How the Internet Plus empowers the development of modern agriculture

1. Understanding "Internet Plus" and "Internet Plus Agriculture"

1.1 "Internet Plus" is a new mode of production

(1) The essence of "Internet Plus" is the onlineization and datafication of traditional industries. "Internet Plus" focuses on using new technologies such as the Internet of Things, big data and mobile intelligence to build network service platforms, and emphasizes giving play to the role of cyberspace in transforming and upgrading traditional industries along an intelligent path, thereby promoting the general appreciation of all industries and their transformation and upgrading toward service orientation.

(2) The new business forms brought by "Internet Plus" are in essence driven by information productivity as the engine, spurring a transformation in the way industries develop. The outstanding advantage of "Internet Plus" lies in relying on scientific and technological productivity to achieve increasing returns to scale, while at the same time relying on information productivity to achieve increasing returns to scope. On the basis of this advantage, "Internet Plus" supports premium-price competition through innovation in methods and reduction of diversity costs, thereby realizing the transformation and upgrading toward high value-added business forms. In this process, "Internet Plus" relies on the leading role and effectiveness of the network in resource allocation to advance the precision of the market. The network mechanism mainly allocates resources by means of qualitative information such as language and unstructured data, and through one-to-one matching, it precisely allocates those resources that are difficult to allocate by price (such as quality and experience), forming contextual pricing and thereby an effective resource allocation mechanism.

(3) "Internet Plus" is a process of mutual penetration and integration between service orientation and industrialization, requiring both the maintenance of growth speed and the improvement of development quality. Mr. Wu Jiapei once said that the information economy is a service-oriented economy that transcends the boundaries of time and space. The information economy releases its energy through service orientation. Service orientation refers to a dynamic process in which manufacturers shift from being providers of goods to providers of services; its essence is the service orientation of the economy. Service orientation mainly includes two aspects, namely the service orientation of inputs (service elements increasingly occupy an important position in all inputs of an industry) and the service orientation of outputs (service products increasingly occupy an important position in all outputs of an industry). Service orientation has broad coverage; it does not refer only to the service sector but permeates the upgrading process of all industries including the primary, secondary and tertiary industries. In this process, service orientation plays an economic engine role different from that of industrialization. Service orientation improves the quality of economic development through differentiated production and premium-price competition; industrialization, by contrast, improves the speed of economic development through scaled production and price-cutting competition. In the process by which service orientation advances the economy from a non-optimized structure of homogenization, low value-added and the low end of the industrial chain toward high quality, high value-added and the high end of the industrial chain, information productivity becomes the core driving force of service orientation because of its essential characteristics of supporting premium-price competition and satisfying people's increasingly rich and diverse needs.

(4) "Internet Plus" releases the potential of service orientation and shifts toward innovation-driven transformation. The interaction between "Internet Plus" and innovation-driven development is mainly manifested in market orientation, because in the process of service orientation the market can naturally generate demand for innovation through differentiated needs. Innovation is in essence differentiated supply and requires service orientation to reveal demand targets so as to ensure the direction of innovation. In the past, government-oriented innovation was supply-oriented rather than demand-oriented, because it emphasized industrialization without combining it with service orientation. "Internet Plus" will give play to the strength of the Internet industry's close integration with market demand and promote integrated development with all walks of life through demand-oriented innovation-driven development.

1.2 "Internet Plus Agriculture" is the product of information productivity acting on the entire process of the agricultural industrial chain

"Internet Plus Agriculture" is a process of comprehensive integration of modern information technology with agricultural development, and its essence is "informatization plus agriculture." With the rapid development of information technology, information has become a factor of production as important as, or even more important than, land, capital and labor, and has formed information productivity. "Internet Plus Agriculture" is the product of information productivity acting directly on the entire process of the agricultural industrial chain; through the optimized reconstruction of traditional agricultural production and circulation, it continuously releases the enormous energy of agricultural industrial transformation and upgrading under the information economy.

China's "Internet Plus Agriculture" is "industrialization plus 'informatization plus agriculture'." China's "Internet Plus Agriculture" is a development process in which agricultural industrialization and agricultural informatization are gradually being unified. The essence of agricultural industrialization is "industrialization plus agriculture." At the current stage when China's industrialization still needs 5 years to be basically completed, agricultural industrialization mainly addresses the problem of the socialized large-scale production of agriculture. Therefore, on the basis of this goal, China's "Internet Plus Agriculture" should focus on resolving the contradiction between the diverse value of rural household management and the complex requirements of precisely connecting with the market. While inheriting the efficiency advantages of industrialization, service orientation also incorporates the characteristics of the diversity economy and forms an effectiveness (efficiency plus diversity) advantage; this is the key way to resolve the contradiction between increasing output (cost leadership) and increasing income (differentiation).

2. Mechanism analysis of how "Internet Plus" embeds itself in the industrial chain and promotes the transformation of the agricultural economic development mode

In recent years, "Internet Plus Agriculture" has gradually developed in China and has already achieved initial results. According to statistics, in 2014 the total amount of agricultural products sold through e-commerce channels in China reached 48.302 billion yuan, an increase of 69.83% over 2013; there were 762,100 sellers dealing in agricultural products, a year-on-year increase of 60.57%.

2015 was a favorable year for "Internet Plus Agriculture." The No. 1 Central Document issued in February proposed accelerating agricultural modernization, strengthening the driving role of agricultural scientific and technological innovation, innovating the circulation methods of agricultural products, and supporting enterprises in e-commerce, commerce and trade, logistics and finance to participate in the construction of agriculture-related e-commerce platforms. The "Opinions on Vigorously Developing E-commerce and Accelerating the Cultivation of New Economic Momentum" issued on May 7 further proposed strengthening the integrated development of the Internet with agriculture and rural areas, introducing modern management concepts and methods such as the industrial chain, supply chain and value chain, and developing rural e-commerce; the central government would allocate 2 billion yuan in special funds for the construction of rural e-commerce infrastructure. According to the "Guiding Opinions on Accelerating the Construction of High-Speed Broadband Networks and Promoting Network Speed Increases and Fee Reductions" issued by the General Office of the State Council on May 20, in 2015 fiber-to-the-village construction would be carried out in 10,000 administrative villages, and more than 95% of administrative villages would have access to fixed or mobile broadband. At the same time, the Ministry of Agriculture proposed accelerating the pilot program of bringing information into villages and households, with at least 1 village-level information service station to be built in each administrative village. "Internet Plus Agriculture" has entered a golden period of development.

Combining the development situation and future development trends of "Internet Plus Agriculture" in China in recent years, it can be found that "Internet Plus" has already penetrated into and is reshaping every link of the agricultural industrial chain. By integrating the material, capital and information flows of the entire industrial chain, "Internet Plus" drives the whole industrial chain toward symbiosis, mutual benefit and win-win outcomes, thereby realizing a deep-level transformation of the agricultural economic development mode. This is specifically manifested in the following aspects.

2.1 From the upstream of the industrial chain, "Internet Plus" enters the agricultural materials market and will affect the supply of agricultural materials in all aspects of production, circulation, marketing and services, thereby triggering a transformation in the relationship between agricultural materials producers and farmers

As for agricultural materials products such as seeds, chemical fertilizers, pesticides, veterinary drugs and agricultural machinery, the vast majority of varieties can be described as truly rigid demand, and they have a higher degree of standardization, fit the characteristics of repeated purchases, and have relatively low delivery requirements, making them suitable for sale through the e-commerce model. Under the current favorable policy background, agricultural materials e-commerce will usher in a period of great development opportunities. In 2016, China's total agricultural materials market is expected to exceed 460 billion yuan. This will promote the transformation of sellers into comprehensive service providers and drive a major transformation of the traditional agricultural materials circulation system. At present, leading domestic agricultural materials enterprises such as Stanley, Kingenta and Dabeinong have all entered the e-commerce business. In March 2015, Legend Holdings made a strategic investment in Cloud Farm, a vertical online agricultural materials trading platform. Cloud Farm currently has hundreds of agricultural materials enterprises settled in, has established more than 200 county-level service centers and more than 16,000 village-level stations, and covers more than 10 provinces including Shandong, Henan and Jiangsu. Facing the dispersed state of 176 million farming households in China's 2.7 million natural villages, Cloud Farm adopts a "village station" strategy and strives to be "down-to-earth." Village stations in various places strive to become defenders of the collective interests of the whole village and shopping leaders, reduce transaction costs, and fundamentally remove pain points such as regional distributors and sub-distributors in the traditional agricultural materials circulation chain. Facing the continuous sinking of agricultural materials terminals, major leading agricultural materials enterprises are striving to achieve "disintermediation" between agricultural materials producers and farmers through the integration of technical services, business services and platform services. "Internet Plus" will play an increasingly important role in this.

2.2 From the midstream of the industrial chain, "Internet Plus" enters the field of agricultural production and greatly promotes the process of smart agriculture, thereby solving problems such as agricultural production technology, agricultural product quality and safety, agricultural scale operation and product value realization at a higher technical level

With the widespread application and promotion in agricultural production of technologies such as Internet information integration, big data analysis and remote control, the use of new technologies such as 3G, the Internet of Things① and cloud computing is also increasing. The intelligent agricultural system integrating information perception, intelligent decision-making, automatic control and precision management is continuously being improved. In 2010, the National Development and Reform Commission approved a batch of Internet of Things pilot projects; Henan, Shaanxi, Beijing, Heilongjiang, Wuxi and other places applied Internet of Things technology in field crops, protected agriculture, animal breeding and aquaculture respectively. Henan, a major agricultural province, applied Internet of Things technology in the staple wheat industry. Nearly 20 digital remote monitoring points for wheat seedling conditions were set up in 9 prefecture-level cities across the province to monitor in real time data indicators such as soil temperature and humidity, air temperature and humidity, carbon dioxide concentration and total solar radiation in the fields. Based on images and data, researchers in the monitoring room in Zhengzhou made diagnostic analyses and implemented scientific field management. The Qinlong Modern Ecological Intelligent Creative Agriculture Park in Jinghe New City, Xixian New Area, Shaanxi, uses unmanned aircraft for pesticide spraying and fertilization, with ground remote controllers controlling, positioning and spraying and fertilizing them through radar and GPS navigation; the park also uses robots to pick tomatoes, obtaining fruit information, judging maturity and determining harvest targets through multi-sensor data fusion technology, and guiding the mechanical arm to complete tasks such as grasping, cutting and recovery. The dairy cattle breeding base of Haihua Yundu Ecological Agriculture Co., Ltd. in Xikanggezhuang Village, Miyun, Beijing, has now realized intelligent milking. After birth, each dairy cow is fitted with an electronic "ear stud" storing identity information such as its birth time, pedigree and first milking time. When a dairy cow enters the milking parlor, the information in its "ear stud" is transmitted to the background through sensing devices on the milking cups, thereby realizing monitoring of the milk quality of each milking. At present, the intelligent precision feeding system for pig farming has become a development trend for China's pig industry to align with international standards. This system uses a computer as the control center, feeding stations as control terminals, and weighing sensors and radio frequency card readers to collect various information about pigs, calculates the daily feed supply according to formulas, and then precisely dispenses feed through the controller. It can thus be seen that the application of "Internet Plus" in agricultural production not only saves labor costs and improves quality control capabilities, but also makes the allocation of agricultural production factors more rational and agricultural production and operation management more scientific.

2.3 From the downstream of the industrial chain, "Internet Plus" will profoundly change the consumer market for agricultural products from perspectives such as "space, time, cost, safety and personalization," enhance the customer experience of agricultural product consumers, and realize worry-free consumption and personalized consumption.

From the perspective of time, space and cost, "Internet Plus" breaks through the limits of time and space through IT technology, transmits information anytime and anywhere, solves the problem of information asymmetry, and promotes effective connection between the supply and demand markets for agricultural products. From the perspective of food safety, "Internet Plus" creates new agricultural value by creating a transparent supply chain and building a food safety traceability system. Dachan Food, which has now become KFC's largest supplier, adopts a highly vertically integrated business model and, over 10 years, has integrated feed production, chicken hatching and slaughtering, chicken processing and food production into a unified operating platform, forming a "traceable chicken food safety assurance system from farm to table." At present, for every package (box) of Dachan "Sister Kitchen" chicken products and processed foods sold in the domestic market, as long as the safety code on the package is entered, one can conveniently check through the Internet detailed information including the breeding farm, breeder, chick entry and slaughter time, feed used, electric slaughter plant, fresh meat production and quality inspection, and food deep processing, making it worry-free food and at the same time bringing a higher brand effect. The farmers' cooperative led by Li Minghua, a typical example of ecological agriculture in Hubei Province, developed the fragrant rice and Jiayu duck farming model of "planting rice on top and raising soft-shelled turtles below," and since November 2014 has cooperated with an external mobile Internet platform resource, the "Juebu Food Alliance," and has now become a model of ecological agriculture in Hubei and even across the country. The "Juebu Food Mark" contains a QR code; when scanned with a mobile phone, it enters the Internet page for fragrant rice and Jiayu duck rice, where one can view in real time the monitoring video of the breeding base, the food safety commitment video and pictures of the liability insurance policy, among other things. Wang Yichang, initiator of the "Juebu Food Safety Project," said, we support direct supervision by consumers, thereby better solving the food safety problem. From the perspective of personalized consumption, "Internet Plus" continuously introduces consumption models that adapt to personalized needs. LeTV's organic agriculture operation adopts the C2B (consumer-to-business) order sales model, that is, using big data to analyze consumer demand and accordingly arrange the production and sales of agricultural products. At the same time, the O2O model② is also expanding rapidly nationwide, and online and offline are becoming increasingly integrated. In 2013, the O2O model entered a stage of rapid development, with an obvious localization momentum. Especially since 2014, the Ministry of Finance and the Ministry of Commerce have accelerated the comprehensive demonstration work in 56 counties in 8 provinces including Hebei and Henan, promoting large e-commerce and express delivery enterprises such as Alibaba, JD.com and Suning to arrange their presence in the rural market. At present, the Alibaba platform's "specialty pavilions" have covered 31 prefectures and counties in 24 provinces, and nearly 400,000 agricultural product online stores registered and operating normally on Taobao. Alibaba's "Thousand Counties and Ten Thousand Villages Plan" has now been launched, aiming to build 1,000 county-level operation centers and 100,000 village-level service stations within the next 3 to 5 years; in 2015, JD.com planned to add 500 county-level service centers and recruit tens of thousands of rural promoters. These online stores, county-level operation centers and village stations will become important levers for meeting personalized consumer demand.

2.4 From the perspective of the entire industrial chain, agricultural Internet finance has emerged as the times require and runs through the entire process of agricultural materials purchasing and sales, agricultural production and agricultural product sales, helping to build a new rural financial guarantee system

The "China Rural Financial Development Report (2014)" released in April 2015 shows that the current success rate of formal credit for rural households in China is about 27.6%, far below the national average of 40.5%. The application of big data on the Internet helps solve the risk management problems of rural finance and form a new rural financial guarantee system. The "China Rural Financial Services Report (2014)" released in March 2015 pointed out that the role of Internet finance should be actively brought into play to promote the great development of inclusive rural finance. Leading agricultural enterprises hold information across the entire industrial chain and therefore are in a position to build agricultural Internet finance platforms with themselves at the core and provide services such as investment and financing and online payment for all links of the entire industrial chain. In January 2015, New Hope Company (one of the largest agricultural and animal husbandry enterprises in China), together with Beijing Shouwang Innovation Technology Co., Ltd. and Southern Hope Industrial Co., Ltd., jointly contributed capital to establish Huinong Technology, aiming to build an interconnected rural financial services network linking thousands of enterprises and tens of thousands of households; in March, Noposion (a leading domestic pesticide formulation enterprise) announced a capital increase of 17.5 million yuan in Nongjinquan, becoming the first truly meaningful agricultural Internet finance platform on the A-share market; in May, Noposion launched the "Tiantianquan" Internet development strategy, actively building an Internet ecosystem that can comprehensively connect with farmers' needs. At the same time, Dabeinong, with Nongxin.com as its core and combining "Nongfudai," "Nongfutong" and "Nongxinbao," strives to build the industry's first closed-loop, inclusive rural business and financial service system. The above rural financial service networks, platforms and systems cover the entire process of agricultural materials purchasing and sales, agricultural production and agricultural product sales. "Internet Plus" has already embedded itself in every link of the agricultural industrial chain.

3. Path choices for using "Internet Plus" to optimize the industrial chain and promote the transformation of the agricultural economic development mode

China's rural Internet development has begun to take shape, but the engine role of "Internet Plus" in optimizing the agricultural industrial chain has not yet been fully brought into play, and there are still many obstacles to using "Internet Plus" to promote deep-level transformation of the agricultural economic development mode. In 2014, China's rural per capita disposable income was 10,489 yuan, the rural Internet penetration rate reached 28.8%, and the number of rural netizens exceeded 178 million[13]. However, at present the service-orientation advantage of "Internet Plus Agriculture" has still not been fully brought into play, and the paths for farmers to increase income are narrow; the information service foundation in some areas is weak, and rural areas still have the "information access gap" and the "last mile" problem, with more than 50,000 administrative villages still lacking broadband access; the proportion of farmer households owning computers is less than 30%, the utilization rate of agricultural data resources is low, and the application of agricultural big data is still at an initial stage and needs to further release its development potential[7]. In addition, most farmers currently have weak Internet awareness and technical sensitivity, which need to be further strengthened through methods such as inclusive education, while continuously broadening talent training work for "Internet Plus Agriculture."

In the future, to give play to "Internet Plus" in optimizing the industrial chain and promoting the transformation of the agricultural economic development mode, the following 3 aspects of work need to be done well:

First, fully give play to the service-orientation advantage of "Internet Plus Agriculture" in the complementarity of platform services and value-added services, and strive to open up new channels for increasing farmers' income. Under the general trend of the overall economy increasingly transforming and upgrading toward service orientation, China's agriculture, while improving productivity through agricultural industrialization, urgently needs to strengthen the engine power of informatization and further raise the level of agricultural modernization. As a new business form of service orientation, "Internet Plus Agriculture" can rely on the function of the Internet platform as the main carrier of service orientation and its advantage of close integration with market demand to promote the transformation from "company plus farmer" to "network plus farmer," allowing farmers to directly integrate into value-added business forms, thereby eliminating the many links in which intermediaries previously peeled off profits layer by layer, effectively resolving the conflict of interests between companies and farmers under conditions of industrialization, and opening up more channels for increasing income. The key to service orientation is e-commerceization. Driven by e-commerce, agricultural service industries have now formed 3 types of service business forms: first, agricultural e-commerce transaction services. Second, agricultural e-commerce supporting services or platform services (including basic electronic public services such as online payment, logistics and express delivery, and cloud computing, which help scaled production and obtaining the cost leadership advantage of socialized services). Third, agricultural e-commerce derived services (mainly referring to application services based on the platform, including value-added services in other industrial chains and value chains beyond transactions).

Among them, the third type, derived services, mainly improves the differentiated competitive advantage of customized production (such as contract farming) and value-added services, and is the key to farmers becoming the main body of income increase. Through free supporting platforms and their derived services, agricultural e-commerce is becoming an effective way to resolve the conflict of interests between companies and farmers in the process of industrialization. In the past, the small-scale production characteristics of household management strengthened the value-added nature of farmers' personalized customization, but at the same time it also had the defect of weak cost performance. The role of "Internet Plus" is to turn the personalized weakness of household management into an advantage. Household management by farmers and the Internet have a spiraling upward logical relationship in personalized customization, and can drive agriculture to transform and upgrade from homogenized industrialization toward differentiated service orientation, thereby forming a path with Chinese characteristics for connecting household personalized customized independent management with industrialized large-scale production, and realizing the sublation at a higher level of the contradiction between household management and industrialization.

Second, strive to do a good job in the "last mile" and do well in agricultural big data application services. In addition to relying on Internet platforms, "Internet Plus Agriculture" cannot do without a service system. China's agriculture has now formed a top-down service system, and "village stations" are a newly added social force in this service system. "Internet Plus Agriculture" has the development foundation of a market economy and therefore can complement the government-led service system and play different roles in socialized services. The Ministry of Agriculture is now promoting "information health payment," integrating e-commerce, public welfare services and Tencent enterprise services needed by farmers, and focusing support on "village stations" as the point of connection between online and offline. The important experience of the "Cuncunle" website, valued at 1 billion yuan by the venture capital community in the first half of 2015, is to first do a good job in the "first mile": over the 5 years since its founding, "Cuncunle" has focused on helping farmers in aspects such as agricultural product supply and demand, employment and entrepreneurship, and rural tourism, and members can freely publish legitimate marketing information on the "Cuncunle" platform; "Cuncunle" strives to achieve an operation platform fully compatible with the public-welfareization of business activities, and has now formed village coverage of more than 600,000 people; "Cuncunle" also targets two opinion leader groups, college student village officials and leaders in becoming rich through science and technology, selecting them as "station chiefs," and provides free WiFi and supermarket management systems for rural shops, effectively solving the "first mile" problem. In addition, with the help of the "Broadband China" strategy, the focus should be on solving the problem of "broadband access to every village," continuously strengthening the in-depth development of agriculture-related information resources, and accelerating the research, development and promotion of low-cost intelligent terminals suited to farmers' characteristics; at the same time, establish a national agricultural big data research and application center covering the entire information chain of agricultural big data collection, processing, storage, handling and analysis, and promote agricultural big data application services to domestic and international markets.

Third, actively develop "Internet Plus agricultural organizations" and increase the breadth and depth of training. At present, the most efficient organizational form for linking the Internet with agricultural products is "Internet Plus agricultural organizations." Since China's vast rural areas have formed unique values and their own ecosystems over a long process of development, only by relying on organized forms and using the power of examples (with village chiefs, college student village officials, agricultural cooperatives, agricultural managers, large agricultural growers and others engaging in e-commerce) for guidance can farmers' transformation be effectively promoted and the process of their self-growth accelerated. Governments at all levels should allocate special e-commerce training funds and cooperate with universities, secondary specialized schools or relevant enterprises to train farmers in the business skills for participating in "Internet Plus Agriculture," and in particular consciously train some new-type professional farmers, returning entrepreneurial personnel and cooperative members so that they become market entities with Internet thinking and mastery of information technology; at the same time, vigorously research and develop new-type professional farmer training and education platforms based on intelligent terminals, such as online classrooms, interactive classrooms and certification exams, to realize the mobile and intelligent cultivation of new-type professional farmers and promote mass entrepreneurship and innovation. At present, basically every village has college student village officials, and the advantage of these young people's familiarity with e-commerce and their exemplary leading role can be fully brought into play. From a long-term perspective, transforming the agricultural economic development mode is not only a matter of technology itself but also involves the transformation of farmers' habits of thinking. In the process of technical and skills training, efforts should be made to form a clustering effect, teaching farmers new concepts, new production and lifestyles, and new value orientations, so that farmers recognize from deep in their thinking the role of "Internet Plus" in optimizing the agricultural industrial chain and its engine role in transforming the development mode, and actively join the practice of "Internet Plus Agriculture."