representatives according to the same proportion of population in urban and rural areas; (iii) improving the organizational structure and system to protect the democratic rights of farmers, including establishing sound democratic decision-making mechanisms to protect the democratic rights of farmers, improving the democratic management and the villager autonomy regime, strengthening democratic supervision, and developing a sound contact system for village cadres to listen to public opinion sufficiently; and (iv) Improving the system of villagers’ autonomy.

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V. Recommendations 1. Organizational Innovations Following innovations should be pursued in the organization and

coordination of rural development in line with the needs for accomplishing the goals set for rural development strategy while the existing functions of the concerned government departments working on rural development in Jiangxi are improved and strengthened.

1.1 Trans-departmental Rural Development Coordination Agency

and Mechanism Trans-departmental rural development coordination agency and

mechanism should be established at provincial level to coordinate the overall planning and policy making regarding rural development and to reduce the inconsistence and conflicts among departmental based policies and planning making. Specific coordination and decision making arrangement can be made in following areas.

First, a rural and urban development coordination and decision making mechanism can be established to coordinate the policies and long-run plans on rural-urban development. With accelerating urbanization going on in Jiangxi and in the country as whole, rural development can not go on well without considering the rural-urban linkage. Jiangxi government should combine rural development strategy and policies in the context of urbanization. It is necessary to establish a rural-urban development coordination and decision making mechanism by which high level officers in Jiangxi Province meet at least twice to discuss and coordinate the strategies, planning and decisions regarding rural-urban coordinated development, and to resolve the issues emerged in the implementation of the approved planning and projects. A special office can be set up to take charge of the routine affairs under the mechanism umbrella, which can be put in the provincial Development and Reform Committee.

Second, a trans-departmental rural development coordination agency should be established at provincial level to coordinate the overall planning and policy making regarding rural development and to reduce the inconsistence and conflicts among departmental based policies and planning making. A special office can be set up to take charge of the routine affairs relating to the agency, which can be put in the provincial Rural Works Committee. In order to enhance the coordination power, one of the standing members of the provincial CCPC can be nominated as the office director.

Third, trans-departmental Leading Group for Rural Industries Development, Leading group for Green Agricultural Development, Leading Group for Rural Environmental Protection, Leading Group for Rural Social Development, can be established to strengthen the leadership and coordination in the concerned areas.

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Fourthly, similar organizations should be established at municipal and county level.

1.2 Advisory Committee for Rural Development Advisory committee for rural development at provincial level can be

established to strengthen the capacities of Jiangxi Province for policy making and planning making on rural development. Such a committee can be formed utilizing the research resources distributed in Jiangxi.

1.3 Industry Associations Related to Rural Industry Development Industry associations related to rural industry development can play

important roles in sharing information, diffusion of new technologies, coordinating the internal relations within the industry, putting together the needs of the industry for policies and communicating with concerned government departments. But the existing industry association in Jiangxi has been mainly performing the agent of government departments. It is necessary to restore the nature of industry association as clubs of member organizations and strengthen the function of industry association in supporting and serving for the industry. Recommendations are made in enhancing the industry associations on rural industries development.

First, it is imperative to identify the functions and responsibilities of governmental departments and industries associations in the rural development. The industries association should take the place of government departments in business supervision and provision of services which have been overtaken by the government when the government departments hold and enhance their roles in administration and provision of supports.

Second, efforts should be made to improve and strengthen the external supervision and internal governance of the industries associations. It is suggested that the Jiangxi provincial People’s Congress draw up a regulation on industries association to define the relation between the government and industries associations, requirements and procedures for the formation and management of industry association. At meantime, the new regulation should support industry associations to restore the nature of clubs and to improve the internal governance.

Third, it is very important to raise the representations and votes of farmers’ cooperatives and leading agro-businesses in the industries associations relating to rural development, by which to ensure the interests and rights of the stakeholders in the whole industry chain. This will make the industries associations become the leaders, promoters and protectors in the concerned industries rather than the legal platforms and tools for the larger firms in suppressing and exploiting the small producers.

Some industries associations in the areas in which Jiangxi is of comparative advantage, in particular, the industry associations for orange,

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sesame oil, bamboo, aquaculture, pigs, waterfowl and logistics, should be established as soon as possible.

1.4 Farmers’ Professional Cooperatives Farmers’ professional cooperatives perform imperative actors in

achieving economies of scale, supporting the development of standardized and brand based green agriculture, organizing and undertaking training of agricultural technology for farmers, and facilitating the grassroots democracy and governance in current situations. It is recommended that farmers’ professional cooperatives be developed more rapidly and more healthily in Jiangxi by taking the actions below.

First, Jiangxi Province can borrow from other countries in organizing and promoting farmers’ cooperatives with the supports of professional promoters.

Second, efforts should also be made in forming county or municipal unions of farmers’ professional cooperatives to increase the scale of economy of cooperatives and to give a larger play to professional cooperatives in provision of services, organizing technical training, negotiating prices and protecting the right of members.

Third, the development of farmers’ professional cooperatives in the rural industries of comparative advantage in Jiangxi, such as orange, sesame oil, bamboo, aquaculture, pigs, waterfowl and logistics, should be put on the priorities.

Except for farmers’ professional cooperatives, Jiangxi government should also encourage and support the development of professional service organizations to provide socialized services for agricultural production, among which those professional service organizations specializing in serving for the food production should be put on the priority.

2. Institutional Innovation and Improvement A set of institutional innovations are recommended so as to guarantee

the accomplishment of the proposed strategic goals for rural development in Jiangxi.

2.1 Land Property Transfer System Land property transfer system should be modified to support the

transfer of land property when the interests of the owners and contractors of the lands are protected, including the transaction market of land property, information management system for the registration and transaction of land property, institutional arrangements for consulting, evaluation and pricing of land property transfer.

2.2 Rural Social Security System and Public Services The coverage and operation of rural social security system and public

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services should be improved to provide basic social safety and public services for all rural residents. First, the government should improve the rural social security system, including the new rural medical cooperative system, the system for relief for the severe disease suffers, rural minimum living protection system, Five Guaranty System, rural compulsory education system as well as rural social pension system. Efforts should be made in increasing the access and coverage of the systems, optimizing and simplifying the procedures for application, checking, utilization and delivery, to increase the fairness and transparency of the allocation and utilization of the public resources for rural social security. Second, the supporting and service system for the elderly, home-left children and the vulnerable in rural areas should be established and improved. Third, efforts should be made in developing healthy and civil social service system for rural wedding and funerals. Fourth, the government should establish and modify the mechanism for prevention and disposal of rural emergencies to reduce and avoid the losses and adverse effects on rural development and people’s life.

2.3 Rural Grassroots Democracy System The rural grassroots democracy system should be modified and

strengthened to protect the democratic rights of rural residents. Specific recommendations are: (i) improving the rural grassroots democracy system centered on villagers’ autonomy by modifying the election system for villagers’ committee, disclosure and democratic management system for village’s financial affairs, the decision making and supervision regulations for village public affairs ; (ii) giving a larger play to the deputies to township people’s congress in communicating villagers with township governments by gradually execution of direct election system for the deputies to township people’s congress; and (iii) encouraging and supporting the civil organizations and volunteers in rural community to play more active roles in rural democracy, serving for the villagers and maintaining social order by borrowing from the lessons in Jiangxi on development of villagers’ council.

2.4 Regulations and Legislations Regarding Green Agricultural

Development The regulations and legislations regarding green agricultural

development should be made and modified, including the regulation on standardized production, inspection and testing, authorization management, law enforcement, and green technology promotion system, and information release system.

2.5 Vocational Training System Vocational training system serving for all rural labors should be

established to provide necessary training and education for all rural labors. Four institutional modifications are recommended according to this study to

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improve the vocational training system. They are (i) establishing a vocational and skill training system open to all rural labors to provide varied types of training needed by the agricultural producers, migrants and business start-up labors; (ii) developing an effective mechanism for collecting and processing the information of demands for vocational training of rural labors, to which rural communities, farmers’ professional cooperatives and industries associations can make contributions; (iii) developing a multiply supply system for vocation training of rural labors composed of before joining employment, on the job training, reemployment training, and training for starting business, to improve the effectiveness and adaptability of the supplied vocational training. The system should cover the training provided to the rural labors, including technical schools, vocational centers and colleges; and (iv) establishing effective mechanisms linking the vocational training to employment or business start-ups.

2.6 Sustainable Utilization and Management System for Rural

Infrastructure Sustainable utilization and management system for rural infrastructure

should be developed and modified. 2.7 Regulations and Standard System on Rural Environment

Protection The laws, regulations and standard system on rural environment

protection should be amended to provide more effective institutional supports for rural environmental protection. Specific recommendations are drawing up and implementing the "Rural environment comprehensive control and treatment planning", "Agro-ecological environmental protection regulations in Jiangxi Province", "emission standards for livestock and poultry breeding industry," "Mine restoration deposit system for environmental control and treatment" and "Livestock Pollution Prevention Act," etc, and ensuring their authority, seriousness and continuity. In the meantime, it is important to establish and improve responsibility systems of accountability at county (city, district), township and village levels to take charge of rural environment supervision.

3. Financing Innovations It needs huge amount of funds to realize the goals set for rural

development in Jiangxi. In general, combined employment of financing channels, including public finance, financing, private investment and farmers’ inputs, and related innovations are necessary to raise sufficient funds to support the rural development in Jiangxi.

3.1 Public Finance The public finance should prioritize the expenditure on public services

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and social security in rural areas. Particularly, priorities should be given to ensuring the input of public finance in rural social security, elementary education, public health, environmental protection, disaster control and prevention as well as the function of grassroots governments. Necessary budget should also allocated to supporting rural infrastructure, in particular the small water conservancy and drinking water infrastructure, the R&D for the production and processing of important agricultural products of comparative advantage in Jiangxi, and training and vocational education of rural labors. Public finance should play leverage roles of seed money by setting up venture funds and guaranty funds for supporting the brand development of green agricultural products of comparative advantage and giving bonus to the innovation in agricultural development.

3.2 Financing First, it is necessary to accelerate the rural financing institutional

innovation to provide financing support for rural development in Jiangxi. Efforts should be made to develop new style of rural financing institutions, such as microcredit institutions, community development fund and agricultural insurance while continuing the reform on rural credit cooperatives and other formal financing institutions. Second, the innovation of financing products and services should be encouraged and supported to improve the financing services for rural development in Jiangxi. Possible directions include innovating the collateral and guaranty for landing on the base of risk evaluation, such as using the contract of product sales, contracted land property and expected income as collateral to increase the credit lines for agricultural development; innovating the terms of loans according to the production cycle and cash flow and increasing the terms of loans for forestry and fruit development; setting up special guaranty funds for some important green agricultural products in Jiangxi by the government to share risks when financing institutions make loans to the producers and marketing enterprises of these products; and innovating the agricultural insurance supported by policies.

3.3 Private Investment Private investment should play imperative roles in financing the rural

development in Jiangxi. Efforts should be made to support large leading agricultural production and processing enterprises to directly raise funds from stock market and to improve investment environments for private investors from within and beyond Jiangxi Province to make investment in rural industries development.

3.4 Investment of Local Farmers The government should formulate more favorable policies to encourage

and support the local farmers, in particular, those retired from migration, to

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make investment in rural industries development. 3.5 Financing Support for the Poyang Lake Ecological Economic

Zone Planning The financing mechanisms should be innovated to adapt to the needs

of the PLEEZP. The recommended measures include consummating horizontal financing networks standardized within the region, expanding funding sources and channels to promote the commercial banks of regional center cities to cooperate for formulating regional banking group, business financing institutions. The financial products and services should be innovated by setting up agricultural industry development fund, proving necessary interest subsidies, grants and other financing supports to attract more financial resources investing in the Poyang Lake areas. In addition, government should increase the capital investment to support the development of environment friendly agriculture and agriculture industrialization.

4. Institutional Innovations Required for Scientific and

Technological Supports Scientific and technological supports are very important for promoting

rural development, in particular, for ensuring the transformation of traditional agriculture in Jiangxi. Efforts should be made in following respective.

4.1 R&D for the Production, Processing and Logistics of Major

Agricultural Products It is found that the underdevelopment of R&D in Jiangxi for the

production, processing and logistics of major agricultural products has been a key constraint for raising the competitive power of the agricultural products of comparative advantages in Jiangxi, such as bamboo, citrus and camellia oil, etc.. Establishing R&D network for supporting agricultural development in Jiangxi and importing high-tech personnel and technologies from out of Jiangxi will help address the constraints. Division of labors among the concerned R&D stakeholders is recommended. The agricultural research institutions and universities focusing on agricultural production and processing at provincial level should be strengthened to develop into the regional R&D center for solving the key technologic issues facing to the development of important agricultural products, such as bamboo, citrus, camellia oil, rice, rapeseed, fresh water aquatic products, etc. The municipal research institutions and technical schools on agricultural production and processing will focus on the applied research, experiment and extension of the locally important agricultural products. Large leading agriculture related enterprises and industry association should be encouraged to play active roles in the R&D for production and processing of agricultural products.

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4.2 Research on the Standards Relating to Rural Development The research on the standards relating to rural development should be

strengthened. In particular, the standards on agricultural production, information service as well as logistics in rural areas should be developed to support the standardization and brand based development of important agricultural products.

4.3 Technical Extension and Training Establishing a workable agricultural technical extension network is

imperative for transforming the traditional agriculture in Jiangxi. The leading agricultural enterprises, industry association of agriculture and farmers’ cooperatives should play more important actors in the technical extension. In particular, farmers’ cooperatives should be supported to perform the role of platform for agricultural technical extension.

5. Infrastructure Construction and Management The accomplishment of the objectives of rural development in Jiangxi

by 2020 is closely associated with the construction and normal operation of the necessary infrastructure. The priorities of rural infrastructure development in Jiangxi are recommended to be in four areas: (i) strengthening rural water conservancy infrastructure, in particular the small irrigation facilities and drinking water infrastructure, and establishing sustainable operation and management institutional arrangement; (ii) enhancing rural physical infrastructure construction and management, including rural road infrastructure construction and maintenance, rural energy infrastructure construction and management, developing rural information infrastructure and information platform to provide timely and sufficient information necessary for rural economic and social development and management and improving the rural logistics infrastructure, including storage, refrigeration, transportation and logistics parks; (iii) supporting rural social infrastructure construction and management with priorities on building necessary education, training and health infrastructure, developing cultural and entertainment centers in central towns and rural communities, and establishing rural sports facilities in rural areas; and (iv) strengthening rural environmental infrastructure construction and management with priorities on rural garbage disposal and environment monitoring facilities.

6. Policy Suggestions 6.1 Establishing and Improving the Policy System for Supporting

Rural Economic Development 6.1.1 Establishing a Reliable Mechanism Linking the Expenditure

for Agricultural and Rural Development to the Growth of Budgetary Revenue

It is important to establish a reliable mechanism linking the expenditure

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for agricultural and rural development to the growth of budgetary revenue to ensure stable increase of public finance expenditure at central and local level used for agricultural development. The top priority should be given to effectively identify and standardize channels of financial support for agriculture so that each policy can be carried out in the end.

6.1.2 Supporting the Development of Agricultural Products of

Comparative Advantages by Means of Public Finance Policies It is recommended that the policy instruments, such as provision of

interest subsidies, risk resistance and compensation, rewards for developing influential brands, subsidies based on projects and product order contracts, can be employed to support the development of major agricultural products of comparative advantages in Jiangxi, in particular, green vegetable, orange, camellia, bamboo, pigs, waterfowl and aquatic products. These policies will help facilitate the standardization of major agricultural products and build up influential product brands.

6.1.3 Supporting the Development of Green Agricultural Products A package of supportive policies should be made to support the

development of green agricultural products in Jiangxi. The government should set up earmark fund in its annual budgetary planning for green agricultural products. Jiangxi provincial government needs to set up a green agricultural product development venture fund to help the producers of green products to cope with the risks involved. Other favorable policies, including tax reduction and exemption, and provision of subsidized loans, should be made to support the enterprises specializing in the processing, marketing of green agricultural products. Providing rewards for the firms that have successfully acquired the licenses for producers of green products, organic products will help encourage the development of green agricultural products.

6.1.4 Supporting the Agro-businesses of Comparative Advantage

in Jiangxi to Increase Their Competitiveness Local governments should continue and strengthen the existing

supportive policies for leading agro-businesses to assist them to develop nationwide influential brands and increase the competitiveness of the products. It is suggested that the government should make advantage of license control and allocation of the supporting funds to avoid the excessive competition and waste of productive capacities in the area of agro-processing. Favorable policy should also be formulated to support the agro-businesses participate in the R & D of production and processing of agricultural products of comparative advantage.

6.1.5 Supporting the Large-scale Irrigation Projects and Small

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Irrigation Facilities Supporting the large-scale irrigation projects and small irrigation

facilities such as ponds, dams, canals and small reservoirs by increasing the fiscal input of the central and local government in rural water conservancy, should be put on the priority of supportive policies. The priorities of funding for water conservancy in Jiangxi should be put on the construction of small scale water conservancy projects in rural communities, and the maintenances and management of the existing irrigation projects.

6.1.6 Supporting the R & D for Agriculture Production and

extension of New and Applied Agricultural Technologies The policies should focus on supporting the R&D of major agricultural

products in the province. Meanwhile, support should be given to speed up the application of technologies and the introduction of new varieties. The non-profit agro-tech agencies should be encouraged to promote their services to farmers, meeting the latter’s needs and concerns and stimulating the transformation of the developed technologies into actual productivity. The government should give larger actor to farmers’ cooperatives and agro-businesses to play in the agricultural technical training and extension by allocating more public funds for them.

6.1.7 Developing and Modifying the Policy and Regulation System

for Rural Land Property Transfer Policies and regulations should be made or modified to provide more

enabling environment for rural land property transfer in Jiangxi. Specific recommendations are: making legislation and policies to permit farmers to use their contracted land as mortgage, formulating policies and regulations to regulate the norms and rules for intermediate institutions involving in the valuation, registration, exchange of transfer of rural land property, making laws such as "The Implementing Regulations on Arbitration Law of The People's Republic of China on Mediating Disputes of Land Contract Management' in Jiangxi Province” to improve arbitration system of mediating disputes of land contract management.

6.1.8 Supporting the Healthy Development of Farmers’ Cooperatives in Jiangxi

The government in Jiangxi should support the healthy development of farmers’ cooperative organizations by lowering the threshold for cooperative registration and simplifying the procedures for checking and approval of cooperatives. The special funds allocated for the farmers’ cooperatives should be mainly used for training of the true cooperatives and for funding the promotion of farmers’ cooperatives.

6.1.9 Establishing Supportive Policy System for Farmers in

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Running Small or Micro Enterprises First, local government should lower the threshold for farmers running

small or micro enterprises in minimum capital and office space requirement simplify the procedure for checking and approval and reduce the administrative costs for acquiring the operational license. Second, micro-credit program which has been in place in cities should be extended to rural areas. The government should set up guaranty fund for micro-credit to farmers running small or micro enterprises to improve farmers’ access to financial services. Third, the training of farmers running small or micro enterprises on management and technologies should be placed in the important position same as that for agricultural technologies and for migrated employment. Special agencies should be organized to provide new business instruction and advice for rural labors while training is provided. Fourthly, it is necessary to make favorable taxation policies for farmers running small or micro enterprises, for example, permitting the farmers’ new businesses sharing the favorable policy by which income tax in the first three years can be exempted.

6.1.10 Strengthening the Supports for Professional Skill Training of Rural Labors The governments at varied levels should increase their budgetary expenditure allocated for professional skill training of rural labors when efforts are made on the coordination of training programs and funds. In order to improve the effects of training programs, it is recommended that result based evaluation and management system be established to link the allocation of funds for training to the proportion of trainees that have found jobs after completion of the training. The cost sharing of training of rural labors should be modified. The government should share the costs for training with the beneficiaries except for continuing the policy of providing training free of charge for the registered poor farmers and those from the identified households living under the minimum living protection threshold. The involvement of private sectors in the provision of professional skill training for rural labors should be encouraged by providing favorable financing and taxation treatment and opening the public resources.

6.2 Supporting Rural Social Undertakings 6.2.1 Developing and Improving the Long-term Guarantee

Mechanism for Rural Compulsory Education Expenditure to Reduce the Rural-urban Disparity in Education

In view of the less developed economy of Jiangxi Province, its lower-than-average per capita financial resources, and the financial burdens at county and township level, it is proposed that the central government should intensify investment for rural primary & secondary school public funding, subsidies for their teachers and transfer payments for alleviating

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rural educational debts. Naturally, the provincial government should shoulder more duties in the three aspects as well. It is suggested meanwhile to set up an allowance policy for primary and secondary school teachers so as to stabilize the personnel and encourage them to stick with their respective posts.

6.2.2 Improving the Public Health Services in Rural Areas to

Reduce the Rural-urban Disparity First, it is necessary to Increase the expenditure of public finance on

rural public health. Local governments should intensify their support to rural public health and shift larger focus onto villages and townships when the central finance keep raising the total amount and portion of rural sanitation expenditure. Budget allocated for rural public health services should be in favor of township hospitals and village clinics. Second, the government should make efforts to build up rational division of labor between rural and cities in medical services. The hospitals and clinics in countryside will mainly take care of minor ailment, emergency disposal and prevention while the hospitals in cities take responsibility for the treatment of serious illness and hard surgery operation. Meanwhile it is important to develop the information system covering the medical treatment in both rural and urban areas. Third, the government should enhance the technical training for rural medical personnel and organize the doctors in cities to work in countryside regularly.

6.2.3 Supporting the Development of Local Culture and Sports to

Enrich the Outdoor Activities in Rural Areas The government at varied levels should increase the budgetary

expenditure in the culture and sports in rural areas. Efforts should be made in developing theatre and sports centers of local characteristics in rural communities and central towns and support the development of folk culture and theatre. The municipal and county departments in charge of culture and sport undertakings should provide advice and assistance for rural grassroots culture and sports.

6.2.4 Improving the Coverage and Service of Rural Social Security

System with Focuses on Rural Minimum Living Protection Scheme and Pension Insurance

6.3 Improving the Decision Making Mechanism and Institutions for

Rural Physical Infrastructure Supply and Sustainable Utilization 6.3.1 The concerned departments should make regular survey of

the demands for public services in rural areas and prioritize the public resources available on the public goods that are ranked in the top priorities in the list of demands.

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6.3.2 Largely increasing the budgetary input from central and local government in the rural physical infrastructure, in particular, in the areas for small and micro irrigation and public environmental infrastructure in rural areas.

6.3.3 Establishing and improving the decision making mechanism

with farmers’ participation by modifying the case by case approval system for public affairs in rural areas.

6.3.4 Making efforts to increase and diversify the funding sources

of rural physical infrastructure construction. Except for increasing the input of budgetary funds, the government should make policies to mobilize private capital and credit to finance the construction of rural physical infrastructure.

6.3.5 Innovating the models for the operation and management of

rural physical infrastructure. Different operation and management modes can be developed according to the variation of rural physical infrastructure. Businesslike infrastructure for which the operation income can cover the operation costs can be operated and managed by competitive firms based on bidding. The infrastructure which belongs to pure public goods can be managed by professional team assigned by the concerned departments. The small and micro rural physical infrastructure can be operated and managed by users’ association or contracted persons.

6.4. Developing and Improving the Policy System for Rural

Environmental Protection 6.4.1 Establishing a rural environmental protection policy system

with multiple policy instruments. One is to use the compulsory policy instruments such as license control and setting higher standards. Second is to use the directive policy instruments, including defining varied tax rate, allocating subsidies and charging fines according to the nature and degree of the impacts on environment, to encourage farmers to take environmentally friendly actions and give up the environment unfriendly behavior. Third is to provide information support for the farmers to adopt environmentally friendly actions.

6.4.2 Developing Eco-compensation mechanism. The government

should develop the compensation mechanism of ecosystem service value according to the contribution to and benefits from the incurred ecosystem service value.

6.4.3 Developing protection mechanism of Ecosystem. The main

task of such a protection mechanism is to protect forest, water body and the

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other natural ecological systems. 6.4.4 Coordinating the funds and programs of rural environmental

protection. There are many environmental protection programs in place in the PRC. In order to make these programs function well, it is necessary to coordinate the programs and funds with varied name of environmental protection to produce better effects on rural environmental protection. For instance, the national ecological compensation fund, infrastructure construction fund of environmental protection and construction fund of ecological protection need to be integrated.

6.5 Supporting the Development of Good Governance in Rural

Grassroots to Push the Progress of Rural Grassroots Democracy 6.5.1 Raising the subsidies and welfare of rural grassroots cadres

to attract outstanding rural personnel to serve for rural development.

6.5.2 Making efforts to perfect the procedure and regulations for villagers’ committee election so as to increase the level and quality of autonomy of rural communities.

6.5.3 Broadening the sources of rural cadres with local farmers as

the main body. Efforts should also be made to invite out-migrated rural residents, college graduates and other outstanding personnel to serve as rural development leaders.

6.5.4 Strengthening the training of rural grassroots cadres on

policies, leadership skills and other capacities. 6.6 Deepening Financial System Reform in Counties and Villages 6.6.1 Advancing and improving the ‘province governing county’

financial system in a comprehensive way. First, given that the financial resources are heavily allocated to the counties and townships in Jiangxi, the central finance should further increase rewards and subsidies to the province, which is not only for the sake of the latter but creates an exemplary case all over the nation. Second, the provincial budget allocation, especially transfer payments, should favor the underdeveloped counties (cities), constituting a critical link in promoting public goods equalization. Third, in the long run, it is necessary to change the co-existence of ‘province governing counties’ and ‘city governing counties’ systems.

6.6.2 Setting up basic financial security system at the county level

step by step. The so-called basic financial security system at the county level aims to realize ‘three guarantees’ (of wages, production and livelihood). Therefore, it is necessary to identify reasonably the scope, standards and

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financial needs of the ‘three guarantees’ , reaffirm the fiscal revenue in province and counties, and adjust the difference between the revenue and expenditure at county level by means of payment transfer.

6.6.3 Proactively eliminating the debts of township governments. 6.7 Building the Long-term Mechanism for Supporting the

Development of Poyang Lake Ecological Economic Zone 6.7.1 Innovating ecological protection mechanism, enhancing

ecological construction and environmental protection. The first is to establish and consummate an evaluation system of ecological protection and establish different ecological construction and evaluation index system according to different functions, it can reflect the regional eco-development environment comprehensively. The second is innovating ecological protection incentive mechanism. The government should implement ecological environment protection institution and ecological compensation policy by the category based management principle, varying the policies for waters and wetlands in Poyang Lake, the lake region and the upper stream of the five major river systems. Besides, the government should consider establishing ecological compensation fund, setting up benefit compensation mechanism between drainage basin so that the downstream ecological benefit regional can undertake a part of the cost of the upper stream ecological construction, it make the cost and benefits in different watershed areas tend to equilibrium. It also can be used for compensating the enterprises which ecological construction needs to pay cost. The third is to penetrate ecological agriculture protection through the Poyang Lake ecological economic zone.

6.7.2 Transforming the ecological advantages into economic

advantages by establishing industrial development way which meets the ecological construction and environmental protection requirements. With low-carbon and green economy as the focal point of changing in growth and adjusting the industrial structure, it is necessary to develop high-tech industry vigorously and cultivate new points of economic growth and competitive advantage actively so accelerating the formation of favorable structural adjustment, the way conducive to the development institutional and mechanism to make Poyang Lake Ecological Economic Zone into a virtuous cycle of sustainable development track.

6.7.3 Promoting ecological protection and economic development

win-win by giving full play to the leverage finance and taxation. The first is to innovative financial funds allocation mechanisms by ensuring the public expenditure for the region's agricultural scientific research, extension of agricultural science and technology, agriculture disaster prevention and

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relief, ecological infrastructure construction and management and rural public environment. The second is further improving fiscal policy and increasing efforts to support the development of recycling economy in the province, in particular, in Poyang Lake Ecological Economic Zone. The third is increasing efforts to support investment in ecological protection and high-tech industries through the financial transfer payment. Enterprises’ technological innovation and institutional innovation should be supported so as to improve resource productivity and reduce waste emissions. The fourth is to strengthen the interface between fiscal policy and the rural financial policies effectively and guide more credit funds for rural development.

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Appendix: International Experiences for Jiangxi Rural Development Strategy

Field visits and review of the documentation highlighted four key issues in rural development relating to the Jiangxi rural development strategy. The first one focuses on how to stimulate agricultural productivity and improve both income and living conditions of the farmers, in a context of high rural population density, small agriculture holding size, and important seasonal migration of farmers. The second issue is about how to compensate the discrepancies in development between urban and rural areas, and strengthen the linkages between rural and urban development. The third one focuses on how to improve grassroots governance and the fourth one is on how to culture and develop farmers’ organizations.

The international lessons on rural development are highlighted here. In addition, the lessons learned from the overseas study tour in South Korea and Japan are also summarised.

The following chapter intends to provide examples of how different countries looked for solutions to each of these challenges. There are both successful and unsuccessful international examples from which lessons can be learned. Examples are to be considered carefully since each situation is closely related to its context (history, socio-economic conditions) and thus cannot be applied as such in different conditions. Therefore, the examples shall be introduced together with their context in order to draw lessons and make concrete and practical recommendations on how these experiences might be applied in the actual socio-economic, political and institutional context of rural Jiangxi.

1. Land Tenure Policies for Optimising Agricultural Production5 The Chinese government policy is to facilitate land transfers in order to

encourage the creation of larger agricultural production units. The main purposes are to facilitate the modernization of agricultural production and to allow the full and productive utilisation of the land left unused or underused by migrants. At present, transfers already occurs but mostly through informal agreements when the land use rights owners leave the countryside for off-farm work. These informal agreements do not provide any legal guarantee and are in most of the cases of short duration. These conditions do not encourage investment for improvement of the land (wells, terracing, planting trees, etc.) and limit the scope of transfers. Another limitation to the transfers is that migrants’ families cannot rely completely on unsecured and temporary work in cities, and therefore keep a possibility to come back to 5 This chapter mainly draws from “Michel Merlet, Land Policies and Agrarian reforms, AGTER (An Association for the Improvement of Land, Water and Natural Resource Governance), Paris, 2007”.

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farming. In order to support transfer of agriculture land, it is essential to secure the land use rights of the ones who cultivate the land, but at the same time to protect the interests of the owners and of the contractor.

Main issues facing Jiangxi regarding land tenure: • Which regulation policies can ensure an optimal reallocation of land for a

more efficient agricultural production? • How might the rights of land users be secured? • How might access to land be guaranteed in conformity with the interests

of the majority of the population?

1.1 Jiangxi’s agriculture: a relatively high productivity per hectare but a low productivity per worker and small farms that cannot sustain the households needs.

The structure of agricultural production in Jiangxi is characterised by small family farms. In the sample villages about 75% of the farms have an area of less than 1.3 ha (20 mu), and 92.8% less than 2 ha (30 mu).

Figure 16: Farm sizes in sample villages of Jiangxi

Farm Size in Sample Villages

74.5%

18.2%

5.4%

1.6%

0.3%

<20 mu 20-30 mu 30-50 mu 50-100 mu >100 mu

Source: RDI survey, 2008-2009.

In spite of the very small size of agriculture holdings, agricultural production in the PRC, and in Jiangxi, kept growing during the last ten years.

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The per capita agricultural production index recorded by FAO shows an increase from 82 in the 1994/1996 period to 119 in 2005. This makes PRC’s agriculture one of the most successful in the world. Through allocation of the land to family farmers in the early eighties, the PRC has achieved two results: improved food security and creation of the basis for its impressive industrial and economic development.

Land productivity shows good results. The following table gives the example of cereals production. Yields of cereals in the PRC are compared to the yields in the most important cereal producing countries. In all these countries, production is characterised by much larger production units and more industrialised agricultural practices than in Jiangxi. Yields of cereals in Jiangxi, and in the PRC, rank well compared to the most efficient and modernised agricultures worldwide (United States of America, France). Yields in the PRC are far above the yields of major producing countries with large agricultural estates (Russian Federation and Ukraine).

Table 59: Yields of cereals in selected countries (Kg/Ha) Jiangxi 5,630 Canada 3,046 PRC 5,320 France 6,788 Russian Federation 1,894 Ukraine 2,353 United States of America 6,402 Thailand 2,967 World 3,261

Source: Mission report and FAO Statistics, 2007-2008.

The first difficulty faced by agricultural production in Jiangxi is two fold: the low productivity per worker combined with the very small arable land area per household does not result in sufficient income. The second issue is the high discrepancies in natural and socio-economic conditions between areas which results in high differences in agricultural performances. The third issue is that the farmers lack of investment capacity.

1.2 Which agricultural structures to optimize production in Jiangxi:

family farms or capitalist companies? A common idea is that land concentration contributes to increasing land

productivity. Experts of the World Bank, Binswanger, Deininger and Feder came to the following basic conclusion in their work on land polices: family farms that employ little or no salaried labour are generally the most efficient economically speaking. Small family farms not only possess advantages for the environment and the maintenance of the rural social fabric, they are also often more productive than capitalist companies. Nonetheless, small family

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farms are not always the most efficient and not all of them ensure the sustainable use of resources. To achieve these results, they must be able to count on sufficient means (land, machines, inputs, etc.) and an adequate agricultural policy.

Jiangxi’s farmers face the difficulty of lack of investment capacity and small size of farms. A major problem faced by the government is also to provide work to a still important rural population which includes mainly farmers. In order to increase the efficiency of agriculture and ensure income from agriculture for part of the population in the countryside, policies could be geared to optimizing the size of family farms in most sectors of agriculture. Examples from the most efficient agriculture countries in the world will be given in the next paragraph.

The example of Argentina shows the social risk of land concentration without regulation policies to protect the interest of the majority of the population. The agricultural system that was imposed is designed to export commodities and concentrate land ownership, but excluded the people. 20 million hectares of the best farmland are now in the hands of 2,000 companies. It was in the 90s that the largest transfer of farmland in the history of the country occurred. To compensate unpaid debts, 300,000 farmers were expelled and 13 million hectares were seized. This social disaster was further worsened by massive immigration by farm workers. A machine replaced 500 workers in the Chaco. Ruined landowners rented their lands to big businessmen and the countryside was transformed with the installation of agriculture without farmers. More than 500 villages were abandoned. Half of the population is now living below the poverty level: five million people are suffering from hunger.

K. Deininger6 shows that the initial distribution of land affects the nature and rate of long-term economic growth and that land concentration reduces the efficiency of resource use.

6 In Land Policies for Growth and Poverty Reduction (World Bank, 2003)

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Figure 17: Initial land distribution and economic growth in selected countries

Note: The Gini coefficient measures the degree of concentration of a variable in a distribution of its elements. Source: Merlet, M. (2002) based on Deininger and Squire (1997).

1.3 How can land policies help family farms to modernize? Land policies for permanent regulation of land markets aiming at

optimising land resources distribution through time can permit the farm structure to develop by modernising family farms. This type of policy has been decisive in most developed countries, especially in Western Europe.

Northern European countries possess the most efficient agricultural sector in the European Union. This sector is based on commercial family

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farming. How have they managed their structures so as to permit modernisation?

After the Second World War, agricultural systems in Western countries mainly have been deeply transformed through mechanisation, highly specialised and performing machinery, and the use of chemicals. These changes together with the development of long distance transportation means resulted in horizontal and vertical specialisation of agricultural production. Within a few decades, small family farms with a few hectares of land, which income were based at the beginning of the century on multi-cropping and animal husbandry as well as off-farm jobs, grew up into much bigger farms heavily equipped and at least ten times more productive.

This modernisation of agriculture during the last century has not been equal. Only a few family farms have survived which were big enough and sufficiently equipped and productive to ensure a per worker income higher than the price of low qualified labour on the market.

These changes resulted in a very efficient accumulation of capital, distribution of production means, cropping and livestock production activities. But disadvantages also resulted from modernisation of agriculture including enhanced differences of income between farms and regions, a very uneven concentration of activities according to regions (some have been completely abandoned), unbalanced offer and demand, important fluctuations of agricultural products prices, deterioration of the environment, deterioration of the products’ quality, reduction of the biodiversity, and impoverishment of some domesticated species.

Some countries started to apply policies aimed at ameliorating the undesirable effects of modernisation of agriculture.

Comparing the situations in Denmark, Netherlands, France, Italy, Spain and Portugal is most interesting. The southern parts of southern European countries have a hacienda type agrarian structure7 that has required land reforms. However, in the northern territories of these countries, small farms remain predominant.

The participation of farmers’ organisations has been an essential element in the success of structural policies. In Denmark, a policy was applied to control agrarian structures as early as the 18th century. Agricultural policy was supported by “a disciplined peasantry well organised, and managed in farmers unions (Land-boforeniger)”, established to fight for the political and economic freedom of the peasantry, which went on to build a powerful cooperative sector. The most important characteristic of this new agriculture is the vital role played by the government through the political, administrative, and financial assistance it gave to the peasantry to organise itself.

7 « Agrarian Structures » refers in this paper to the types (family farm, enterprise, etc) and size of the agricultural production units.

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The Netherlands possesses the most efficient agricultural sector in the European Union: with only 1.6% of its active population, this small country produces 8% of the EU’s agricultural output, and rivals France at the international level for second place behind the USA among agro exporting countries. This high performance originates in Dutch agricultural history, since the coastal regions of the country have been at the forefront of agricultural development in Western Europe for more than three centuries. Holland’s success is the fruit of its agricultural policy, which has been focused since the 1950s not only on the most developed regions but also on the disadvantaged inland regions in order to offset the differences in terms of development and to use the country’s agricultural resources to their fullest. Dutch agriculture is basically run by families and is characterised by relatively uniform farm structures. Farms are small (18 ha on average, 8.5 ha per farm worker) and grouped around this average. Two-thirds of farms now cover less than 20 ha, and only a mere 7% exceed 50 ha. The Land Administration Foundation, established in 1950, intervenes in areas of rural development within a political framework designed to encourage the interruption of activity, though it rarely intervenes on the free market. From 1953 to 1963, sales of farmland were subject to two checks (price and purchaser) in order to control increase in land prices in this high density population area. Control over tenant farming was maintained and farm policy is managed jointly by farmers’ unions and the government.

In France, there is a system for regulating the land market that relies on the collaboration of the State and farmers’ organisations. This system is called the Land Development and Rural Settlement Associations (Sociétés d'Aménagement Foncier et d'Etablissement Rural, SAFERs) and constitutes one of the key components of French "structures policy”. Under this “structures policy” umbrella falls not only all the policies for agricultural modernisation, but also policies aiming to preserve the family farm model by providing farms with enough land to meet contemporary technical and social demands. The Tenant Farming Status and SAFER are managed jointly by the government and farmers’ unions.

These market and structural regulation policies are not perfect. They can give rise to corruption and different types of manipulation. More often than not, regulation functions through systems managed jointly by governments and farmers’ unions.

Apart from these limitations, these policies are nonetheless essential for a country in which family farming plays an important role and where there is no virgin land to be exploited. However, there are a certain number of prerequisites:

• The existence of strong, representative and democratic farmers' unions;

• A coherent agricultural policy that protects family farming from the dramatic effects incurred when put in competition with farms that

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produce the same products at incomparably lower prices, for reasons having nothing to do with economic efficiency.

The experience of Taipei,China, beyond its specificity, clearly illustrates a certain number of necessary conditions to be met in order to attain sustainable economic development backed by family farming. Reform of land tenure and transfer to enable farmers to profit from new possibilities due to intensified production is necessary but not sufficient. The reforms in Taipei,China, have been successful because they were accompanied by a coherent and comprehensive agricultural policy, as much at the technical level (modernisation of techniques and organisation) as at the level of political economy (market regulation). This would have been impossible without solid farmers’ organisations, which hence need to be developed. Furthermore, this would be impossible today when economies are completely open to the global market economy.

1.4 Securing access to land in a land transfer system The way tenant farming in France is legally protected8 can be a source

of inspiration for decision makers in Jiangxi. A major part of agricultural land in France is not cultivated by the owners

but by tenants. The laws on the status of tenant farming date back from the forties of the

twentieth century. At this time, French farming needed to modernise its production techniques. The texts concerning the status of tenant farmers are now incorporated in the Rural Code.

Guaranteed lasting land access for the farmer: The contracts are written. The minimum legal leasehold is for nine years. Long term leases of 18 to 25 years as well as career leases (whose term is set until the retirement age of the tenant farmer) are also possible.

The tenant is entitled to renew the lease for nine years, except in the case of cancellation for serious reasons or repossession [the owner can repossess the rented farmland only if it is to be worked by himself or his wife or by a descendant of age or an unconstrained minor, who must both take part in agricultural work (effectively and permanently) and live in the dwellings on the repossessed property].

If the tenant should die, the lease continues for his/her spouse, descendants and ascendants who take part in farm work or have effectively taken part during the five years prior to the decease.

A tenant that has improved the rented property (through work or investment) is entitled to compensation from the owner upon expiry of the lease. 8 Main source: Rivera, Marie-Christine. « Le Foncier en Europe. Politiques des structures au Danemark, en France et au Portugal », (Land Issues in Europe. Policies and farm structures in Denmark, France and Portugal), Cahiers Options Méditerranéennes, vol. 36, 1996.

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The tenant must be given priority in purchasing the land if the owner wishes to sell it, on the condition that the tenant has worked as a farmer for at least three years and has farmed himself the property on sale, as well as on certain conditions related to the "control of farm structures", (pre-emptive rights).

Land rent controlled by the government The minima and maxima between which the rent can vary are set by the

prefecture per agricultural region, for both the land and the farm buildings. This is an interesting way for Jiangxi’s government to explore to protect the interests of both the owner and the contractor.

A specific procedure for settling disputes A specific jurisdiction has been created to deal efficiently with disputes

between owners and tenants to ensure that the law is executed effectively. Rural lease courts give primary hearings to disputes involving tenant farming and share cropping statuses. These courts are composed of two owners (renting their land), two tenant farmers and a presiding judge.

Working in conjunction with other development policies The lease contract is subject to “structures control”, a policy that aims to

avoid an over-concentration of land and to maintain viable farms. The contract’s validity is bound by these regulations and by the tenant’s need to obtain a farming permit which includes a series of conditions including having obtained a given technical education in farming.

1.5 Establishment of information management systems for the

registration and transaction of land rights Information management systems for the registration of transaction of

land property or land use rights are the basis of any secured land tenure system. Different systems for recording property rights, with and without cadastres or land registries, exist around the world. The example of different systems is provided below which can be useful for Jiangxi. In the German system, rights are registered in the Land Book after having been verified by a judge. The French system, on the contrary, is based on the strong presumption that rights result from a successive social validation of contracts between individuals 9 . In both cases, these rights were constituted progressively through history, balances of power, trials of strength and laws, though they do not stem in the main from the handing over of title deeds by the government. The Torrens system is similar to the German system in many ways except that it recognizes the validity of rights only when granted by the government.

9 Jacques Gastaldi, “Les systèmes d'information foncière", in Lavigne Delville, Quelles politiques foncières pour l'Afrique rurale ? Paris : Karthala, Coopération française, 1998. pp. 449-460.

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The French system of information on land tenure rights10 This system is based on two institutions: the cadastre and the mortgage

registry office. They both operate under the aegis of the Ministry of Finance (Tax Division). This system has three basic missions: fiscal (evaluation of real estate and calculating tax bases), legal (identification of estates, owners and their rights) and technical (coordination and verification by large scale maps).

Although cadastral documents (maps and plot owners’ records) do not have any official and legal force as such, their progressive involvement in the public announcement of land rights (extracts from the cadastre and plot numbers for spatial identification) has caused jurisprudence to concede that they have some probative value.

The French way to provide public notice of land holdings is done through the registration of deeds granting real (immovable property) rights and their transcription into public records within the local institutions responsible for recording mortgages. According to French law, the basis of a right is the succession of publicly recognised and acknowledged contracts between parties. The contracts are drawn up by notaries (deeds of sales and purchase, and other deeds related to real (immovable property) rights, and filed in the mortgage register.

In the German system, the land registry (Land Book) has a legal role above all else because it is where rights are validated, registered, and made available as public knowledge. The Ministry of Justice is in charge of it. The Land Book is managed by land magistrates, who examine the substance and form of the rights before registering them. These rights cover all the existing rights within a territory, which are transcribed after having been validated in the registry. For this reason, reference to the land registry has absolute probative force. The act of registration generates both the deed and the proof of the existence of rights before the parties concerned and third parties. Estates are subject to obligatory demarcation of boundaries upon the initiative of public decision-making bodies. The land registry is complemented by the cadastre, which describes and identifies the properties. The same ministry or another may be in charge of the cadastre, and it also may be used for tax purposes. This system certainly provides great security, but it is long and expensive to set into motion.

The system of Torrens was developed for Australia, at that time part of the British Empire. In a general way, common colonial practice was as such: after having discovered “virgin” land, the colonial power distributed land plots among the new arrivals. This is what happened in North America after the land was “cleared” of the Indians. The cadastral survey defined cartographic demarcations, and the colonial authorities awarded a unit of land to each

10 This is the system employed in France, except for Alsace and Moselle, where the German land registration system remains for historic reasons.

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arrival. Registration in the land registry was equivalent to possession of a title deed. Subsequent transfers of property rights were recorded in the registry. Although registration is not obligatory, the Torrens system only guarantees rights to registered land.

There are similarities between the Torrens system and the German land registry: registration is definitive and enjoys absolute probative force, there is no separation between the cadastre and the land registry, and any person requiring registration is bound to carry out a demarcation of boundaries and have surveyors draw up a map. However, the Torrens system only recognizes the validity of rights granted by the government.

Private property is not always the best and the only solution for achieving land tenure security. Certain forms of common tenure are recognized to increase land security and reduce transaction costs11. It is also recognized that it is advisable to deal with each case individually in order to decide which form of tenure, private ownership or common property, would be the most appropriate.

2. Processing and Logistics of Agricultural Products The low investment capacity of farmers and their limited access to

technical training and advice are main obstacles to the development of agriculture in Jiangxi. On another side, processing and logistic industries need to be delivered high quality and standardized products. In this context, seeking the support of private investment for investment in services to agriculture (extension, credit, guaranteed prices, etc) is often considered as a solution to rural industries development. Based on international experience, this sector presents the predominant forms of contractual agriculture in the rural industry sector and their advantages and disadvantages.

Recent research and studies put much emphasis on Vertical coordination (VC) in agriculture and food product supply chains. This growing phenomenon is playing an increasing role in the development of agribusiness and agro-industry. VC refers to contracting agreements between different actors in the agriculture and food products chain.

VC is a widespread practice in European countries and in the United States where 30 percent of farmers are concerned. In East European and Central Asian Countries, VC emerged in the transition countries in order to overcome the disruption of the agriculture and food product chains after the collapse of the socialist system. In particular, the insufficient supply of agricultural products both in quantity and quality, and on the producer side, the lack of inputs (such as fertilizer and credit), delays in payment from the

11 Deininger, Klaus and Hans Binswanger, “The Evolution of the World Bank's Land Policy: Principles, Experience, and Future Challenges”, The World Bank Research Observer, vol. 14, # 2. August 1999, pp. 247-276.

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downstream sector, and insufficient technical expertise presented serious obstacles to the agriculture and food product entities. In its early stages, VC focused on securing supplies and prompt payment. That was the case of the cotton supply chains in Central Asia, the dairy and fruit and vegetable supply chains in Hungary and the Caucasus. In more advanced situations, more emphasis was put on product quality, which involved provision of extension services, farm-level investments in technology and equipment, bank loan guarantee, investment assistance, etc. A survey conducted in five CIS countries found that three-quarters of the agriculture and food product processors surveyed used contracts with suppliers.

Case studies carried out by the World Bank in Eastern Europe and Central Asia showed the dominant role of different types of contracts in various sub-sectors. In the dairy and sugar sector, extensive contracting arrangements developed between processors and farms, including the provision of credit, investment loans, feed, inputs, extension services, bank loan guarantees. In the cotton sector, gins contract with farms to supply seed cotton and provide them with credit, seeds, fertilizer, etc. In the fresh fruits and vegetables sector, retail chains created supplier contracts with farm assistance program, as a result of demanding quality and timeliness of delivery. In Kazakhstan there is strong integration in the grain sector.

Vertical coordination requires capital and, when domestic capital is lacking, VC is driven by and closely related to foreign direct investment (FDI). Initiators of contracting with supplier assistance may also include companies investing profits from other sectors (e.g. profits from financial-industrial groups), processors or traders who have liquidity from sales executed in international markets (e.g. grain traders in Kazakhstan) and processors who have contracts with international companies (e.g. cotton gins in Central Asia). This tends to show that VC in its new form is definitely linked to access to international markets and trade. However, in reality the domestic resources are often blocked by insufficiently developed or inappropriate credit policies, as in the case of Hungary.

Positive effects of VC are a direct impact on increased output and productivity of the processing companies. Indirectly, contract supported measures may result in an increase of farm productivity through specialist storage (e.g. cooling equipment in the dairy sector), veterinary support and physical inputs. Prompt payments, guaranteed prices and market access should also have a positive effect.

But VC encourages high concentration of agricultural production and excludes relatively small farmers. Given the structure of agricultural production in Jiangxi, only relying on VC and investment by financial groups would represent a risk for Jiangxi’s family farmers in economic conditions where non-agricultural sectors cannot offer enough job opportunities to convert farmers in the short-term. In terms of modernization of agriculture

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and introduction of innovative techniques to farmers, a review of various contract farming schemes in the African and the Latin American countries revealed that in a majority of cases, new technologies received by farmers through production contracts are very limited. They mainly consist of new crop varieties which have higher yields than the traditional ones. Sometimes, there is improvement in production due to agronomic advice given to the farmers by the companies (Lewis, 1985; Goldsmith, 1985). But, little of the new technologies seemed particularly innovative as the companies did very little original research. It was more of adapting a new seed variety to local growing conditions (Goldsmith 1985; Benziger, 1996).

Thailand and Taipei,China give examples of the positive effect of the involvement of public services as regulatory bodies in contract farming arrangements to protect interests of the farmers. Governments were able to help the farmers move to new crops in the 1960s with the help of private sector. Governments were flexible and worked closely as partners and facilitators in private firm initiated projects in which the firms provided a package of services to growers like extension, credit, and marketing support along with new seeds under production contracts (Benziger, 1996).

Access to investment for farmers, extension of new techniques can be achieved through other ways. Direct support to farmers, establishment of closer links between the producers, the processors, the decision-makers and Research & Development institutions are paths recommended to be developed by Jiangxi’s Government that will be presented in the following chapters.

3. Financial Services to Agriculture The existence of credit markets and the conditions of access to these

credits plays a major role in the development of agriculture production, processing and logistics. In this respect, the recent history of Eastern Europe and Central Asian countries brings interesting examples. Along with the collapse of the agro-food chain integrated in the centrally planned economy, input supply and distribution, and machinery services were disrupted. This led to an increased need for short and long–term finance in agriculture and agro-industries. The lack of, or limited access to, credit has been a major impediment to the development of primary agriculture, as well as the upstream and downstream sectors in all transition economies, leading to the use of inappropriate machinery and equipment and restricting the use of inputs such as fertilizers, pesticides, high yielding crop varieties, compound feed and others.

Credit markets had to be created or to adjust to the rapid changes in the macroeconomic environment, privatization and the implementation of structural reforms. The banking sector itself is undergoing reform. Previously geared to serving mostly large collective enterprises, it lacks

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experience and adequate information for working with small-scale borrowers. Dealing with such small clients also involves higher transaction costs. The transformation of the financial services offered to the agribusiness and agro-industries through banking and non-banking systems used different instruments and took a variety of paths in the region, which led to a catalogue of errors and successes. Experience shows that financing institutions should offer demand-oriented products designed to support the government’s policy in the agricultural sector.

The establishment of subsidized loans systems has been one of the measures taken by most of the Western European countries in order to enlarge the possibilities of investment of rural enterprises. In addition, tax exemption and sometimes subsidies have been set-up to facilitate purchasing of production equipment and inputs including machinery, fertilizers, pesticides, buildings and land improvement.

In all Central and Eastern European Countries, governments plays an important role in providing credit to agriculture and often also to enterprises in rural areas. The role of governments has been two fold: they have improved access to credit, often through a credit guarantee fund, and they have subsidized interest rates. Hungary even set up two funds: one for small and medium holders and one for large farms.

Governments initiatives have proven successful in some countries, for example, credit guarantees or warehouse receipts. Bulgaria as well as the governments of Albania, Hungary, and Slovakia supported the acceptance of warehouse receipts as collateral for enterprises. The example of Bulgaria, Romania and Slovenia show that there has been considerable government intervention in agricultural credit markets since the beginning of reforms in 1989/90. Intervention has often been justified in response to the perceived market failure and length to start-up with respect to the lack of access to finance and credit for developing the agro-food sector.

It is recommended for the Jiangxi Government to develop risk management and crop insurance programs. The most developed risk management systems exist in countries where the governments have established specialized agencies or introduced partnership programs with the private insurance sector. This strategy requires an active government role and an allocation of substantial budget funds. The specialized agencies define which programs should be introduced and play an active role in formulating the country agricultural risk mitigation strategy. Such a government agency is a costly initiative and requires permanent budgetary support. The agricultural risk management partnerships are less costly for the state budget since many functions are transferred to the private insurance sector. The partnerships allow private companies to increase the calculated premium with a percentage that should be sufficient for covering the companies’ administrative costs and some reasonable profit. The most effective system for management of risks in agriculture seems to be the

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creation of a specialized agency within the Ministry of Agriculture/Agriculture Administration. A state institution for agricultural insurance has operated successfully in Spain for a number of years and since 2003 a similar state institution has been operating in the Russian Federation.

Table 58: Building a risk management strategy- Keys of success

Main necessary criteria Accompanying measures • Transparency and trust between participants; • Voluntary participation in the system. In case of government support, the public sector should regulate and control the participants’ activities; • Accessibility of insurance services and products to all agricultural producers. The market should provide a wide variety of insurance products that comply with producers’ needs and at affordable prices; • Economic suitability of the agro-insurance market for private insurance companies; • Efficient use of public funds for risk management support;

• Improvement of legislation regulating the provision of insurance services and public support for rural development; • Institutional development, aimed at increasing the public capacity and knowledge of risk management strategies; • Stimulation and promotion of the private agro-insurance sector in order to increase the capacity to provide qualified services and products.

Source: De Oliveira, W. Agriculture risk management as a tool to improve the agribusiness environment in Ukraine, 2007

4. Quality and Safety of Agricultural and Food Products With an important forest coverage and plentiful water sources and

surfaces, Jiangxi enjoys favorable environmental conditions to produce quality and safe agricultural products. Yet, recent changes and accelerated industrialization and urbanization are a threat of pollution for the air, water and soils and result in heavy degradation of the conditions of agricultural production. The main difficulties faced in setting up the food safety system are:

• The lack of clear responsibilities and duties of different agencies; • The weaknesses in quality inspection system; and • The lack of traceability. The food safety system in Jiangxi Province needs to be further

developed and adapted to the socio-economic changes that have taken place in the PRC and world-wide over the last thirty to forty years:

• Changes in methods of production, processing, sale and consumption of farm products;

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• Intensification and industrialization of livestock breeding, crop farming and manufacturing of animal feed;

• Emergence of new diseases, and the evidence of new diseases transmitted through food products;

• New consumers needs, expectations and lifestyle; and • Increased trade of food products making tracking of products from

field to plate more complex. The experience of European countries in tackling with such changes

related to food safety issues since the 1950s can be relevant to the Jiangxi Government. The example of France will be detailed below. In particular, it shows how the food safety system is organized, which institutions have been created to make it work, what are the responsibilities of each stakeholder, and how the system adapts to changes.

The French food safety system is based on three principles: • Separating risk assessment and risk management: Risk

management is at present a corner stone in the implementation of the food safety systems and is the responsibility of the government who specifies rules aimed at ensuring consumers’ safety, promoting fair-trade and industrial practices, and guaranteeing market stability through regulation practices. Risk assessment is the responsibility of an independent organization especially created for this purpose, the French agency for Food Safety (AFSSA).

• Prevention and precaution: an inspection system built on “specific actions based on specific risks” (see 4.2. for more details).

• Transparency: a commitment to the public that goes along with traceability (see 4.4.)

4.1 Definition of responsibilities Responsibilities and tasks regarding food safety policy are clearly

allocated to different actors throughout the food chain and specific institutions have been created:

• Food industry firms (producers, processors and distributors) hold primary responsibility;

• Regulations must be constantly adapted to keep pace with scientific advances and new techniques in the health field: research and the government institutions work closely together;

• A system for certifying and inspecting industrial firms falls under the responsibility of the government authorities which have the power to penalize non-compliant firms when necessary;

• The French Alert Network and the European Union ‘s Rapid Alert Network are responsible for health monitoring in the event of potential or proven dangers

• Government authorities are qualified to manage risks particularly in

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emergency situations.

Box 1: An independent consultative body to advice on the French “food policy” The National Food Council (CNA) works on how to adapt consumption to nutritional needs, food safety for consumers and the quality of food products. The ministers responsible for issues regarding agriculture, food and health consult it. The CNA may also investigate matters of its own initiative. The CNA is composed of 47 members representing the entire food supply chain and civil society: consumer and user associations (9 members), farmers (9), large and small-scale food processing firms (9), distributors (3), restaurants (6), agriculture, food processing and distribution employee unions (5) and qualified scientific personalities (6). Representatives from the Ministries concerned and from the AFSSA also participate in the debates, lending a consultative voice. As soon as the government refers a matter to the CNA, the Council assembles a working group headed by one of its members. The recorder is either a member of the CNA or a personality from outside the organization. After meeting regularly, the group writes a report and a draft opinion.

Producers and processors are subject to “Performance obligation” In addition to the standards developed by the three international bodies

agreed by the World Trade Organization (WTO) in 199412, Europe has specified health standards for food products that are applicable in all Member States. Since the 1980s, industry professionals are given increased responsibility. Producers and processors are subject to “performance obligation” which serves as the basis for relations between food producers and manufacturers on the one hand and government authorities on the other hand. The choice of the means to achieve this performance is left up to the firms themselves. The responsibility of industry professionals and that of control services are clearly separated. Box 2 : Responsibility of firms in food products safety In France, the manufacturing and marketing of food products are subject to the principle of “proven safety” as stipulated in the Consumer Code. This text defines risk analysis and the principle of responsibility for defective products (Law of May 1998). To ensure the safety of their products, industry professionals are thus responsible for identifying the critical points of their activity. To help them in this, the Hygiene Committee of Codex Alimentarius 12 These three authorities are: the Codex Alimentarius Commission for consumer public health issues, the Secretariat of the International Plant Protection Convention (IPPC) for the protection of plants, and the World Organization for Animal Health (OIE) for animal health and animal diseases that can be transmitted to humans.

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has developed a method of analysis, called Hazard Analysis Critical Control Point (HACCP). New European legislation encourages the use of Guides to Good Hygiene Practices (GGHP), written by industry professionals and validated by the administration. The food processing, animal feed and restaurant sectors have been familiar with HACCP concepts, traceability and European hygiene standards for several years.

In practice, who is doing what? The way how French and European food safety systems organized their

administrative bodies might be of interest for Jiangxi. The system for monitoring and inspecting the production and

manufacturing of food products takes into account nutritional, biological, chemical and physical risks. In France, this control mission is shared between three directorates, in three different Ministries, with specific missions related to management and inspection:

• The General Directorate for Food monitors compliance with health regulations “from field to plate”, i.e. throughout the entire food supply chain for products of animal origin and up to the first processing for products of plant origin;

• The General Directorate for Fraud Repression monitors plant products (except those undergoing their first processing) on the food supply chain and mainly carries out inspections at points of distribution and consumption. In particular, it focuses on aspects regarding fair trade and consumer protection;

• The General Directorate of Health handles water quality issues; and • These entities are also represented at the regional and local levels to

carry out inspections in the field and to enforce any measures decided upon.

They have a dual competency, illustrated in the table below: • A “political” competency through a central administration, which

represents France in international and EU bodies, and by developing regulations at the national level.

• An “operational” competency through decentralized departments which fall under the authority of the various regions. Their mission is to ensure that health and food regulations are strictly enforced and to carry out investigations funded by the central administration or the prefects.

In order to carry out their missions, these national directorates call upon scientific expertise and lead the network of public and private laboratories that work in the food and veterinary fields.

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Table 59: Organization of the food safety plan in France Central administration: Policy competency

Ministry of Agriculture, Fisheries and Food Directorate General of Food (200 persons)

Ministry of Economy, Finance and Industry Directorate General for Competition and the Repression of Fraud (435 employees)

Ministry of Health and Solidarity Directorate General for Health (12 employees specialized in food safety)

Decentralized Departments: Operational competency

100 Departmental Management of Veterinary Services (3169 technicians and 773 administrative staff)

101 Departmental Management for Competition, Consumption, and the Repression of Fraud 8 Regional Directorates and 9 laboratories

100 Departmental Management of Health and Social Affairs 22 Regional Management of Health and Social Affairs 13 inter-Regional Epidemiology Units

Mission - Determines policy for protection of plants and animals, and for food quality and safety - Certification and qualification - Control and investigation - Continuous inspection in slaughterhouses

- Guarantee open fair trade - Protect consumers in their daily life

- Checks on drinking water - Investigations following cases of human food poisoning

Source: Adapted from “French Food Safety Systems”, Ministry of Agriculture and Fisheries, Paris, France. www.frenchfoodsafety.com (also available in Chinese language).

4.2 Inspections: preventive and protective measures The various food business operators involved in the food supply chain

(producers, processors and distributors) are required to implement internal inspections based on HACCP guidelines and methods. Failure to carry out such inspections or performance of ineffective inspections may lead to severe administrative penalties ranging from seizure of the manufactured food products up to closure of the company. These are preventative measures.

As for the government, its agents have a wide variety of inspection powers at their disposal. They are responsible for:

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• Implementing monitoring plans, established as part of a national program, in order to assess potential risks that may lead to corrective measures.

• Developing plans for controlling locally identified risks. • Carrying out more specific inspections when alerts are given by

consumers or health authorities from other countries. Non-compliance with health and safety regulations observed during

official inspections results in protective measures that may, for example, include the seizure of products (in other words, their withdrawal from the market so that they do not enter the food supply chain), and the obligation to clean and disinfect the facility. The facility may even be closed and be stripped of its health certification. Furthermore, as inspectors are sworn officials, they can, during inspections, uncover regulatory infractions that may lead to administrative or legal penalties.

These inspections are divided into three broad categories: • Inspections at production facilities: From field to plate, agents from

the inspection department monitor food safety. Animals are inspected starting at the ranch or farm. Later, veterinary inspectors perform checks at all certified slaughterhouses. Most industrial or small-scale firms that manufacture food products using animal products or products of animal origin must have a health certificate issued by the Local Direction of Veterinary Services. Each food business concerned is thus inspected before and after it opens. Next, the firm’s products, processes and documents are inspected on a regular basis. The frequency of these inspections depends on the risks related to the nature of the activity and the company’s overall hygiene level.

• Product inspections: Inspections are performed throughout a product’s travels, at the production, transport, storage and distribution stages. These inspections check the composition of the products, their microbiological characteristics and their storage conditions (in particular, the temperature). Ad hoc, annually renewable, qualitative monitoring plans are implemented for some categories of food products that are particularly fragile or likely to develop emerging pathogens or be in contact with toxic residues. Finally, random inspections at refrigerated warehouses, distribution facilities and agribusiness firms round out this set of measures.

• Investigations following food-related incidents: For example investigations following an outbreak of food poisoning are coordinated by the prefects (equivalent of local governors). They aim to identify the factors responsible for the incident (i.e. a pathogenic germ, toxic residue, etc.) and to determine the conditions that gave rise to the danger (i.e. incorrect handling, failure to maintain the cold

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chain, etc.). Pre-determined procedures make these missions more efficient and enable investigators to collect the required information as quickly as possible. Thanks to this process, the infection can be confined and any affected persons can be treated.

4.3 Monitoring and assessment The mission of monitoring is given to two main governmental

organizations, both founded in 1999 as part of the drive to increase food safety.

The French Food Safety Agency (AFSSA), supervised by the Ministries in charge of Health, Agriculture and Consumer Affairs, is responsible of food safety monitoring. The Agency assesses the nutritional and health risks of food products intended for human or animal consumption. Its key missions are monitoring and triggering alerts, and to provide information and transparency. In addition, it carries out research and scientific/technical support for government authorities. Its role of assessing and providing expertise on health and nutritional risks is also an integral part of the monitoring system. It publishes opinions and makes recommendations. The consultative opinions are always sent to the government and made public. AFSSA has 950 employees. To fulfill its mission, AFSSA relies on 10 expert committees and 12 laboratories.

The National Health Monitoring Institute (INV) falls under the authority of the Ministry of Health. The INV monitors sanitary conditions and observes the health of the population and how it evolves over time. It has 253 employees responsible for alerting government authorities and providing them with recommendations in the event of a public health threat. These employees rely on government infrastructures located throughout France (13 Inter-Regional Epidemiology Units).

Other bodies are involved in assessing health and environmental risks such as the commission to study the toxicity of pest-control substances used in agriculture and related products, namely for pesticides and the Biomolecular Engineering Commission on Genetically Modified Organisms.

4.4 Information on food products and risk communication Traceability Health authorities, industry professionals and food business firms do

everything possible to know the origin of the products put on the market. Traceability is an important guarantee of transparency which is defined by the ISO 8402 standard as “the ability to trace the history, application or location of an entity by means of recorded identifications”. Traceability is an integral part of quality assurance systems. It requires manufacturers to provide the characteristics of the raw materials used in every batch or lot they produce.

Since July 1s, 2005, traceability has been extended to the European

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Union. This enables products to be tracked from field to shop — including at the factory, during transport, in storage and at the point of distribution — both in France and abroad. This guarantees both the origin and safety of the food products at every step of the way. The label thus plays a key role in traceability by providing an overview of the entire production chain.

Labeling Labels are a true identity card for a product, providing a wealth of

information and health advice. Four types of information can be found on a product label:

• Descriptive information, i.e. the product trade name, its batch/lot number, the product ingredients, the net quantity and any instructions for use.

• Health-related information, i.e. information regarding product freshness (“best before”, “use by” or “expiry” dates), risks related to a product ingredient, proper storage temperature and precautions for use.

• Mandatory information for differentiation. This includes the address and phone number of the product’s customer service (if applicable) or of the manufacturer and the batch / lot number. Products of animal origin include a veterinary stamp showing the official certification number of the final processor of the product. Beef packaging features specific information such as the animal’s country of origin, the category of the animal (steer, heifer, cow, etc.) as well as the type of breed (dairy or beef).

• Explicit information, such as illustrations, voluntary information — whether certified (for example, quality labels) or not — which enhances the product’s image and is added to the previously mentioned mandatory.

Box 3: The example of pig production—from the farm to abattoir and processing Animal identification Most French livestock farmers are organized in groups of producers who ensure the technical support and marketing of the animals. Working between the pre- (genetically selected breeding and/or feed suppliers) and post-process (slaughterhouses, carvers, processors), they play a role in monitoring traceability. Bacon pigs are identified with a tattoo at the rear of the shoulder with a code indicating the Country, the Department, and the farm site. This marking is done at least 3 weeks before leaving the farm. All farm-bred animals are logged in a studbook which also records other information including sanitary, feed, movement data. It is used and filled in by the farmer, technical personnel and vets and monitored by French

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officials on farm visits. The studbook Since the law introduced on 5 June 2000, livestock farmers must use a studbook comprising different sections: type of operation, information on zootechnic, sanitary and veterinary support on the farm for each animal species, animal movements, care provided for the animals, animal feed. For the ‘movement’ section of this studbook, the farmer is required to conserve the documents accompanying the movements, in order, import and export certificates and carcass removal documents. They must be conserved for a duration of 5 years. An accompanying document is created for each movement of pigs between breeding sites, grouping centers, slaughterhouses and abattoirs. All pig movements have to be recorded in the national pig identification database. Accompanying documents and notification of pig movements in the national pig identification database Every time pigs go in or out of a breeding site, the breeder has to complete and sign the accompanying documents. They must be conserved in a studbook for 5 years. The new regulation stipulates mandatory information including the name of the transporter, their registered number, the truck or trailer’s registration number, the driver’s signature, the identification of the location where the content was loaded or unloaded, the number of animals, the types of animals (piglets, bacon pigs, reforms, breeders), the farmer’s signature etc. All this information is logged in the national pig identification database. One of the benefits of this national pig traceability system is the ability to improve health crisis management in order to safeguard the health of animals and consumers. Healthy, managed feeding: Pig feed has to meet strict quality and sanitary requirements. Constant hygiene and sanitary monitoring: France benefits from an efficient network of epidemiological monitoring. Plans to combat and eradicate the main diseases have been put in place. The generalization of the rearing-fattening breeding model ensures optimum animal monitoring (sanitary, traceability…). Groups of pig farmers ensure sanitary monitoring. This involves several visits per year from veterinaries and technical personnel from these groups to each farm, when they visit workshops, examine animals, rearing conditions and recommend a certain amount of action plans. Well-being of the animals: Consumer expectations are accounted for in farming practices. The French pig farming industry is aware of the need for the humane treatment of animals both during the rearing phase and during transport, in compliance with European legislation. Traceability and sanitary inspection at the abattoir: When it arrives at

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the abattoir, the animal must be accompanied by documents indicating its identity number. Abattoir management, monitored by the veterinary inspection service, checks the food chain information. Based on the identification, a slaughter number is put on its carcass. The abattoir needs to be able to find the animal’s identity number at any time, from this slaughter number. This system guarantees traceability. The ICA The food chain information (Information sur la Chaîne Alimentaire), in the abattoir, is one of the cornerstones of controlling sanitary risks, both biological and chemical and at times physical, by enabling abattoir management to stay informed of the quality of the live animals coming onto their premises. All animals are examined to ensure they are in good health. Any animal that is sick, unidentified or is not accompanied by its sanitary documents is immediately withdrawn from commercialization and therefore from human consumption. Abattoir management is responsible for applying current regulations in terms of hygiene and quality (premises maintenance, carcass preparation, material…). They check the effectiveness of their working methods using bacteriological self-inspections. Before being taken into cold storage, the carcasses are inspected by veterinary services from the Agriculture Ministry which ensures they are fit to enter the human food chain. The healthy condition of the meat is assured by stamping the carcasses, certifying that the meat has passed inspection and identifying the slaughter company. Self-inspections Industry professionals, responsible for the sanitary quality of the products they commercialize, implement self-inspection procedures. These inspections are carried out internally by the company or by independent external organizations. All these operations are carried out under surveillance from local authority veterinary services (DDSV). After slaughter, the carcasses are chilled and then taken to a cutting area. The DDSV, local authority veterinary services (Directions départementales des services vétérinaires) The DDSV are decentralized departments from the French food, agriculture and fishing Ministry. There mission is to ensure nationwide application of regulations and to set up an effective and rapid emergency network. A regional level coordinates local departments under the authority of the region’s prefect. Over 4000 agents in 100 local départements monitor and inspect food quality, from the field to the table. Their work is supported by over 5000 practising veterinaries involved in livestock production. This way, on a daily basis, these specialist agents, who hold

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administrative and legal powers, contribute to safeguarding public health, animal health and the environment. Quality inspections and procedures in cutting and processing workshops: Regular inspection of the quality of products is carried out by self-inspections during cutting and processing. Every location along the food chain, from the abattoir to the processing company, implements a sanitary control plan adapted to the premises and based on the principles of the HACCP. HACCP HACCP stands for Hazard Analysis Critical Control Points. This is the application of a systematic scientific method which enables biological, chemical and physical risks associated with raw materials and the various operations to be carried out on the food to be identified, in order to then define the critical points for controlling these risks and thereby ensuring the safety of the finished product, delivered to the consumer. The Codex Alimentarius Commission – an international association responsible for harmonizing regulations in terms of food safety – has decided to use the HACCP method as a reference. This way, strict procedures for ensuring sanitary quality of raw materials and finished products are applied by the companies (traceability, microbiological quality of incorporated meats, validation of use-by dates, product compliance…). Each production site is subject to regular inspections and certifications, carried out by external independent organizations, by public authorities or by customers. Conserving the cold chain in transport: Carcasses and meat are transported to their destination in vehicles or containers designed and equipped to maintain internal temperature at +7°C. Strict and efficient warning procedure in the event of risk: In the event a health problem is discovered, any employee on the food chain (farmer, slaughterhouse employee, processing industry employee, veterinary…) must alert the veterinary authorities. It is their responsibility to make an initial analysis of the situation and to inform, if necessary, the administrative bodies involved: DGCCRF and DGS (Direction Générale de la Santé). The DGCCRF, the French office for consumption, competition and consumer protection (Direction générale de la consommation, de la concurrence et de la répression des fraudes (Ministère de l’économie, de l’industrie et de l’emploi) The DGCCRF’s role is to ensure free and fair competition on the French market and to protect consumers. Its cope covers security, fair trading and quality of consumer goods (ingredients, additives, authorized treatments, labelling, trading practice…) and also services. Food makes up a part of its activities. 4100 agents work in market inspection, including 2000 investigators covering the entire country in a central office and 100 local units.

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In the event of an immediate risk to human health, the company is obliged to withdraw or recall products likely to present the same risk as the infected sample. When a risk is detected in an exported product, the official authorities in the country of destination are informed immediately by the French authorities. Agricultural and veterinary representatives posted in the embassies concerned are responsible for liaising with the national health authorities.

Some countries like Armenia put emphasis on the establishment of measures in plant protection and seed production, state vaccination campaign. However once standards are on paper, another step is to enforce their application. First conformity assessment needs to be established by law. Second, necessary resources to test conformity needs to be deployed. When they exist or are still operational, laboratories may lack capacity in terms of instrumentation, material and training to conduct the testing needed for international standards.

Different examples in South-East Asia, Latin America and Europe show the difficulties faced by small and medium-sized enterprises which may not have the capacity to invest in the new technology necessary to fulfill the international sanitary and quality standards.

5. Promotion of Quality and High Value-added Products To promote the production of higher added value agricultural products is

a way to increase the agricultural income of small farmers. In Jiangxi, high quality brands already exist, and some are famous. The development of organic products is already well advanced with such products as green tea and camellia oil. Jiangxi benefits from a well protected environment and plenty of resources. The development of Protected Designation Origin products has certainly a high potential as well since in Jiangxi’s territory, many areas have their own specificity and specific products: aquatic products from Poyang lake, citrus from Ganzhou, etc. Farmers need to be sufficiently encouraged and informed .The government could support education and information campaigns for consumers.

The development of Protected Designation Origin (PDO) and of Protected Geographical Indication (PGI) in the EU provides an example of efforts made to value and promote quality products. Until recent years, international recognition of OLPs was problematic and opponents of this position saw only private trademarks as legitimate protection and maintain that an OLP's status as public property is meaningless in free market countries like the US or the Cairns Group countries.

In France, an even more strict type of PDO exists, the Controlled Designation Origin (AOC). A specific branch of the Ministry of Agriculture, the INAO (National Institute of Origin Designation Products), guarantees

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that all AOC products will hold to a rigorous set of clearly defined standards. The organization stresses that AOC products will be produced in a consistent and traditional manner with ingredients from specifically classified producers in designated geographical areas. The products must further be aged at least partially in the respective designated area.

Under French law, it is illegal to manufacture and sell a product under one of the AOC-controlled geographical indications if it does not comply with the criteria of the AOC. AOC products can be identified by a seal, which is printed on the label in wines, and with cheeses, on the rind. To prevent any possible misrepresentation, no part of an AOC name may be used on a label of a product not qualifying for that AOC

International experiences show that these measures can efficiently support agricultural production in less favored areas, such as mountain territories. For example, after the French cheese “Morbier” obtained the AOC in 2000, its production has doubled within two years time and the number of producers increased from 25 to 40 because the price of AOC cheese is 30%higher that the price of “normal” cheese. This guarantee of quality also results in an increase in land prices. The price of land planted in AOC olive trees in Drôme (a French District) is getting up at a much quicker (2% per year) than the land planted in non AOC trees. The AOC can also help to protect agriculture land from pressure due to urbanization and tourism since the product cannot be produced elsewhere. The green lentils from the Puy or the Roquefort cheese are collective properties that cannot be “resettled” to be produced in another place.

Vietnam has adopted the Protected Designation Origin label in 2001. The first product to receive the label was the « nuoc mam de Phu Quoc ». Unilever was interested and invested USD 1 million in the island where it is produced. Since then, prices increased three fold.

Other kinds of quality labels exist that help increasing added value in agriculture. In Chile, the policy action plan for 2006-2010 calls for quality attribute labels for Good Agriculture Practices (GAP), guarantee of origin, organic agriculture and family-based agriculture label. In Uruguay, where small-scale farmers and marketing of low priced commodities prevail, one of the priorities is to develop a “certified natural meat” label for export markets. However, institutions are weak and lack integration.

In the recent years, the PRC became by far the Asian leader in the field of organic agriculture with a great variety of products and, in 2005 more than 40,000 new certified organic products and more than one million hectares cultivated. However, this area still represents only a very little part of the overall cultivated land. More than half of the production is exported, especially products which satisfied the most strict requirements. The international demand is increasing and there is a large scope as well for national market. Producers need encouragement and information. Technical extension in the field of organic agriculture is still too limited.

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A great diversity of quality labels has been developed in the PRC. However, the consumers are not always aware of the characteristics of each quality label and of the differences between labels. Dissemination of information targeted to the consumer to raise awareness and build confidence would enhance the interest in organic and quality labeled products. Similarly, the visibility of quality products should be enhanced. A number of production and commercialization companies from Jiangxi are already visible on the internet such as Wuyuan Xitou Organic Tea Factory or Jinyuan Agriculture Development Co. Public support could be offered to cooperatives or groups of producers to promote their products quality.

For example, in Tunisia, the Government strongly supports the development of organic products. A series of measures have been taken including subsidies for control and certification for groups of producers. But action taken by the Government put emphasis on the organization of various events to promote organic agriculture products: creation of an annual “week of Tunisian organic products”, support to national and international fairs, elaboration of a plan for development of organic products related to the tourist sector, creation and financing of a laboratory for research in organic agriculture within the Regional Development Centre for research in agriculture, and creation of units in charge of organic products within the professional organizations.

The work done in the state of Uttarakhand in India to promote organic products is full of lessons to be learned and original experiences. Organic Uttarakhand is a label. An Organic Commodity Board was created in 2003 to promote, coordinate, the dispersed organic activities and efforts for organic farming. The board was registered under the societies registration act, 1860 and is acting as the nodal agency of the state to enhance organic activities in agriculture and allied sectors like Horticulture, Medicinal Aromatic Plants & Herbs and animal husbandry through out the state. On-going programs, many of which are funded externally, presently provide the source for human resource for the technical and marketing activities. Efforts have been raised for the brand creation and visibility of organic products. The sale and popularizing of the products in the local markets through points of purchase at vantage points have been attempted. An element of consumer awareness was added through the participation in various fairs, exhibitions and seminars, which would subsequently trigger demand of the product. An original supply chain has been developed. Around 2000 bio-villages are interwoven directly into the chain. The model is being successfully tested for the different terminal markets as well as for specific food fairs for the last three years. The major supply chain member's are producer groups, master trainers/ service providers/ supply chain officers, wholesalers and retailers. The Board also runs Researches. Spices and condiments packaging is an example. The packaging material was designed and printed for the various organic products clearly indicating the size and price of the contained

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commodity along with the complete nutritional information. This packaging material is used for packing the produce of the farmers and selling them directly to the consumers through fairs and exhibitions. The packaging has been developed for Spices like Chilly powder, Ginger powder, Turmuric powder and Jambhoo faran and also for cereals like rice and wheat flour.

6. Towards A Comprehensive Approach to Rural Development

Planning This section focuses on two key questions for Jiangxi: i. How to coordinate the different dimensions of development: social,

economic, environmental, and culture? ii. How to strengthen the linkages between rural and urban

development? How to promote economic activities at local level? What role can play the small towns in the process of development?

A central question to develop a harmonious society is how to balance development between regions and people. Experiences in terms of fiscal decentralisation might be of interest for rural Jiangxi in the context of the recent reforms implemented in the PRC in terms of governance and administrative systems. In their discussion of intergovernmental fiscal relations and poverty alleviation in Viet Nam, Bird et al. (1995) argue for greater decentralisation of spending and revenue decisions to make sure that pro-poor expenditures (such as local infrastructure, health care and education) reflect the preferences, needs and fiscal abilities of different localities. Fiscal decentralisation theory addresses the vertical structure of the public sector, the assignment of functions and instruments to different levels of government, and the ways in which different levels of government relate to one another through instruments such as intergovernmental transfers.

An administrative and decision-making decentralisation is not sufficient. Mechanisms to channel resources –specifically investment- to the most

favoured regions and people are necessary. In Sri Lanka, in spite of the effort of decentralisation which started in the

1980s, considerable regional disparities in the incidence of poverty remain, with the proportion of poor people lowest in the densely populated districts of Colombo and Gampaha in Western Province (Gunewardene, 2000). Decentralization of power was not sufficient to balance these gaps, without good coordination. Unequal regional access to basic infrastructure is also evident. In Sri Lanka, both the public sector and the non-government (NGO) sector are involved in implementing rural development programmes. However, the NGO sector has traditionally concentrated on social mobilisation and micro-finance programmes, whereas the government is the key player in rural infrastructure development programmes. Originally, infrastructure development was the mission of the de-concentrated line

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ministries and statutory authorities of the Central Government. In the 1980s, more power was shifted to Provincial Councils and responsibilities relating to rural development were shared between Centre and the Provinces, Considerable overlaps and problems of co-ordination which hampered the programs efficiency.

The experience of The Netherlands is original and edifying. It shows how an interventionist and systematic policy was applied and successively made use of different tools to reduce economic and social disparities among farmers and across regions. Funding was distributed among research, education, widespread training, modernization, the development of rural land and support for food industry. Agriculture in The Netherlands is presently one of the most efficient in the world (see box 4). Box 4: The Netherlands: an example of a comprehensive and coherent agriculture policy After World War II, the Dutch public authorities implemented a policy aimed at reducing economic and social disparities among farmers, especially across regions. This interventionist and systematic policy was applied without opposition from 1950 to the mid-1980s. It successively made use of different tools and was remarkably coherent: funding was distributed well among research, education, widespread training, modernization, the development of rural land and support for food industry. How was it possible to implement such an original policy, particularly for Western Europe? Right after World War II, the Dutch public authorities started to intervene in the national economy, to such an extent that economists began to speak of a "semi-planned" economy. This intervention was part of a close partnership between the State, unions and civil society groups. The unions and civil society groups were equally represented in public agencies that were conferred a number of duties traditionally under the government’s realm of activities. The 1950 law that laid the framework for the national economy provided for the creation of such agencies within each of the sectors of the economy. The State continued to make the large, over-arching decisions regarding the political economy, whereas the agencies within each economic sector made their own interpretations. Three types of agencies within the farming sector were created:

• a "horizontal" agency, in which farmers’ groups and farm workers’ unions were given equal representation.

• field-specific “vertical” agencies, with equal representation of the different agents who work in this field.

• "foundations" responsible for implementing the general measures of agricultural policy, of which both representatives of the Ministry of Agriculture and farmers’ groups are members.

The rate of union membership in the agricultural sector is high: more

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than 80% of farmers are members of one of three farmers’ unions. One of the unions acts as spokesperson for inland farms. Dutch union pluralism is the basis of farmers’ democratic representation: the interests of small farmers in disadvantaged regions are expressed through the agencies that carry out an important role in defining and implementing agricultural policies. The government gives a positive response to the defense of their interests since one of its main objectives is to reduce economic and social inequalities. Inequalities in regional agricultural development were reduced in several steps, by the successive implementation of different agricultural policy instruments:

• Regionally differentiated pricing policies, in favor of the most disadvantaged regions from 1950 to 1965;

• Limitation of poultry production disconnected from the territory to farms of less than 10 ha, thereby allowing them to offset their size disadvantage, from 1950 to 1960;

• Integrated development of rural land (merging plots, construction of new farm buildings, improvement of infrastructures) from 1958, that took into account three quarters of farmland until 2000, according to a plan that gave priority to the least favored regions. These regions are those in which the highest increases of productivity could be expected, thereby ensuring optimal use of the large amounts of public funds invested. Overall the objective was satisfied and formed a powerful tool for reducing inequalities in regional development;

• Different levels of investment aid given to regions from 1978 to 1982, permitting much higher rates of subsidies in disadvantaged regions. These aids are only proposed to farms with incomes lower than the reference income, itself set below the average salary;

• Intervention by the public authorities in the land market via the Land Administration Foundation;

• Implementation of the research and popularizing policy adapted to different regions’ problems: as early as 1932, specialized centers were set up to develop the small farms of the inland regions.

From 1970, Dutch agricultural development policy relied on a dynamic research and development structure capable of proposing suitable types of farm organization, by anticipating individual initiatives. Source: DEVIENNE, Sophie. Doctoral thesis. Unpublished. Cited by Merlet, M., 2007.

The Integrated Regional Development (IRD) approach developed in the

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Settlement Study Center at Rehovot, Israel13 might help in designing a harmonious set of actions between rural and urban areas, and integrating different sectors of activities. The approach is built on the concept that regional development has a two-fold function: “vertical” in planning of agricultural production by connecting macro-planning at the national level and micro-planning at the level of individual production units; “horizontal” in integration of agriculture, industry, and services from the economic, social, organizational, and physical points of view. This method has been tested in various countries over the past 20 years, including the PRC (Jurong County Integrated Development Plan elaborated in 1996). The approach is appropriate for countries whose non agricultural sectors are not sufficiently developed to absorb surplus manpower. The prescribed methods and sequences of economic planning involve getting to know the region and its areas, determining an "income target" for the area, developing a macro plan, sector plan and micro plans, and integrating the three sector plans into a comprehensive regional economic plan. A practical model which links three sets of variables including three economic stages, spatial levels of activity, and the various elements constituting the physical planning, is suggested as a guide for physical planning. Implementation of IRD must be carried out in two stages: translating the plan into stages of operation and projects, and organizing for implementation.

The Leader Initiative in the European Union14 put the focus on the small regions and local initiatives, resulting in regional integrated development (thus integrating rural and urban areas as well as all sectors) base on a participatory planning process. Once approved and financed, the projects proposed by the regions are implemented under regional responsibility. The Leader Initiative is interesting for Jiangxi’s Government in order to focus development on the specificities and needs of each region within the province, enhancing the advantages of each of them. This strategy would also help the promotion of Regional quality labels and allow to build a demand-based Research & Development and extension system.

13 Weitz R., Rehovot, Settlement Study Center, 1979. 92 p. (Publications on Problems of Regional Development; 28) 14 Claude Saint-Pierre, Rita Merkle and Sylvie Dideron, Addressing the Challenges of Rural Development in a Context of Rural-Urban Migration: Compared Approaches in China and in the European Union, ECARDC, March 2009.

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Rural development is one of the areas with a common policy framework in the European Union15. Individual member States carry out their own policies within that framework, and implement them partly under programmes co-financed by European, national and regional levels of government. The programme Leader has a special status. It was launched in 1991 and is in its fourth programming phase until 2013.

15 Rural development is part of the common agricultural policy of the EU. It was also addressed through the regional cohesion policy until 2006.

Box 5: Leader Initiative in the Monts d’Ardèche Regional Natural Park in the Cévennes

Through its Leader programme, this region confirmed and strengthened its position as a stakeholder involved in integrated rural development instead of environment preservation in a narrow sense. Leader, with its series of programming phases, is also viewed as an appropriate vehicle to strengthen the recently established village associations since individual public projects are often undertaken at that level. In, 2000, the Leader group decided to focus its programme on attracting new micro-enterprises in non-conventional sectors and handicrafts. In 2007, for the new programme, the strategy has now been refocused on the actual population issue: maintaining an active population in the parts of the territory that remain outside counter-urbanization trends. Landscape maintenance through agriculture will be supported thanks to the new mainstreaming approach. The programme’s slogan for 2007 and 2013 is “another life is being invented here” Source: Monts d’Ardèche Regional Natural Park 2007.

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Box 6: The Rehovot Integrated Regional Development approach The IRD Methodology regards planning in terms of a cross-functional process. Regions are viewed as the meeting points between economic opportunities and social and environmental concerns. The regional development plan presents itself as the point of intersection at the regional level of the two planning functions—the vertical and the horizontal. The concept of cross function permits the achievement of simultaneous consistency between the following factors:

• Coordination and interrelationship between the various levels, from national to regional and local (usually national, regional, district, city and village).

• Coordination and relationship between the three economic sectors, primary (agriculture), secondary (industry), and tertiary (services).

• Integration within the regional plan of the economic, social, organizational and spatial aspects.

The IRD approach avoids the adoption of a structured "recipe" for regional development. Rather, a flexible approach, based on local conditions and predominant institutional structures, is embraced. Moreover, the Rehovot approach stresses the fact that development planning is a dynamic process that enhances the capacity of territories to contribute to the creation of economic activities. Source: www.weitz-center.org

The goal of the Leader program is revitalization of lagging-behind rural

areas. In France, the national managing authorities have also encouraged Leader groups to base their development strategy on the integration of new enterprises and inhabitants, therefore inviting new groups from “new countryside” territories to apply.

The initiative does not define “what to do” but “how to do it”. The local programmes implement a set of well-defined features called “principles for effective rural development”: a bottom-up and area based approach, partnership between public and private stakeholders, integrated and multi-sector actions, innovation, co-operation and networking 16 . These principles facilitate the mobilization of endogenous resources from human and social capital to cultural assets, natural resources and capacity for

16 « Leader » is an acronym standing for « Liaison Entre Actions de Développement de l’Economie Rurale » - linking actions for the development of rural economy.

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innovation (EC 2006). The initiative has been recognized as effective, efficient and conducive to innovation (OECD 2006)17.

Leader is implemented as a series of local programmes, each of them managed by a mixed board of public stakeholders (generally local elected officials and their staff) and private stakeholders (generally associations from the civil society), called local action group (LAG). Each group represents a territory with 10,000 to 100,000 inhabitants. The groups define their own rural development strategy (based on both issues and opportunities), framework of actions and budgets. They call for project proposals from local economic and public actors, support these projects in financial and management terms, and evaluate together lessons learnt. The Leader action groups are also required to carry out joint actions with other groups including in other member States, and to participate in the networks of groups at regional, national and EU level. Each group receives a limited overall budget for each programming period, 2.5 million euros of EU subsidies on average in 2000-2006. With close to 850 groups during that last programming period, Leader covered 47 million people, i.e. more than half of the rural population in the EU, and 1.5 million sq. km.

Leader has promoted new forms of local governance. Its promoters describe a change of culture or behaviour (OIR 2004). Leader has helped throughout the EU moving away from an approach from a sector approach, focusing on agriculture or forestry, to a multi-sector rural development policy (OECD 2006). In countries with a strong tradition of representative democracy (democracy where decision-making is devolved to elected officials), Leader is pushing for new governance based on active participation of associations and of the general public. Further, Leader in France is one of the incentives used to encourage the grouping of individual communes into higher-level territorial units, in particular, the groupings of commune associations and rural towns. These groupings (called “pays” i.e. “country”) are of interest for Jiangxi in the way they aim to develop a synergy between the countryside and small rural towns.. These units are the appropriate level for project-based approaches and Leader is a learning-by-doing opportunity for project-based management.

The creation and improvement of services to the population, generally termed “improvement of quality of life”, is an important field of intervention and the main theme of one fourth of Leader groups in 2000-2006. With only small budgets available and an encouragement for innovation, Leader groups chose to prepare and test new services and/or to encourage services managed by the civil society. Services that have been tested through Leader and are now commonplace in fragile rural areas include for example public internet point allowing access to e-administration,

17 Evaluation reports are available and describe both strengths and weaknesses in implementation (OIR 2004a and 2004b).

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convenience stores providing the basic services of a post office and a bank outlet, “transport on demand” (collective taxis made available at a reasonable price, for example for old people, where no bus services are available) or childcare with hours adapted to the needs of parents who live in the countryside and work in a nearby city.

The integration of the three historical economic sectors, agriculture, food processing and forestry into Leader has been subject to much debate. In most member States including France, the Leader groups have operated in isolation from the professional bodies and local stakeholders of these sectors. Leader has promoted innovations and employment opportunities in sectors largely outside these sectors, while programmes in these sectors have largely remained managed in a top-down manner and have not been a vehicle for innovation. In order to fill this gap, “mainstreaming the Leader approach” is now required in all rural development programmes co-financed by the European Union (OIR 2004b, EC 2008b).

7. Enhancing the Capacity and Efficiency of R&D, Extension and Information Services

The Research & Development system in Jiangxi needs to be adapted in order to fully support agricultural development in the present context. Major questions are the following:

• How to enhance a demand-based R&D? • How to develop closer links between R&D on the one hand, and

producers and processors on the other hand in order to target specific problems of different actors?

How to strengthen the R&D system capacity to handle both specific technical issues related to each agricultural product, and more general socio-economic aspects?

In Eastern European and Central Asian countries, debates are going on regarding the most appropriate way to provide best services to producers and processors. Research and development as well as extension are being restructured. In the former socialist system they relied on public investments and were mainly based on centralized research and advisory institutions linked to the related Ministries. This system still predominates and professional organizations or private extension services does not seem to emerge. Traditional areas of public investment such as research and extension, market information systems, veterinary services and animal surveillance programs tries to take into account the new organization of the cluster and particularly the increasing role vertical integration plays in these areas. In this field, some advocate focusing on strengthening collaboration between public authorities, NGOs and private companies. The possibility and conditions of emergence of clusters would be worth investigating as a number of examples (the classic case often mentioned is the Californian wine industry) tend to show that clustering is a strong tool to tighten the links

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between different actors. In the case of countries engaged in the process of EU accession,

services to farmers are also supported mostly through government services. During the successful process of accession of Hungary, grants for advisory work were distributed to Counties and decisions regarding R&D activities were made by the County authorities. Special attention and support was given to the creation and development of producers’ marketing organizations.

In the European Union, the systems for R&D and extension and information services in the agricultural sector differ according to countries. During the last fifty years, agriculture has acknowledged a series of successive mutations. The concept of sustainable agriculture emerges in the views of agricultural organizations, and consumers developed justifiable demand in terms of quality, safety and origin of food products. The organization of the extension, information and development in the field of agriculture had to adapt his methods and themes of work to this new context. Remarkably, it has rehabilitated group approaches, establishment of collective actions and networking for issues of national level interest. The advising practices became progressively less prescriptive, and more geared to listen to the producers and consumers needs, wishes, and constraints. Generally, the advisory system calls more and more for generalist expertise (with a capacity for a comprehensive approach to development) than for specific expertise. The content of the education curriculums for agriculture schools has evolved in accordance, strengthening the tights between the profession, the consumers, research and the advisory system18.

Extension systems often make the link between R&D and the producers. R&D and extension systems in Europe combine private professional organizations -production-based (wine producers, organic farmers, etc) or region-based (one organization per administrative division- and public services. In France, professional organizations seek for researchers of the National Institute for Agronomic Research for trainings in very specific subjects and for the latest technologies or legislation. This can be as diversified as soil preparation, animal health, the European Agricultural Policy, certification processes for agricultural products and of farms. Through this continuous dialog, researchers are aware of the demand and difficulties met by the profession: their research is demand-oriented.

Another way to strengthen the link and coordination between R&D, the profession, and decision-makers is through their participation into various institutions or organizations intervening in the definition and implementation of agriculture policies. Previous chapters showed the importance played by councils or commissions of experts in the decision-making and shared

18 Georges Vedel, Développement agricole et conseil aux agriculteurs: de la productivité au développement durable, Conseiller en agriculture, INRA, 2006.

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responsibility processes. In the French food-safety system for example, the National Food Council plays a major role in definition of policies.

Sustained and increasing investments in agriculture R&D is necessary to support agricultural productivity improvements. Published estimates of rates of return on R&D and extension investments in the developing world average 43% a year. Despite this high return on investment, agricultural science remains grossly under-funded in developing countries. Global and national market failures continue to induce serious under-investment in R&D and in related extension systems, especially in the agriculture-based economies of Africa.

In the developing world, private investment in agricultural R&D is very limited – 94% of the investment is from the public sector. But growth in public sector spending has slowed sharply in the past decade and as a share of agricultural GDP, remains a fraction of the public investment in industrialized countries.

A third to a half of current R&D investments may be for “maintenance research” to deliver continued yield stability and insure against outbreaks of new pathogens. The recent emergence of a new type of stem rust in wheat clearly demonstrates why maintenance research is critical. Given the narrow base of genetic resistance to the disease in existing varieties in some of the world’s breadbaskets, losses are potentially devastating. An international effort by plant breeders and pathologists is underway to screen for resistant genotypes and get them into farmers’ fields to prevent a global epidemic.

Meeting today’s rapidly changing market demands, improving efficiency and effectiveness of R&D requires new institutions, collective action and partnerships involving a variety of actors in an innovation systems framework. Many public research organizations face serious institutional constraints that inhibit their effectiveness as well as their ability to attract funds. These require serious reform. Furthermore, the high fixed costs of much of today’s research put small and medium-sized countries at a disadvantage for some kinds of research. A challenge is therefore how to strengthen institutions that finance and organize research on a multinational basis.

The new world of agriculture is opening space for a wider range of actors in innovation, including farmers, the private sector and civil society. Linking technological progress with institutional innovations and markets to engage this diverse set of actors is at the heart of future productivity growth. Extension programs are shifting from a delivery model that prescribes technological practices to focusing on building capacity among rural people to empower them to identify and take advantage of available technological and economic opportunities.

For example, new decentralized approaches to plant breeding that involve farmers in the early stages of breeding and varietal selection can both speed varietal development and dissemination to 5-7 years, half the

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10-15 years in a conventional plant breeding program. Partnerships between R&D and farmers’ organizations aim to enhance the demand for innovation by bringing farmers’ voices into R&D decision-making.

8. Enhancing Public Participation An important lesson from international experience is the value of

increasing popular participation in decision making and program implementation for rural development programs. The effectiveness of rural development efforts in Jiangxi could be strengthened through measures to increase the extent of public participation and input into decision making processes. Enhancing public participation would help ensure that government efforts are more closely aligned with the needs and aspirations of rural residents, and thus would enjoy greater support from the affected communities. This can lead to greater mobilization of local resources as well as a stronger commitment to maintain and manage investments.

“Participation” has been a major theme in development thinking for more than two decades, yet it is a concept about which there is no clear definition and significant differences in understanding exist. A useful definition recognizes that participation can be carried out in a variety of forms, which are often ranked in a hierarchy based on the extent of participation. A simple summary of this hierarchy is as follows:

i. Passive participation (such as contributing labor to a project because one is told to) where decisions on policies and programs are made entirely by others.

ii. Consultation, where the views of participants and beneficiaries are solicited, but decision making power is controlled by higher authorities.

iii. Active participation, where the participants make the key decisions on the nature of a program as well as participate in monitoring and supervising its implementation.

The first type of participation is most commonly encountered in rural development where decisions are made by planners and senior officials, and local residents are instructed to participate in activities which have been planned by others. This may or may not be accompanied by compensation for their participation in the form of wages. The operation of village councils established under the New Socialist Village Program in Jiangxi resembles this type of participation.

Consultation as a form of participation is exemplified by “participatory village development planning” which has been promoted by the national Poverty Alleviation Office under ADB supported programs. This may involve extensive consultation with villagers and other stakeholders to understand their circumstances and opportunities, but the ultimate decision on programs to be implemented are made by planners and government officials.

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Active participation involves decentralization of decision making power to the participants and beneficiaries of programs, giving them the right to make key decisions on programs, and participating in the implementation and monitoring of activities. This often requires new management models, with a high degree of flexibility. It also requires building the capacity of beneficiaries and the communities involved to effectively exercise a higher degree of decision making authority.

It can't be said that one type of participation the best or the most appropriate to use in all cases. The application of participatory approaches and the extent of popular participation in a program necessarily varies according to the type of program implemented, the overall aim of the program and the particular circumstances involved in its implementation. However it is useful to be aware of the different levels of participation so that the choice of approach is made deliberately, with an understanding of the implications of the choice.

Nevertheless, a development policy which takes people as its key should aim to improve the ability of people to determine and manage their own development path, rather than simply provide a top-down transfer of knowledge, technology or investment capital. There is a case to be made to pursue participation as a goal in its own right. In such cases participation, and enhancing the community’s capacity for participation, could be considered a goal in itself.

Participation and local input into decision making can improve the efficiency and impact of programs by making use of local knowledge, networks and resources of which senior planners and officials are not aware. Increasing the participation of local communities in the implementation of programs is a way of joining the complementary strengths of communities with those of the higher levels of government. This can also be an effective way to improve the monitoring and supervision of programs.

When communities are involved in decision making about programs which take into account their real priorities and needs, there is a willingness for communities to mobilize local resources. In the Saemaul Undong program of South Korea, up to 70% of the total investment contribution for the program came from villages.

Korean Saemaul Undong Movement A well-known example of a successful rural development program in

which popular participation played a key role was the Saemaul Undong, or “New Village” program of South Korea. The Saemaul Undong movement started in the 1970's and was a concerted effort by the central government to improve livelihoods and living conditions in Korea's rural areas. At a village level the program was managed by village committees, which coordinated decision making on program activities, supervised the implementation and handled the finances for the program.

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The program involved a high degree of autonomy in decision making, combined with a competitive process which rewarded good management. Initially each village was provided 335 bags of cement by the central government, to use for enhancing the local infrastructure. Villages which implemented projects successfully were then rewarded with additional resources. This process achieved the dual objectives of improving living and productive conditions in the villages at the same time as increasing the management and development skills of rural communities.

One of the key features of Saemaul Undong is that it started with simple projects, generally focused on improving physical infrastructure. This provided an opportunity to build the capacity of local communities to manage their resources, before moving to a second stage where the focus was on income generating activities. Leadership training was a very important element contributing to the success of the program. Moreover, the structure of the program and the village committees ensured the representation and participation of different segments of the village community, including young people and women.

Mexico PIDER Rural Investment Program The PIDER program in Mexico was an attempt to introduce popular

participation in decision making for a large rural development and poverty alleviation program. It was carried out over more than a decade, beginning in 1973. Detailed guidelines were developed as part of the program on procedures to analyze the socio-economic situation of rural communities as a first step towards drawing up a local development plan. This was done by multi-disciplinary teams of rural development workers, who would then draft up a development and investment program in close consultation with the communities involved, addressing the needs of the poor and marginalized elements of the community. The program recognized that government officials and specialists need to take account of local conditions to make optimal investment decisions. They also recognized that investment decisions made without thorough consultation with the effected communities were often poorly planned, and communities had no commitment to support the ongoing operation and maintenance of the investments.

A key to the program was decentralizing decision making authority to the state level rather than keeping it at a national level. If a comparison is made based on the relative population sizes of Mexico and Jiangxi Province, this would be comparable to decision making being decentralized to a municipality level or county level.

Through the program villagers were consulted in detail on their priorities, and the resulting projects included, for example, small-scale irrigation, soil conservation projects, fruit tree plantations, rural roads, fishponds, livestock units, rural health points, schools, potable water systems, village electrification, etc. A comprehensive technical review of the program noted that significant obstacles stand in the way of increasing popular participation,

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including the inertia of working patterns within government agencies, bureaucratic rigidity, interagency conflicts and cultural constraints. An important finding of the review was that while using participatory approaches, technical considerations related to the feasibility of activities must also be acknowledged. Otherwise there is the risk that process may result in a wish list of villager's hopes, reflecting unrealistic expectations or a lack of understanding.

As with Saemaul Undong, one of the aims of the PIDER program was to better mobilize local resources by encouraging participation and respecting the aspirations of the communities. A requirement of the program was that local communities make a contribution, in cash or labor, towards program activities. However it was noted that, unless the program involves full consultation with the community, the requirement for a local contribution may be seen by the community as coercive taxation and resisted.

The experience on the program highlights that participation in decision making is important to maximize impact and use of local resources. Top-down planning doesn't adequately take into account local endowments which could lead to successful development initiatives. For example in the PIDER program one community submitted an application for construction of a dance hall. The authorities were first inclined to dismiss the request as flippant, but further investigation found that the village in question had a long history of musical talent, and the villagers felt that a dance hall would attract people from surrounding villages for social functions, hence providing a source of employment and revenue.

The technical review noted that the extent of participation was limited to the planning process, and did not extend to monitoring the implementation or impact of the programs. It suggested that full application of participatory methods would include beneficiary involvement in these latter stages of a program.

Participation in South African Public Investment Programs Central government development policy in South Africa mandates that

public participation be used in all facets of public works program, including design, implementation, monitoring and operations. The rationale for promoting participation is twofold: to improve the efficiency of investments by fully taking into account the needs and aspirations of the beneficiary populations and; through participation in public works programs, to improve the management and development capacity of communities. An in depth analysis made of participation in public works programs in South Africa has some very relevant findings.

The national policy calls for participation of community members across the board in public works projects, noting that community participation can take place at different stages of the project cycle. This includes selecting the type of projects to be undertaken; choosing aspects of project design, such as selecting labor versus capital intensity; methods of project

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implementation, including the hiring of contractors; selecting, hiring, and supervising workers; supervision of construction; and maintenance and management of assets resulting from the investment.

Directives for the Department of Public Works explicitly state that: “the community through its representative community structure, should make the decisions about what should be constructed, how it should be designed and constructed, who should work on the project, as well as the rates and system of employment”.

Some examples of choices made by communities in the process of consultation demonstrate the importance of community choice. An example cited involved a program to pave roads in suburban communities. One community chose to have its roads paved with bricks, involving a higher labor input (hence more return to the community), and elected to have the bricks manufactured locally (improving skills in the local workforce) despite the slightly higher cost. However a different community chose to pave their roads with asphalt, out of a concern that bricks used for paving might be stolen by residents for use in private construction. Thus different types of communities, with different degrees of social cohesion, had very different needs and different choices.

The study also highlighted the importance of transparency in financial management as an element of ensuring active participation. Instances were cited where a lack of transparency led to mistrust, eventually resulting in a collapse of the participatory process. Contractors involved in managing the project noted that for reasons of accountability the final say on authorizing expenditure would have to remain with the contractor or government official, but without full transparency of financial affairs, including budgeting and expenditure information, the trust and confidence of the community in the partnership could not be maintained.

It is often suggested that the use of participatory approaches is time consuming and can delay the implementation of programs unnecessarily. However through detailed comparison and case studies it was found that while public participation may delay the launch of projects, fewer delays were encountered in the course of implementation because there were fewer conflicts between authorities and the public. Overall the level of participation did not result in longer implementation periods.

Thailand: Participation in Resource Management Recognizing the importance of community participation in decision

making, the new constitution of Thailand, adopted in 1997, explicitly gives communities the right of participation in decision regarding the use of natural resources in their vicinity. Article 46 of the constitution states that: “Local communities which have traditionally been formed by individuals shall have the rights to conserve or rehabilitate customs, indigenous knowledge, local as well as national arts and culture, and to participate in the management, maintenance and balanced and sustainable use of natural resources and

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the environment”. Government agencies are under instruction to implement policies and programs through participatory processes.

The support for popular participation has been accompanied by efforts to decentralize decision making and increase the authority of local governments. In the mid-1990's Tambon (sub-district) Administrative Organizations (TAOs) were formed to give voice to local communities in matters directly effecting their livelihoods such as the provision and maintenance of infrastructure, waste disposal, development of women, children, youth, and senior citizens and the protection and maintenance of natural resources and environment.

Despite the full endorsement by central government, it was found that a strong tension still exists between local communities and government officials, and there is still a way to go before participation can be considered fully adopted. In particular, it was noted that the application of participatory approaches requires a significant attitude change among local level officials. One official interviewed in the course of a study commented that the process had not been fully entrenched in the working approaches, and suggested that for the process to work: “government officials should lower themselves to the same level as the farmers in the village so that they can listen better to the people”.

Water Management, India For several decades India has applied participatory approaches to the

management of irrigation systems, an approach commonly known as Participatory Irrigation Management” or PIM. Under this approach the responsibility for management and maintenance of irrigation systems at a local level is devolved to farmers groups, or Water Users Associations. Important experience has been gained using this approach, and successful examples are frequently cited. However, here too important challenges have been found to exist.

A detailed study using fieldwork, case studies and econometric analysis, found a positive correlation between the existence of farmer groups and the maintenance of irrigation infrastructure. However it also found that merely the existence of water user associations was no guarantee that maintenance and water management would be adequately dealt with. Some organizations were found to exist in name only, without playing any significant role in water management. Many challenges to creating effective organizations were identified, including the need for community leadership, strong community networks and the extent of commercialization of agricultural activities. The report also noted that many of the proponents of community based water management systems have not sufficiently taken into account the challenges or the instances where water management reforms have failed to achieve the intended aims.

Developed World Experience

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Promoting economic development in rural areas is a challenge also faced by developed countries, and the challenge is being met with innovations in policy making and improved governance. While there are differences between the situation in rural PRC and the rural areas of OECD countries, there are also similarities. Rural areas tend to have lower levels of income and growth, less access to public services, with growing gaps between rural and urban development. A recent OECD policy paper on rural development strategies notes: “On the aggregate, rural regions face problems of decline with out-migration, ageing, a lower skill base and lower average labour productivity”. In rural areas of OECD countries GDP per capita is 83% of the national average, and in more than half of OECD countries, GDP per capita in rural regions declined as a per cent of the national average between 1995 and 2000.

With PRC's rapid growth and great diversity, it is useful to understand the issues being faced developed countries both as a point of comparison and also to illustrate some approaches to similar issues faced in rural PRC. Another point in common is that “Rural stewardship of a nation’s natural resources is of concern to all given the potential for widespread harm that can occur through the failure to appropriately deal with natural systems related to land, water, air and other associated natural resources”. It is noteworthy that many of the policy responses being devised in OECD countries relate to issues of improved governance.

Participation and Decentralization In much of the developed world public participation takes place in the

shape of representative democracy, and is put into action through a long tradition of civil society organizations. There are existing mechanisms for popular participation in decisions regarding the delivery of public services, policy formulation or public investment programs. Even so, in developed countries it has been recognized that decentralizing decision making leads to improved local development strategies. Decentralization is in many respects similar to increasing popular participation, as it creates the opportunity for stakeholders at a local level to play a role and gives them decision making power regarding development strategies.

Regarding the government’s role in this process, there is recognition that: “the role of central governments in accompanying effective investments in rural areas should shift from one of “ruling” to one of “steering”. That is, central governments should assume increasingly the key role of providing the legal and regulatory environment as well as the governance mechanisms that facilitate knowledge sharing and the identification of the right investment opportunities.”

Policy makers in developed countries are recognizing that rural development policies should be “place-based”. In other words programs should be flexible enough to be tailored to specific conditions prevailing in particular localities, rather than being a “one-size-fits-all” policy passed

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down from above. This involves real decentralization, shifting not just decision making power but also the ability to decide on the allocation of resources, to local levels. At the same time it requires broad consultation on policy design, implementation and oversight.

International experience shows that as local economies develop their economies become more clearly differentiated and, to continue to develop sustainably, particular localities must identify and build on their specific strengths. An OECD conference on rural development policies noted that “rural” development is no longer synonymous with “agricultural development”, and rural communities must understand their unique strengths on which to promote their development. This is a new approach to rural development. While agricultural policies tend to be reasonably homogeneous for application across broad areas, sustainable development in specific areas must build on unique, local strengths.

In Scotland planning for rural development has been decentralized to a local level and “community planning partnerships” have been introduced as a way of giving all stakeholders input into planning priorities and development programs. This is in recognition of the fact that players at the local level have the best insights into the local priorities and opportunities.

A survey of international experience on rural development undertaken by the Canadian Policy Research Network also concludes that governance is critical, and “Effective governance – including consultation mechanisms, planning, networking, delivery systems, and monitoring, accountability and evaluation – must involve the local community, citizens, the private and non-profit sectors, government, education, and others.” The report notes that traditional approaches to economic development, involving job creation and enterprise development are no longer sufficient for the development of healthy, vibrant local economies. They concluded that initiatives must be targeted at the local assets and resources, and involve full consultation with a variety of actors in the effected communities. This “place based” approach to development requires government to provide the necessary support for community development and capacity building, aimed at community empowerment.

Examples of this approach in the United States include the Rural Community Empowerment Program and, in Oregon State, the Regional Investment Fund. These both involve the development of a long term strategy by local stakeholders, with the federal or state government providing the support necessary for preparation and implementation of the plans.

The economic development office of Littleton, Colorado has adopted a strategy which they call “economic gardening. This is aimed at promoting local innovation and entrepreneurship to achieve local development. Their experience showed that trying to attract outside investment through tax and price incentives ultimately served to reduce the benefits flowing to their

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community, as enterprises attracted through such a strategy were highly mobile and were likely to move on to new locations whenever better price incentives were offered elsewhere. The result was that there was not a strong, sustainable boost to the local economy. The regional development agency thus devised a strategy of supporting local entrepreneurs by providing information services, marketing information, technical advice and other services, helping them grow their small businesses into larger enterprises, and providing a stable, sustainable impetus to local development.

An OECD report on rural development strategy notes that “In the past, regional development policy tended to try to achieve [its] objectives by means of large-scale infrastructure development and by attracting inward investment. Awareness of the need for a new approach is driven by observation that past policies have failed to reduce regional disparities significantly and have not been able to help individual lagging regions to catch up, despite the allocation of significant public funding.” The report goes on to suggest that “Rather than subsidies to industry sectors or firms, regional and rural policy should be based on strategic investments – in people, in communities, in local resources and assets, and in technology – seeking to stimulate economic development by building on local strengths and opportunities.”

This perspective is reflected in practice in such programs as the EU LEADER program, mentioned above, and the German REGIONEN AKTIV program, both of which have proven particularly successful in promoting “place-based” development. These programs involve the preparation of development strategies and plans by multiple stakeholders at a local level through a coordinated planning effort; selection of viable proposals on a competitive basis (reminiscent of the Korean Saemoul Undong approach); followed by support from the central government for implementation. A key to this approach is the creation of Local Action Groups (LAG) which is composed of various private and public stakeholders, and is subsequently responsible for local implementation of approved programs.

An example of the approach is given by the case of Bregenzerwald, Vorlarberg in Austria, where the local cheese industry was rehabilitated and developed into a local economic engine through a program involving co-operation between different sectors including agriculture, dairies, accommodation providers, alpine pasture managers, trade and commerce. By building on their complementary functions and combining their resources they achieved a result which was greater than the sum of its parts.

The key to these programs is that they recognize the integrated nature of development activities and work to create a process which enables communities to capitalize on their strengths. The LEADER program is frequently noted for having producing significant achievements with

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relatively limited investment, largely as a result of motivating and mobilizing local support based on local strengths.

Lessons on Participation International experience shows that the use of public participation in

rural development programs can ensure that programs reflect the true needs of beneficiaries, and harness local energies to complement government resources. Decisions made through a top-down approach frequently fail to take into account the real problems of communities, resulting in a waste of resources and ineffective outcomes.

Comprehensive reviews of international experience using participatory approaches show that while participation can be an effective tool, it is more appropriate in some situations than in others and that it is not necessarily the best tool in all cases. Numerous examples can be cited in which participatory approaches were applied in a mechanical, formulaic approach, without achieving the intended results.

To be applied effectively requires a re-thinking of management styles and approaches. Unlike physical construction activities where results are readily apparent and easily measured, successful participation is an “invisible” achievement, hard to objectively verify. The usual style of government programs are designed for centralized planning, decision making and implementation, an approach not conducive to participation. As such it requires change from top to bottom, with the top providing support while empowering the bottom to take an active role in decision making. Achieving results through participatory approaches takes time.

Participation in the sense of empowering communities and individuals requires that higher levels of government change their role from one of monitoring and coordinating to one of supporting and facilitating. It is frequently noted that the main constraint to effective participation is a lack of political will. Participation is a process which requires flexibility in implementation, as the end results may not match the initial expectations. A participatory approach does not fit in well with an administrative system which measures achievements in terms of quantifiable, objective targets.

From the perspective of the provincial government, collaboration with representatives of local communities can serve as a way of supervising the work of local authorities with the aim of ensuring that investment activities achieve the intended objectives. Rural residents, the targeted beneficiaries of infrastructure construction and rural development activities, have the strongest interest in ensuring that funds are well spent and the intended results are achieved. Systematically including them in evaluation and acceptance of projects and programs will help ensure the intended results are achieved.

As the economy grows and demands changes, development opportunities will be found through greater diversification of economic activities. Standard one-size fits all policies will become less and less

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appropriate, and each locality will have to capitalize on its own unique set of resource endowments to continue developing. Responding to these changes can be done most effectively through decentralization of decision making to a local level, where there is a greater awareness of local strengths and potential. The role of higher levels of government should become one of supervising and creating an enabling environment in which local authorities can effectively use their resources.

If one looks ahead to the coming challenges in rural development, it will not be an issue simply of increasing productivity but of increasing the competitiveness of rural producers. This will require innovation and an increasing focus on “place based” development models, with each locality identifying its specific strengths and creating a strategy to capitalize on these. The use of participatory approaches and decentralization now, with the aim of building the management and skills of local entrepreneurs, will set the stage for the next stage of development.

9. Farmer Cooperatives A common theme throughout international experience is the importance

of the role played by cooperatives for the development of agriculture and the rural sector. Cooperatives have made a great contribution towards increasing the incomes and living standards of rural residents and improving the efficiency of development efforts in both developing and developed countries and on all continents.

Effective cooperatives provide marketing, purchasing and technical training services to their members, improving the profitability and incomes of farmers. Fully matured cooperatives enable their members to participate in and benefit from all stages of the supply chain, from the purchase and supply of inputs to processing of final products; they are active in grading, storage and transportation of products; they may also become involved in research and development activities, sometimes in collaboration with other cooperatives or under umbrella organizations.

Equally important, cooperatives provide a voice for farmers in dialogue with government on policy discussions, decisions regarding the allocation of resources in investment programs, setting research agendas, operation and maintenance of physical infrastructure and the delivery of public services. When decision making is decentralized to a local level, cooperatives become a vital partner working with local government and other stakeholders to support the interests of their members.

One of the most authoritative sources of insight on the development of cooperatives is the International Cooperative Association (ICA). Established in 1895, the ICA has been actively representing and serving cooperatives around the world for over a century. Its membership now comprises cooperative organizations from 89 countries, representing more than 800 million individual members worldwide.

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Based on their long history and experience, the ICA has distilled and formalized a set of seven basic principles as guidelines for successful cooperative practices. These principles form part of the cooperative identity. The principles are not derived from abstract theory, but represent lessons learned from the practical experience of thousands of cooperatives and more than a century of cooperative development. They provide an important touchstone for the development and operation of successful cooperatives. Briefly these are:

i. Voluntary and Open Membership Membership should be voluntary. People should not be coerced into

joining and should be free to leave. Membership should be open to all those who meet the qualifications established by the organization, without discrimination based on gender, nationality or social classes.

ii. Democratic Member Control The organizations should be controlled by their members in a

democratic fashion, with all members having an equal say (one member one vote) in decisions regarding the overall functioning of the organization.

iii. Member Economic Participation Members should receive economic benefit from the organization and

make an economic contribution to the operation of the organization (such as purchasing shares or paying membership fees).

iv. Autonomy and Independence Cooperatives should be independent organizations, responsible to and

controlled by their members. They are not a branch of government or a subsidiary unit of an enterprise.

v. Education, Training and Information Cooperatives should provide ongoing education, training and

information for their members, their leadership and managers, and their employees. This includes training and information on cooperative principles.

vi. Co-operation among Co-operatives Cooperation among cooperatives is a way to strengthen their

operations and build a stronger cooperative movement. vii. Concern for Community Cooperatives contribute to the development of communities in which

they are based, through policies agreed by their members. International experience shows that there is a relationship between the

success of cooperatives and how well they apply the above principles. At the same time it has to be recognized that they are general principles and must be pursued pragmatically and adapted to prevailing conditions and the existing environment through a process of localization.

Features of Cooperatives – The Cooperative Advantage The success of cooperatives, both internationally and historically, is

largely due to the unique characteristics related to their management and governance, sometimes referred to as “ the cooperative advantage“.

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Policies to support the development of farmer cooperative must recognize these essential features, and take into account those key differences between cooperative organizations and other types of commercial organizations. The key element identified by cooperative practitioners in the “cooperative advantage” is the application of democratic member control of cooperatives.

The practical importance of applying democratic processes in cooperative management and governance is highlighted by the practical experience gained through the history of cooperative development. To play their role effectively cooperative organizations must represent the interests of their members. This ensures that the organizations earn the loyalty and commitment of members, and that members adhere to the discipline required by their cooperative. To achieve this, members must be able to participate fully in decision making, setting the agenda and establishing priorities for the organizations.

Another the key difference between cooperative organizations and commercial enterprises is the multi-dimensional nature of cooperative operations. In one dimension they are commercial organizations, and their operations must be profitable. At the same time they are organizations created to serve the needs of their members, who may choose to balance concerns about profitability with their wider interests the interests of the communities in which they are based.

In the business dimension cooperatives and private enterprises both operate in a market environment, and both seek to improve the profit of their owners and shareholders. They both seek to take advantage of economies of scale to improve their profitability. They may pursue similar strategies, such as doing value-added processing, grading and packaging of products, investing in transportation or storage facilities, registering brand names or obtaining quality certification. In this dimension similar indicators can be used to measure the success of cooperatives and private enterprise, such as volume of sales, value of production, or profits returned to shareholders. However complete reliance on such measures blurs important distinctions between the different types of organizations.

As member-based organizations the operations of cooperative have additional objectives to be met. The US Dept. of Agriculture notes that management strategies and practices of cooperatives are distinctly different from the management of investor owned firms in several respects, including strategic development planning, pricing of services, distribution of profits and the need for a much higher degree of transparency and accountability for cooperative management.

Farmer cooperatives are established by members to solve problems they face in common. People are motivated to create a cooperative when they recognize that their problems can best be solved through acting collectively rather than as individuals. These problems may relate to

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improving their incomes: perhaps by seeking higher prices for their products or negotiating lower prices for their inputs. Their problems may also be inadequate technical services, high degrees of risk in marketing, an inability to get credit, or inadequate income security.

Enterprises with a commercial objective seek to maximize their profits, and make decisions based on market prices. They trade with farmers only as long as they can make a profit, and will stop trading when they can find better prices elsewhere. Likewise, farmers will trade with a private enterprise only as long as the enterprise offers a better price or better service than other enterprises. The benefits are short term and immediate. Either side will abandon the relationship whenever there are offers of a better price or improved service.

The goals of a cooperative are determined by their members through a democratic process and reflect the needs and interests of members. They may decide to pursue either short term gains or long term objectives. They may accept lower returns to their members in the short run, perhaps to re-invest the profits in processing, transportation or storage facilities, with a view to developing a stronger organization over a longer term. Because they operate in the interests of producer members, their decisions may well be different to those of a commercial enterprise which seeks only to maximize profits.

A strength of cooperatives is that they are rooted in the communities in which they operate and from which they draw their members. They have a commitment to ensuring the strong and sustainable growth of these communities. Commercial enterprises, operating on a profit incentive, will relocate whenever opportunities arise elsewhere to increase their profits. Cooperatives are established within a community, and have a vested interest in contributing to the development and stability of that community. When they practice the cooperative principles of providing education and training for members, and supporting their communities, this serves to further strengthen and promote social stability.

Yet another strength of the cooperative style of governance is that members learn to recognize the importance of trust, confidence and mutual support for their sustainable development. In a cooperative members realize that their long term development depends on creating a stable relationship with buyers and consumers. They have an incentive to produce quality products and establish a reputation for quality. They are more likely to implement a self-policing mechanism to ensure adherence to quality and safety standards. (The origin of dairy cooperatives in Denmark in the late 19th century arose from the need to assure urban consumers that they could rely on the cooperative to provide safe, high quality milk products.) In an environment, where producers and buyers relate only in terms of market prices and spot sales, farmers producing on a small scale and selling to small traders have little incentive to adhere to food safety regulations if they

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think that contaminated or adulterated products will not be detected. Food safety regulations can only be implemented through the imposition of inspection regimes and penalties.

Federations and Apex (Umbrella) Organizations In countries with well developed cooperative sectors it is generally the

case that the cooperatives work together in the form of federations or umbrella organizations. This combines the democratic, bottom-up nature of cooperatives with the economic benefits to be gained through economies of scale. The larger organizations can provide inputs or marketing services for their member organizations. By concentrating the resources of individual cooperatives they are also able to undertake research and development activities on behalf of their members. Umbrella organizations are often the source of training for cooperatives, and help foster the development and strengthening of their member organizations.

Federations may be formed along sectoral lines, such as La Coop Federe in Quebec, Canada which integrates cooperative organizations in the supply chain for pig production. Coop Federe is an organization with a history of more than 80 years, whose members are 58,000 producers and growers in the province of Quebec. The cooperative operates its own feed mills, slaughterhouses, meat processing facilities, storage and transportation networks as well as having sales offices in Japan and Australia. Over 16,000 people are employed in the various operations owned and operated by the cooperative. In addition, in collaboration with other cooperative networks in North America and overseas, it participates in and has access to research in pig genetics, plant production and animal feed.

Cooperatives have also found common interest across sectoral boundaries, and have created organizations such as the Canadian Cooperative Association, whose membership is made up of more than 2,000 cooperative organizations across Canada, representing over nine million individual cooperative members. These cross-sectoral umbrella organizations undertake research, education and promotion on issues effecting cooperatives in general, represent the cooperative sector in relevant policy discussions with government, and serve to put into practice the ICA principle of promoting cooperation between cooperatives. At the international level the International Cooperative Alliance performs a similar function.

Partners in Dialogue Cooperatives are in a unique position to engage in dialogue with

government policy makers and others on issues which affect their members. This is an important role played by cooperatives in many countries, as well as globally through federations of cooperative organizations. Profit-based enterprises, or organizations representing enterprises in specific sectors, can only play this role to a limited extent. Enterprises reflect only the views

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of their owners, and represent their profit-driven incentives, while cooperatives represent the views of a whole community and have a broader perspective.

Cooperatives can play a valuable role with input into decisions regarding the supply of public services, as they are in a position to represent the views of their members, whether it is identifying training needs, establishing preferences for infrastructure construction or suggesting priorities for research agendas. When policy makers solicit the views of cooperatives which are democratically managed they can be confident that they are getting a view representative of a broad section of a community, saving considerable time and effort for public consultation. When cooperatives are involved in consultations they may also be in a position to mobilize resources which can complement government inputs into programs.

Internationally, farmers organizations play a very important role in many aspects related to governance and rural policy. In the process of formulating national agricultural policy it is common in many countries to carry out detailed consultations with these organizations. In Senegal a large number of the recommendations proposed by the national farmers organization found their way into the final policy document on rural development issued by the central government. In West Africa there are well developed networks of producer organizations from a local level, to a national level and even beyond to regional umbrella organizations which represent the interests of small producers in regional and international forums.

Producer Organizations Producer organizations established on a sectoral basis and including

various stakeholders in a specific commodity chain can help spur the development of a particular commodity or product. Such organizations undertake promotional activities, research and development, enforcement of quality and safety standards and also represent the interests of producers in discussions related to laws and policies affecting their particular interests. Such organizations may include producers, processors, as well as enterprises or organizations involved in various stages of the supply chain such as storage, grading, transport and marketing of products. Farmers cooperatives can play a valuable role in such organizations representing the specific interests of producers. While the interests of producers and processors may not always be identical, collaboration in promoting the overall development of the sector can work to the benefit of all stakeholders.

Cooperative Development: Cooperative Promoters International experience with cooperative development has shown that

the most effective approach to creating strong, effective organizations is to systematically help potential members to organize into small self-run groups. The creation of such groups requires facilitation and support by experienced and knowledgeable agents, particularly in their early stage of formation and

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development. This can best be achieved with the support of “promoters” to help them get organized.

The role of a promoter is to help potential members and members of newly formed cooperatives acquire the skills and knowledge necessary to manage their own organizations. It is a multidisciplinary role which requires a wide range of skills. Promoters should be knowledgeable about the communities they work in, be familiar with the agricultural production and marketing problems faced by farmers, and they should be able to work with farmers to identify opportunities for development. They must be familiar with the cooperative laws and relevant policies and regulations which effect the development of farmer organizations nationally and locally. It is importantly that they be able to work effectively with groups of farmers in the role of providing support and advice, rather than by delivering instructions. Most importantly, as noted in a book describing the experience of Canadian cooperative promoters, they need to have an “enthusiasm which is contagious” for helping others and for being creative.

These promoters must bring with them a particular attitude of working on a basis of equality with cooperative members, exemplified by the comment from the local Thai official cited above. These facilitators should be accountable to the communities with which they work, in contrast to the usual responsibility structures where government staff are accountable within hierarchical structure to their agency and immediate supervisors. To be effective the focus of promoters’ work should clearly be on building the capacity of the community to analyze issues, make decisions and manage activities, rather than making decisions themselves.

Providing such support for community groups generally requires one promoter to support ten groups, averaging 10-12 people per group. While this may represent a slow, labor-intensive start-up, it is a process which accelerates over time as groups get larger, more groups are formed and more people gain experience and become qualified to support on-going group formation. To play their role promoters may require additional transportation costs and a small amount of facilitation expenses, however if staff are re-deployed from existing agencies the costs are not particularly high. What is essential is a re-direction of their efforts and support from their leadership to enable a system which responds to the articulated local needs.

Training resources and programs have been developed by a number of organizations which can be used by promoters to guide the process of cooperative development. The Food and Agriculture Organization of the United Nations has produced fairly complete sets of training resources. The International Labor Organization also has specific tools and resources which can be used by promoters. The US Department of Agriculture, through its Business and Cooperative Program, has a variety of reference and resource materials available through its website: (http://www.rurdev.usda.gov/rbs).

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These programs consistently emphasize the importance of developing the capacity of cooperative members to manage their own development, and of supporting cooperative members to analyze and assess their problems, and to develop their own solutions. The training approaches outlined in these materials are highly participatory and offer proven approaches for fostering effective cooperative organizations. The importance of promoting democratic management procedures within cooperatives features prominently in these training resources.

Government Support In western countries government support for cooperative development

takes the form of creating an enabling environment through policies and legislation which is conducive to the operations of cooperatives and providing support through program to assist with the establishment and development of cooperatives. Such support generally takes the form of assisting with marketing and feasibility studies, providing training, advisory and information services and providing funding for the services of cooperative promoters. In keeping with the principles of cooperative autonomy and independence government agencies take no direct role in the operation or management of cooperatives. Government agencies such as the US Department of Agriculture provide funding for relevant studies and research to assist the establishment of cooperatives, with the activities undertaken by the private sector.

Fostering effective farmer cooperatives can provide a strong boost to rural development efforts and improve their effectiveness. At a basic level farmer organizations can provide training, technical and marketing services to help increase the incomes of their members. On a higher level, organizations which represent the interests of farmers and other segments of rural communities can play an important role in dialogue with government, providing their perspective in the formulation of policy initiatives and making investment decisions. However for these organizations to play such a role, significant efforts must be made to improve the capacity of such organizations for their own management and development. International experience notes that fostering the development of such organizations requires long-term efforts aimed at grass roots mobilization.

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