Policy and integrated management Environment

Posted July 1997

Sustainable Agriculture and Rural Development in China, Part 1:
The Agro-Ecosystem and China's Rural Economy (continued)

prepared by
Li Xiaoyun, Centre for Integrated Agricultural Development
Zuo Changsheng, Ministry of Agriculture
Jeffrey B. Tschirley, FAO
Shwu Eng Webb & Ashley Morton, FAO consultants
From "Promotion of sustainable agriculture and rural development in China: elements for a policy framework and a National Agenda 21 Action Programme" (FAO/UNDP/Ministry of Agriculture, China, 1997)

Pressure on human resources

See also: Environment Specials
  • Global climate maps
  • Organic agriculture
  • Integrated coastal area management
  • Biodiversity in agriculture
  • Earth Summit+5
  • Agroclimatic concepts
  • Remote sensing
  • Maps of the World Food Summit
  • Sea-level rise and agriculture
  • The adoption of the Household Production Responsibility System (HPRS) in the 1980's linked farmers' remuneration directly to the value of output produced. Under HPRS, Chinese farmers have been guided by economic returns (narrowly defined) to determine what and how much of a commodity to produce in order to meet State contract requirements. As agricultural production becomes more intense and economic reforms encourage the development of household and township enterprises, structures in rural areas became more diversified. For example, in 1980, nearly the entire rural labor force was engaged in primary industry (mainly agriculture), and contributed 70 per cent of the value of products produced in the rural society. In 1995, the ratio of primary industrial labor force to total rural labor force decreased to 73 per cent and contributed only 46 per cent of gross value of output in rural areas.

    Table 4. Economic structure of rural economy
    Item 1980 1995
    Total population (m) 981 1,211
    Rural population (m) 811 917
    Rural labor (m) 318 450
    Agricultural labor (m) 298 323
    Estimated surplus labor (m) -120*
    Cultivated land (m/ha.) 99 95
    GNP from agricultural sector (b/yuan) 192 2,034
    GNP (b/yuan) 451.78 5,728
    GNP from agriculture (b/yuan) 467 3,632
    GNP from non-agriculture (b/yuan) 2,834 19,681
    Agriculture income per caput 191 1,578
    Non-agriculture income per caput 439 3,893
    Grain production (m/m/t) 321 467
    Meat production (m/m/t) 12 53
    Machinery use (b/watts) 147 361
    Rural energy use (mtce.) 35 51
    * 1994 estimate

    Significant increases in agricultural productivity combined with higher paying employment possibilities outside the agricultural sector is causing labor migration from the agricultural sector. The value of output created per agricultural worker is only one-eighth that of the non-agricultural worker, suggesting significant under-employment in rural areas and scope for further gains in productivity.

    Rural unemployment

    Since the 1980s, China's agricultural systems have been replacing labour with external inputs. Young and better-educated rural workers continue to leave rural areas in search of better paying jobs in the urban areas. These factors generated an estimated agricultural labour surplus of about 120 m. in 1994, which is forecast to increase to 270 - 450 m. by the end of the century.

    Restrictions on internal migration have helped slow the movement of rural laborers to urban areas and, exacerbated rural underemployment. Since the rural economic reforms of 1978, provinces and municipalities have been given a larger role in determining their economic development programmes. Local autonomy and rights to retain profits has given township leaders incentives to implement their own economic plans. This has especially benefited the Township and Village Enterprises (TVEs) which now employ about 13 per cent of total labor force.

    TVEs provide rural employment opportunities which helps to reduce migration to the cities. The rural labor force employed in TVEs has increased from 30 m. in 1980 to 120 m. in 1995 when it contributed nearly 70 per cent of the total value of output produced in rural areas. Township enterprises are usually small and labor-intensive activities such as food processing or textile production, they often require less skilled laborers than are needed in larger cities. This has eased the transition of labor and capital resources from crop production to other agricultural and non-agricultural activities.

    However, even if the growth of the TVEs continues, they will not be able to fully absorb the surplus of laborers released from agricultural sector. Without more infrastructure investment and policies that facilitate the growth of TVEs, they can only absorb another 50 m. of the nearly 300 m. rural people expected to become unemployed over the next ten years.

    The transformation of China's rural labor force has significant implications for sustainable agriculture and rural development in terms of resources flows and policy options. The rapid growth of non-agricultural sectors combined with an increase in efficiency of agricultural production means that progressively less labor will be required in the future.

    Surplus labor will migrate to higher paying alternatives in urban areas where they place an ever-growing burden on public facilities. As a result, sustainable agriculture policies will have to address the effects of rural industrialization on agricultural resources. While lower population pressure in rural areas should alleviate some pressure on land degradation, this could be counterbalanced by more pollution due to intensive use of inputs, as well as a rise in real rural wage rates which will make labor-intensive solutions to environmental degradation more costly.

    Rural-urban income differentials

    The disparity between the rural and urban populations in terms of employment and household income reflects the lower relative earning potential of agriculture created by government policies biased against the sector. Over a long period, agriculture has been taxed to finance investment in urban infrastructure and industrial development.

    Additional factors that have contributed to income disparities include the decline of farm prices in real terms and prices of agricultural inputs that have increased faster than the value of outputs over the period 1985-1992. Furthermore, prices of agricultural products have increased more slowly than those of industrial goods between 1989 and 1992.

    In 1995 more than 50 per cent of China's labor force was employed in the agricultural sector, but they contributed only 20 per cent of the GDP. The average rural (agricultural) household income was just 40 per cent of the urban (non-agricultural) income. From 1989-92 real net farm family incomes increased by less than 2 per cent annually, while the annual growth in urban areas was nearly 7 per cent. In 1993, the differentials widened further - 3 per cent real growth for farm families and 10 per cent for urban. For the five year period 1989 -1993, the estimated increase in farm household income was 11 per cent and urban households 44 per cent.

    The rapid growth of the TVEs has contributed to farm household income - more than 25 per cent of farm household income derives from off-farm work - and has helped increase the average annual rural per capita income to more than 1,500 yuan (Minister Liu Jiang, 24 Nov 1995).

    The out-migration of laborers from rural areas is mostly made up of the younger and better educated group which intensifies the unbalanced distribution of human capital. This becomes even more important as technological change raises agricultural productivity and land becomes less central as a factor of production.


    The prevailing culture of the 'favored son' discriminates against women, especially in rural areas. As a result, women continue to lag behind men in social and economic status and are often denied opportunities for education and training. In the meantime, the large discrepancy in urban-rural incomes has lured rural male farm laborers to cities or to be hired as TVE workers and left farming to the women and children. Chinese often describe this phenomenon as "6138" (61 represents children and 38 women [Women's day is celebrated on 8 March in China]).

    The emigration of men seeking employment in urban areas has left many women to take over agricultural roles traditionally carried out by men. This typically means longer work hours as the availability of male labor decreases.

    Ongoing agricultural development programmes must be reassessed, and where appropriate, efforts made to include women and other target groups in mainstream economic activities. Gender analysis training for research and extension staff, assessing technologies and agricultural production systems targeted for women, involvement in on-farm trials, post-harvest processing technology testing, small enterprise development, monitoring and evaluation to ascertain impact of the introduction of priority commodities and processing technologies on women's income, are among the options that should be pursued.

    Policy impediments to sustainable agriculture and rural development

    More than 40 years of subsidized consumption of agricultural products in urban areas may be the largest single policy distortion in China. Failure to assess the environmental or social costs of China's food self-sufficiency policy has led to numerous hidden costs that are undermining future production. The grain procurement quota obliges farmers to dedicate some of their land to grain production, even if it means adopting inefficient and unsustainable cropping systems.

    The emphasis on grain and cotton production has been compounded by subsidies on the use of inputs. This includes provision of fertilizers, pesticides and plastic sheeting at low prices - often at less than one-third of the production cost; there is virtually no charge for using irrigation water. By failing to reflect the scarcity of resources, inefficient use of chemical fertilizers is encouraged, resulting in soil nutrient imbalance and pollution of water resources; and of pesticides, causing increased crop losses through pest resistance and pollution. The subsidy expenditure on agricultural products also constrains the government from investing in infrastructure development that could have environmental benefits.

    Rapid growth of TVEs combined with the lack of environmental enforcement also have negative impacts on the environment. The industrial and municipal wastes discharged to waterways used as sources of irrigation water have affected not only agricultural productivity but also endanger food safety with unacceptable levels of pollutant residues in the food chain. There is an increasing incidence of cancer which may be linked to these residues. Studies have also linked cadmium residues in rice to health problems such as loss of hair. Despite the market reforms of the past 18 years, the policy bias against agriculture in China remains. Subsidized urban consumption of grains combined with limited transportation facilities, has kept the real value of grain (especially rice) in rural areas very low. The failure to increase the consumer price agricultural commodities resulted in the rapid growth of subsidies. The large budgetary costs of grain and other food subsidies restrained the prices the government was willing to pay for grain.


    Industrial development has been a top priority for China from the 1950s through to the present. To support this, policy provides for low wages to government employees, including industrial workers in large cities.

    Since 1985, the government replaced its unified purchasing (quota) system with double-track pricing for most agricultural goods (i.e. government purchases agricultural product at both low fixed quota prices and negotiated or free market prices), raw materials, and almost all major industrial output. However, urban residents and state-owned enterprises paid for staples and raw materials at low state-fixed prices. The markets that could have raised prices to reflect actual demand and production costs were therefore very limited.

    Instead of broadening the reform process to include urban areas, the double-track pricing system kept the urban food subsidy system intact. With prices of food grains and edible oils at artificially low levels, there was almost no incentive for users to conserve.

    Over the last decade, the government raised procurement prices many times without raising the retail prices for ration coupon sales thus increasing the cost of government subsidies. Subsidies on grain and edible oils alone have increased from around 6,000 m. yuan in 1979 to over 30,000 m. yuan in 1989. With financial burdens building up, in 1991 the government announced price increases that reduced by 20-25 per cent the government subsidies. In 1992 the government replaced coupons and compensated urban residents with cash.

    However the State continued to request agricultural surplus provinces of the grain and oil seed to turn in the required procurement. Furthermore, the financial burden of procurement fell to the provincial government's responsibility. Provincial government also began to bear the cost of subsidies for fertilizers and other inputs to farmers. Facing the mounting financial burden, provincial government set up trade barriers to limit purchases by provinces with grain shortages. This intensified grain shortfalls in the coastal regions and in 1993 grain prices increased by more than 30 per cent despite a record harvest.

    Price distortions

    The combined effects of heavily subsidized consumer grain prices and artificially depressed farm price, combined with limited transportation facilities, has kept the real value of grains (especially rice) in rural areas very low. Farmers have no opportunities to market more grain than is required to fulfill their quota obligations. As a result, food grains have been diverted for use as livestock feed.

    The amount of grain used for livestock production has increased from 65 mt (21 per cent of production) in 1978 to about 150 mt in 1994 (30 per cent of production). Yet, the majority of China's livestock production is carried out under rudimentary conditions. Manufactured feed, although increasing rapidly since 1985, accounted for less than 20 per cent of total livestock feed in 1989.

    Inefficient grain procurement

    China's food security policy focuses on maintaining a 'safety threshold' of 110 m. ha. sown to grains and establishes an annual procurement target of 50 m./t. of grains.

    For the past decade, the procurement of grain and other farm products has been so mishandled that it has strongly reduced farmers confidence in the government. For example, after a record harvest in 1984, an effort was made to reduce the amount of grain procured and to avoid implicit guarantees (Johnson). In 1988 and continuing to 1992, grain was often procured with IOUs instead of cash.

    During years when there was difficulty in paying for grain and other farm products, State and Provincial governments often used administrative measures to block the markets such as restricting the transport of grain from an area until its procurement objectives were met. In good years, such as 1992, government facilities were inadequate to store the grain that was procured and farmers who had been required to grow grain found that they could not sell it.

    The lack of infrastructure development prevents markets from developing and distorts rural consumption of agricultural commodities. Rice in the south and wheat in the north are used to feed livestock because corn cannot be transferred to where it is needed. In the late 1980s, market prices of major agricultural commodities in many rich urban areas were often 2 or 3 times the market prices that farmers received (quality differentials account for part, but not all, of the higher prices). In some regions, surpluses of agricultural products have piled up, particularly corn, while other regions have suffered shortages because of inefficient distribution. Until this year, regional wholesale markets for agricultural products did not exist.

    Subsidies impede investment in sustainable agriculture

    In the 1980s, the Government increased procurement prices for farm products a number of times while prices to urban consumers remained fairly constant. The subsidy needed to support the difference between the procurement prices and the urban re-sale prices for grains and edible oils increased from 1,100 m. yuan in 1978 to 36,400 m. yuan in 1995. The opportunity cost would be to re-direct these funds toward investment in integrated plant nutrition, biological pest control, post-harvest storage and processing, research and development, education and extension, and rural transportation systems. There has been little increase in expenditure for agricultural scientific research over the past 18 years.

    Table 5. Selected government expenditures in agricultural sector (000,000 yuan)
    Year Price subsidies Infra- structure Research
    1978 17.84 5.11 0.11
    1990 38.08 6.67 0.32
    1995 36.43 19.36 -

    Impact of soil loss

    Over the past 4 decades policies aimed at achieving food self-sufficiency and, using agricultural exports to support industrial development have been important forces in causing land and water degradation and environmental pollution, often in areas with high potential for food production. To meet increasing demand, more marginal land is gradually coming under cultivation for grain production.

    Nationally, soil erosion now affects 30 per cent more land than in the 1940s. Cultivation on steep slopes and hills, forest cutting and converting grassland for growing crops without adopting proper conservation measures have led to erosion. Total arable land suffering significant erosion amounts to 45 m. ha. or about 34 per cent of total cultivated land. Cultivation on marginal land has led to the following negative impacts:

    In terms of soil erosion, the following areas are of particular concern and China could direct its policy reform toward benefiting these lands:

    Between 1950 and 1970, several land use disasters were induced by mis-guided policies. Clearing forest to make charcoal for iron and steel making in 1958 is mentioned as creating widespread negative impacts in the mountainous areas of China. While converting grassland to cultivation to achieve the self-sufficiency of grain products in the 1960s and 1970s, helped lead to the desertification of more than 2.7 m. ha. in Inner Mongolia.

    Converting freshwater wetlands to cultivation has negatively impacted the river system and the habitats in many parts of China. For example, Dongting lake's water surface was reduced by 60 per cent. It has also significantly reduced the ability of lakes to serve as a storage buffer when large rivers such as Yangtze flood, resulting in severe crop losses.

    Alternative approaches

    Alternatives to inappropriate practices do exist and many have been developed and extensively tested in China which has a long history and experience in managing agro-ecosystems. In terms of the land resources, there is considerable scope for improving the management of land already under cultivation, and for rehabilitating important farming areas such as the Loess plateau, the uplands of the red soil area and the Northeast China Plain black soils region. In addition, the reconversion of grassland in Inner Mongolia, Xinjiang and Gansu would facilitate a substantial and sustainable increase in meat production that is not dependent on increased grain consumption.

    China ecological agriculture

    The concept of Chinese Ecological Agriculture (CEA) was developed in the late 1970s on the principles of ecology, system science, modern agricultural science and traditional agrotechnology. Its key components are:

    The experimental sites of CEA are distributed throughout China and by various types:

    In addition to the above mentioned models, there are other models employed as well, but one of the important principles of CEA is to be "in line with local conditions of space, time, materials and social capital". CEA looks at the agricultural production system as a living ecosystem, not just as an economic one. The flow of material, energy, and information must be circular. To achieve an output that is sustainable and as high as possible, external inputs must be considered in addition to the production system and the market.

    By the end of 1990, 1,100 CEA pilot units had been established encompassing the farm, village, township and county levels, covering about 3.3 m. ha. Based on a 1988 survey of 36 units, within three years the per capita income of the participants had increased 12 per cent above the national average. The average annual total grain yield increased by 15 per cent (4.5 times greater than the national average) and the unit yield increased by 12 per cent (9.5 times greater than the national average). Similarly, total cotton production increased by 78 per cent and the per unit yield was up by 18.3 per cent.

    Despite these apparently encouraging findings - and the convening in May 1991 of a national conference to draft a plan to promote ecological farming practices - the promotion of CEA seems to have remained on the periphery of China's agricultural policy. There is little evidence of extension of even the most successful components beyond the experimental units.

    Integrated pest management

    Since 1979, Integrated Pest Management (IPM) systems for rice, wheat, cotton and citrushave been developed and extended to more than 10 provinces, covering 15 per cent of the farmland in the selected areas. During the 1980's, IPM was disseminated by the plant protection stations at various levels under the guidance of the National General Station for Plant Protection, Ministry of Agriculture (MA).

    Taking agronomic measures as the foundation and stressing the bio-control and rational use of pesticides, the IPM package was mainly applied to rice, wheat, cotton, fruit trees and vegetables. In 1984 a study of 4.6 m. ha. of rice in 7 provinces showed that the adoption of IPM had reduced the application of pesticides by 68 per cent compared to the 1980 levels. Over a period of ten years, farmers adopting IPM reduced their pesticide use by 50 - 55 per cent, reduced their crop protection costs by 30 - 40 per cent, yet also reduced crop losses by 50 per cent.

    Biological control is one of the alternatives to partially substitute the pesticides. "BT" (bacillus thurigensis) emulsion has been developed, which can kill some pest insects, such as the bollworm and the cabbage caterpillar, and does no harm to their natural enemies and does not pollute the environment. "BT" is easy to learn and can be applied by farm households as very low cost.

    In 1990, natural enemies were used on 9 m. ha. of arable land nationally. IPM for cotton has been applied in Henan and Hebei Provinces since the middle of the 1980's. The main methods include inter-cropping of wheat or rape with cotton, the use of disease-resistant varieties and a reduction in the duration and amount of spraying.

    Integrated plant nutrition

    Integrated Plant Nutrition Management (IPNM) techniques, or 'prescribed fertiliser technology', has been applied to more than 26 m. ha. in China. The basic approach is to (a) determine the appropriate type and amount of fertiliser to be applied according to the soil condition and crop; (b) rationally arrange the ratio of basic feed to top-dressing, including the incorporation of organic matter from farmyard manure, green manure, compost and crop residues; and (c) determine the most appropriate dates and methods of fertiliser application.

    The adoption of IPNM enhances soil fertility, reduces pollution, reduces incidence of plant diseases and pests, decreases crop production costs, and increases output and income. Unfortunately, quantitative data specific to Chinese agro-ecosystems are lacking and the basis for the comparison is not clear.

    Traditional agricultural sustainable practices

    The multiple cropping system is a traditional farming approach developed by ancient Chinese farmers, which is economically effective and ecologically sound. It also used to be the control strategy for increasing food production in China. In the 1970s, a system of three harvests with five species a year, sowing wheat, barley or rape in the autumn and early rice and late rice the following year, was developed by specialists, based on farmers' practice. It can produce 1 to 1.25 tons of grain per mu (15 to 18.75 tons per ha.) a year. It had been extensively adopted in the south of Jiangsu Province and Zhejiang, etc. Provinces, but began gradually disappearing during the mid-80s as subsidized pesticides and fertilizer and grain production quotas began taking on more significance.

    Moreover, the cultivation area of double-rice (early and late rice), which once played a decisive role in the rice production of Southern China, has declined during the last decade although overall the multiple cropping has risen over the years. As the economy develops, the opportunity costs of crop farming increases greatly as farmers become less interested in labor intensive cropping systems. The machinery appropriate for small-size households to apply such systems has not been widely developed and the seed supply cannot always meet demand.

    "Multi-storeyed" agriculture has been strongly promoted over the last decade, especially among farmers who intensively use their limited land, labor, biological resources and technology to increase their income. There are generally two kinds: one crop-based, and another system-based which uses all available land resources and involves animal raising, fishery and forestry as well.

    The crop-based system has a long history in China, inter-cropping and inter-planting, while the contents have evolved along with the change of social demands. Not only various grain crops, but also more and more kinds of cash crops such as cotton, vegetables and melons have been used by farmers in inter-cropping or planting over the last decade.

    Agro-forestry is a kind of "multi-storeyed" agriculture developed on arable land, especially on the marginal slopes. The arable land was planted with seedlings of economic trees such as apple, orange, mulberry, etc., and inter-cropped annually with groundnuts, sweet potatoes, etc. in the beginning years. These can usually bring both cash income and forage value.

    System-based "multi-storeyed" agriculture can be traced back to the "mulberry based fish pond" invented by ancient Chinese farmers. Now, various forms have been developed, from the small-fish raising on a paddy-field, to the integrated watershed management-grain and cash crops, livestock and poultry, fishery, protective and economic forest. All of which were integrated with the mountain slope, valley and pond. Biogas was often a key link in the cycle.

    Agriculture infrastructure has also been developed as farmers built simplified solar greenhouses on their arable land to produce vegetables and even fruits and flowers, which increased productivity and cash income. Solar greenhouses have also been used for pig raising in the cold regions of north China.

  • To: Sustainable Agriculture and Rural Development in China (Part 2): China's Transition to SARD (45K)

    Back to Top FAO Homepage