How to solve the problem of increasing farmers' incomes? The golden key is here

Editor's note: Not long ago, Comrade Tang Renjian, deputy head of the Central Rural Work Leading Group, director of the Central Agricultural Office, and deputy director of the Central Finance Office, led several comrades from the Central Agricultural Office, including Wu Hongyao, Zhang Jianjun, He Yuping, and Li Wenming, to conduct a survey in Shandong Province on how to solve the problem of increasing farmers' incomes under the new situation and form a long-term mechanism for promoting sustained increases in farmers' incomes, focusing on the supply-side structural reform of agriculture, especially the connotation, carriers, and promotion approaches of the integration of the primary, secondary, and tertiary industries in rural areas, as well as the cultivation of new rural industries and new business forms. This survey report was formed and, with the consent of the survey team, is published in this newspaper.

Recently released statistics show that farmers' income growth, which had already achieved "twelve consecutive years of rapid growth," is also facing downward pressure. In the first half of this year, the national per capita disposable income of farmers rose 8.9% year on year in nominal terms and 6.7% in real terms after deducting price factors. This is the smallest real growth rate since 2004. In the same period of the previous 12 years, the real growth rate was above 8%, while this year it fell below 7% for the first time. This is a signal worthy of great attention. As migrant worker employment tightens and agricultural product prices remain sluggish, how can new momentum be found for sustained increases in farmers' incomes?

With this question in mind, we recently went to Shandong Province, focusing on Weifang City and Jinan City, to conduct a survey on the development of new rural industries and new business forms and their effects on increasing farmers' incomes. We successively visited Shouguang City, Hanting District, Xiashan District, and Qingzhou City in Weifang City to inspect a seed industry research and development center, Zhongbai Big Kitchen, greenhouse production areas, a flower industrial park, and an agricultural science and technology incubator, and went to Zhangqiu City in Jinan City to inspect grassroots supply and marketing cooperatives and a modern agriculture park. We held discussions with rural cadres, farmers, and enterprise operators, and exchanged views with the main leaders and leaders in charge of the Shandong Provincial Party Committee. The overall impression is that Shandong Province treats the cultivation of new rural industries and new business forms as a strategic measure to transform the agricultural development model and advance the supply-side structural reform of agriculture, builds a modern industrial system featuring cross-sector integration of agriculture with the secondary and tertiary industries, stimulates rural development vitality, improves agricultural production efficiency, and truly opens up new paths for increasing farmers' incomes.

I. Four measures for the integrated development of rural industries

The "Zhongbai Big Kitchen" built in Weifang City's "China Food Valley" is an example of integrated development of the three industries. Walking into the workshop of "Zhongbai Big Kitchen," what comes into view are boxes of fruits and vegetables that have been cleaned and packaged and are ready for shipment, while several production lines are separately processing various cooked foods and pastries. This 60,000-square-meter processing area, including vegetables, fruits, dried goods, cooked foods, pastries, and soybean products, is linked upstream to 37 vegetable bases in various counties and districts of Weifang and surrounding counties and cities, as well as 29 fruit bases across the country, and downstream to more than 600 directly operated and chain stores, online delivery of "home-matched meal packages," and online sales of agricultural products through Jialejia Mall. There are more than ten similar enterprises in Weifang City.

This is a microcosm of Shandong Province's cultivation of new rural industries and new business forms. In the past two years, Shandong Province has relied on agriculture, been guided by market demand, and been driven by institutional, technological, and business model innovation to promote integrated industrial development, expand the multiple functions of agriculture, and give rise to many new rural industries and new business forms. Comrades from the province introduced that their main measures in this regard are four.

First, persist in the "reconstruction of the three chains" to lead the development of the "new sixth industry." Shandong Province is committed to the "reconstruction of the three chains" of the industrial chain, value chain, and supply chain. That is, the industrial chain is added together, with the focus on industrial upgrading, namely the primary industry connects with the secondary and tertiary industries and extends backward; the secondary industry connects with the primary and tertiary industries and extends in both directions; and the tertiary industry connects with the secondary and primary industries and extends forward. The value chain is multiplied, with the focus on improving quality, increasing efficiency, and raising incomes, namely one portion of income from the primary industry is turned into two portions of income through value-added secondary industry processing, and then forms triple benefits through the tertiary industry. The supply chain is connected, with the focus on reducing costs, enhancing vitality, and achieving sustainability, namely direct docking between production and sales, reducing circulation links, and saving circulation costs.

Second, highlight "two bright spots" to activate the development of the "new sixth industry." The bright spots are rural e-commerce and rural tourism. At present, 40 counties in the province have signed contracts to operate rural Taobao projects, building more than 1,500 village-level service stations. Last year, the province's agricultural product e-commerce transaction scale was about 45 billion yuan, an increase of more than 30%. Rural tourism has shown a booming trend. In the first half of this year, rural tourism revenue reached 95 billion yuan, a year-on-year increase of 29%. There were 64,000 operating households, absorbing and arranging employment for 315,000 people.

Third, rely on the "three major carriers" to drive the development of the "new sixth industry." That is, through beautiful villages, distinctive small towns, and agricultural parks, gather the factors for the integration of the primary, secondary, and tertiary industries. At present, the province has 81 agricultural high-tech industrial parks.

Fourth, strengthen the "three major entities" to leverage the development of the "new sixth industry." At present, the province has 47,000 family farms, 159,000 farmers' cooperatives, and more than 9,300 leading enterprises above designated size. New types of business entities have played the leading role of "being the first to eat crabs." At the same time, Shandong Province has introduced a series of support policies in fiscal investment, land circulation, financial innovation, scientific and technological support, and farmer training, creating an environment and providing impetus for building new rural industries and new business forms.

II. Two keys and four forms of integrated development of rural industries

Comrades in Shandong often say that to understand Shandong agriculture, look at Weifang. Weifang City ranks first in the province in total agricultural output value, and its exports of vegetables and meat account for 1/10 and 1/8 of the national total, respectively. Weifang City is also a place that has produced experience in agriculture. In the 1990s, it took the lead nationwide in nurturing the embryonic form of agricultural industrialization, and the enduring Shouguang vegetable greenhouses are even more famous far and wide. Today, Weifang City's practice of cultivating new industries and new business forms has made us realize that for the integrated development of the primary, secondary, and tertiary industries, it is necessary to firmly grasp the two keys of "upgrading all links and increasing value across the entire chain."

"Upgrading all links" means using new concepts, new technologies, and new equipment to transform and upgrade traditional industries, injecting modern management, scientific and technological, and managerial factors into all links such as soil, fertilizer, water, seeds, and pesticides, as well as the entire process of production, processing, and sales, so that traditional industries are thoroughly transformed. Shouguang City's vegetable industry is an example. From soil to greenhouses, all are being transformed and upgraded. In the past, due to excessive fertilization and years of continuous cropping, greenhouse soil experienced phenomena such as decreased organic matter content, secondary salinization, and worsened soil-borne diseases. Starting in 2011, Shouguang City invested 40 million yuan to improve all 280,000 mu of soil requiring first-round improvement by vigorously promoting technologies such as microbial bacterial fertilizer, high-carbon organic fertilizer, integrated water and fertilizer management, and soil testing and formula fertilization. Soil organic matter content increased by more than 0.8 percentage points, and vegetable output increased by more than 10%; fertilization was reduced by more than 40% on average, pesticide application was reduced by more than 25% on average, and water use was reduced by more than 50%, achieving water saving, fertilizer saving, pesticide saving, and efficiency improvement. This year, Shouguang City carried out the "two transformations" of converting open fields to greenhouses and old greenhouses to new greenhouses. At present, 18,000 mu of "two transformations" have been completed, involving more than 2,600 greenhouses. Compared with traditional greenhouses, the fifth-generation new-style greenhouses have a larger area, higher frames, thinner walls, lower soil layers, better lighting, smoother ventilation, and more advanced equipment. Land utilization rate and labor productivity have both improved, and vegetable output and quality have also risen accordingly.

"Increasing value across the entire chain" means that the three chains of the primary, secondary, and tertiary industries all increase in value simultaneously in integrated development, rather than only the primary industry's preliminary products increasing in value when they reach the secondary industry chain, and the secondary industry's processed products increasing in value only when they reach the tertiary industry chain. Only in this way can the three industries form vertically integrated development in integration, and only then can farmers share more of the value-added benefits of the secondary and tertiary industries. How can value be increased across the entire chain? We found the answer at Youwo Organic Agriculture Co., Ltd. in Xiashan District, Weifang City. Youwo Company is a new type of business entity transformed from an IT company to develop organic agriculture. The project plans to build a 5,000-mu organic vegetable and organic rice planting demonstration zone, of which 600 mu have now been built, including 400 mu of organic certification and 94 types of organically certified vegetables, and it has passed organic certification by the United States (USDA) and Canada (CAAQ). They have achieved value increases in all three chains. First, what to grow? They grow organic vegetables and rice. Even selling these preliminary products alone makes them more valuable than ordinary products. Second, what to process? They process preliminary organic products into food ingredients, and value is added in processing. Then, what to sell? They build the market brand "Organic Hub" and, through the channel of a membership system, provide customers with "one-stop family organic ingredient service." What they sell is the brand and also the service, and the value-added effect is very obvious. "Upgrading all links" and "increasing value across the entire chain" integrate and promote each other. "Upgrading all links" is the foundation, and "increasing value across the entire chain" is the goal.

We further considered: through what industrial forms is industrial integration embodied? Combined with surveys in Weifang and other places, we initially feel that at present there are at least four industrial forms: terminal-oriented, experience-oriented, circular, and smart. These four industrial forms have already broken ground and become effective carriers of industrial integration. The terminal-oriented type takes the terminal consumption demand for agricultural products as its guide and arranges the entire process of the primary, secondary, and tertiary industries in reverse, so that all links of agricultural production, processing, and distribution fit consumer demand. Zhongbai Big Kitchen and Youwo Organic Company have achieved seamless docking of agricultural products from field to table and from preliminary products to terminal consumption. The experience-oriented type taps and expands the multiple functions of agriculture, promotes deep integration of agriculture with tourism, education, culture, health care and elderly care, and other industries, and enables consumers to achieve participatory experience through tourism and sightseeing, leisure and health preservation, social practice, and farming culture education. A large number of farm stays, picking gardens, and happy farms in Shandong Province are such experience venues. The circular type can also be called the ecological type. At present, some places use circular agriculture as a channel for industrial integration, promoting the reciprocal and efficient flow of various agricultural resources and achieving multiple effects such as energy conservation and emission reduction, ecological environmental protection, and improved economic benefits. The smart type introduces modern information technologies such as the internet, the Internet of Things, cloud computing, and sensors into all links of agricultural production, processing, and marketing, and implements intelligent perception, early warning, analysis, decision-making, and control over the entire process. In Panjiadaozhuang, Shouguang City, we visited a series of "smart vegetable greenhouses." A complete set of intelligent facilities monitored changes in humidity, temperature, light, ventilation, and other conditions in real time and carried out care activities such as automatic irrigation, cooling, ventilation, and fertilization. The greenhouse owner could operate remotely with just one mobile phone, greatly saving labor, manpower, and working time.

Of course, the above four forms of industrial integration are generally divided preliminarily according to their respective production forms and industrial functions. In the rich practice at the grassroots level, there are both single industrial forms and mixed forms. The Qingzhou (International) Flower Industrial Park in Weifang City and the Zhangqiu Modern Agriculture Demonstration Park in Jinan City that we inspected not only have the functions of leisure, experience, and sightseeing, but also provide terminal products such as flowers and food for sale. They can be said to be a comprehensive integration of the terminal-oriented and experience-oriented types.

III. It is necessary to define the position, take the pulse accurately, and add strength for the integrated development of industries

Through on-site investigations of the development of new industries and new business forms in Weifang and Jinan, we feel there are several insights as follows.

First, strategically "define the position" well for the integrated development of industries. Judging from the momentum of Shandong Province in promoting integrated industrial development and the enthusiasm of farmers for new industries and new business forms, the integrated development of the primary, secondary, and tertiary industries in rural areas may give rise to another historic transformation in China's agricultural and rural development. We feel that this may be another great creation by Chinese farmers after the "household contract responsibility system," township and village enterprises, and migrant workers entering cities. It is very likely to once again inject strong new momentum into agricultural and rural development, making agriculture and rural areas truly a vast world where much can be accomplished. In the long run, whether industrial integration development, which is springing up like bamboo shoots after a spring rain and growing sturdily, can similarly create historical miracles requires further observation and judgment in the future. But from the current perspective, new industries and new business forms that have already taken root, sprouted, bloomed, and borne fruit in rural areas across the country can indeed enable factors to be allocated efficiently among industry and agriculture, urban and rural areas, and industries. The industrial chain and value chain extend vertically and horizontally in integration, and the production mode, operation mode, and organization mode of agriculture undergo profound changes, injecting new momentum and opening new space for agricultural and rural development. What is striking is that the integration of the three industries has an obvious effect on increasing farmers' incomes, directly reflected in the growth of net operating income. In the first quarter of this year, the per capita disposable income of farmers in Weifang City reached 5,222 yuan, of which wage income increased by only 4.4%, while net operating income increased by 19.9% (far higher than the national level of 9.2% in the same period), the highest for the same period in recent years. In recent years, increases in farmers' incomes have relied to a large extent on the relatively rapid growth of wage income. Under the current situation of tightening migrant worker employment and downward pressure on farmers' incomes, integrated industrial development is becoming a new growth point for increasing farmers' incomes. As one grassroots cadre said, integrated industrial development is very likely to become the "golden key" to solving the difficulty of increasing farmers' incomes. We should guide according to the situation and act in line with the trend, treating the promotion of integrated industrial development and the cultivation of new rural industries and new business forms as major strategic measures for advancing agricultural modernization, new urbanization, and urban-rural integration.

Second, tactically "take the pulse accurately" for integrated industrial development. Weifang City, which nurtured the embryonic form of rural industrialization, is now also making vigorous progress in rural industrial integration. Then, what is the difference between industrial integration and the agricultural industrialization we often spoke of before, and what exactly is their relationship? We feel that industrial integration and agricultural industrialization are two different concepts and two different forms. To use a simple metaphor, industrialization is putting the three "eggs" of the three industries into one basin, where they are next to each other and connected to each other, forming linked development; industrial integration is not only putting the three "eggs" into one basin, but also breaking them and stirring them evenly so that they are completely integrated together, with each containing the others, forming integrated development. Therefore, industrial integration is a high degree of integration among industries, not simple combination; it is organic blending, not ordinary intersection. We have come to understand this truth from the practice of the grassroots and the masses, and it seems necessary in the future to explain it clearly to more cadres and masses. Industrial integration cannot simply be regarded as a "reprint" of agricultural industrialization, but should be regarded as an "upgraded version" of agricultural industrialization. We can further understand the connotation and extension of industrial integration from several aspects. From the perspective of boundaries, integration makes it difficult to distinguish the original boundaries among industries, and difficult to distinguish which is agriculture, which is industry, and which is services. In blending, the three industries seem both absent and present, coexisting and sharing. This is why integrated industrial development is called the "sixth industry." From the perspective of time sequence, there are no three separate periods or order of priority, and it is difficult to distinguish which period is for production and which period is for processing. Often the three industries start and evolve simultaneously. From the perspective of space, integration binds factors together, and the degree of agglomeration is quite high. It is difficult to distinguish which area is for planting and breeding and which plot is for processing and sales. Sometimes the production site is also the processing workshop and also the sales platform. From the perspective of relationships, the three industries rely on each other and are mutually causal. The development of any one industry takes the existence of the others as a necessary condition; otherwise, the effect is greatly reduced.

To promote the healthy development of industrial integration, there is the question of who will do it and who will play the leading role, which also needs to be clarified and grasped accurately. Integrated industrial development has high benefits and good prospects, and industrial and commercial capital is enthusiastic. At present, a lot of industrial and commercial capital and social funds have already entered this field and achieved preliminary results. Industrial integration cannot do without the participation of industrial and commercial capital, or even its guiding role. However, proceeding from China's specific national conditions and agricultural conditions, it needs to be made clear that integrated industrial development should even more be done by farmers themselves, with farmers playing the leading role, so that farmers can more directly create and share the value-added benefits of the industrial chain and value chain. How should farmers do it themselves? It is necessary to cultivate diversified business entities, the core of which are family farms, cooperatives, and leading enterprises in which farmers participate as shareholders. Industrial integration needs a certain degree of organization as a guarantee; sometimes it is very difficult for one household alone to accomplish it. From Shandong's experience, we can see that cooperatives are the most effective organizational form for leading the masses into the field of industrial integration. Industrial integration requires a certain scale of land, and land cooperatives come into use. It requires financial support, and mutual fund organizations established within cooperatives can play a role.

Third, in policy, "add strength" for integrated industrial development. From the survey, accelerating the cultivation of new rural industries and new business forms and promoting integrated industrial development is a major measure for advancing the supply-side structural reform of agriculture, and it is also new momentum for promoting sustained and relatively rapid increases in farmers' incomes under the new situation. New rural industries and new business forms are new things developed on the basis of "Internet Plus." Although a number of typical examples have emerged in various places, indicating a beautiful and bright prospect, to turn these beautiful bonsai into a brilliant landscape and make sparks start a prairie fire across the vast countryside, various entrepreneurial and business entities still need to ride the waves forward in the tide of the market economy, and governments at all levels also need to cheer them on and help them. What the government should do is not "build greenhouses" or "make bonsai," but create a good social atmosphere and a fair competitive environment, so that enterprises innovating and starting businesses in rural areas can enjoy the same policies as in cities, and solve urgent difficulties in land use, financing, talent, infrastructure, and other aspects.

First, solve the land use problem. For a long time, annual construction land quotas have been difficult to allocate to rural areas, and construction land obtained from rural land consolidation and village renovation has also entered cities through "increased vs. decreased linkage" quotas, forming a strange circle in which rural land is difficult for rural areas to use. For new industry and new business form projects to land in rural areas, the construction land problem must first be solved. It may be considered to set a certain proportion of the annual construction land plan quota specifically for the development of new rural industries and new business forms. At the same time, allow rural construction land saved through village renovation, homestead consolidation, and other means to prioritize guaranteeing land for the development of new rural industries and new business forms through land shareholding and public transfer.

Second, solve the financing problem. This is a long-standing difficult problem encountered in starting businesses and running enterprises in rural areas, and the root cause is the lack of effective collateral. It may be considered to solve the financing problem for the development of new industries and new business forms through a financing guarantee system for agriculture, rural areas, and farmers supported by governments at all levels, or by giving play to the leverage role of fiscal funds through establishing funds, interest subsidies, guarantees, and other channels.

Third, solve the talent problem. The development of new rural industries and new business forms and industrial integration require a large number of cross-sector talents, urgently requiring greater efforts in talent training. The immediate task is to accelerate the innovation of the talent training system, improve the skills training mechanism, solve the problem of training and demand being "two separate sheets," gradually make enterprises the main body of skills training, and have the government provide certain support through methods such as purchasing services and post-event subsidies.

Fourth, solve the infrastructure problem. Rural tourism and rural e-commerce are currently the most dynamic new rural industries and new business forms, with very obvious effects on increasing farmers' incomes. It may be considered to further increase support for infrastructure construction so that these two new industries and new business forms can develop faster. For example, study implementing a free Wi-Fi (wireless internet) project in key rural tourism areas, further advance the work of bringing broadband into rural areas and scenic areas, and, with reference to the practices and experience of some regions, accelerate the construction of wireless internet facilities in key rural tourism areas within the strategic framework of "Broadband China," providing free Wi-Fi to rural tourists.