The World Bank's Board of Executive Directors approved on April 28 a loan of US$100 million to the People's Republic of China to help finance the Agricultural Technology Transfer Project, with the objective to develop and test innovative models for agricultural technology generation, transfer and application aimed to generate additional farm income with a potential for scaling up. 

Specifically the project would: 1) help to improve the efficiency and speed of transfer of agricultural technologies, 2) support the emergence, inclusiveness and sustainability of new institutional and public-private partnership arrangements, and 3) pilot the establishment of farmer managed producer organizations.

China's agricultural sector has entered a phase of an urgent and challenging structural transformation. Four major developments dictate this transformation.

Agricultural Output and Incomes Agricultural production has been growing rapidly since the reforms of the agricultural economy that started in 1978. However, farm income growth has fallen alarmingly behind overall income development.

Natural Resource Pressure During the phase of rapid expansion of output, agricultural production encroached into more and more fragile ecological environments and adopted unsustainable production practices. Natural resources have been put under heavy pressure and are deteriorating rapidly. At the same time the demand for those resources from the non-agricultural population has grown steadily.

Changing Demand and Consumer Preferences The rapid growth in the non-agricultural economy and a growing urbanization has caused changes in food preferences and in food consumption patterns. Demand for meat, fruits, vegetables, and other high-value commodities including ‘green' and organic food are rising rapidly.

New Market Challenges and Opportunities China's accession to the WTO commands a fast liberalization of trade practices and further opening up of the border. While this offers important new opportunities for the agricultural sector, it also adds pressure to reshape China's agriculture.

A critical bottleneck for the needed transformation of the agricultural sector is the slow transfer and adoption rate of modern science, technology and knowledge-intensive agriculture. The current farming environment in China is characterized by a highly fragmented production structure, which makes it difficult: a) to expand the use of new technologies and or supply high value markets, b) to reach farmers by the traditional extension system, and c) for farmers to know of and respond effectively to market signals. The current government-based research and extension system is not sufficiently responsive to the new challenges and opportunities, neither of agricultural technologies and markets, nor to the demand of farmers.

The project aims to help China tackle these challenges and improve agricultural technology transfer by piloting novel approaches for setting enabling environments for agricultural technology development and transfer, as well as for creating partnerships between technology generating institutions, private sector industrial/marketing concerns and small farmers for the purpose of increasing rural incomes.

"This project is typical of a new generation of innovative projects that the Government of the People's Republic of China is asking the World Bank to finance", said Shuker Iain, World Bank Task Manager for the Project. "In this project the Government is financing the public goods in partnership with commercial entities, thus making more efficient use of public financing for new technology development and transfer."

The Agricultural Technology Transfer Project includes three components: 

Technology transfer and information markets and services, including the building of a set of large- scale technology transfer markets in or near the Yangling Development Zone to be used for exhibition and/or trade of agricultural technologies and information. 

Promotion of Commercially Attractive Key Technologies and new institutional arrangements, including:

1)      Researcher-Investor-Farmer Technologies;     

2)      Targeted Technology Transfer for farmer groups who do not have adequate access to information, capital or decision making power to enable them to adopt technologies on their own;

3)      Public Sector Support Programs, dedicated to: a) financing activities that enable the private sector to realize its role in commercializing innovative technologies; and b) directing public funds to technologies that do not appeal to the private sector on commercial grounds, but have a clear public goods nature; and 

4)      Innovation Support Fund, available for supporting a second generation proposals under the sub-components 1) and 2) above. Fund would be allocated on a competitive basis with a fixed share going to farmer groups and organizations.

Capacity Building, Project Management, Monitoring and Evaluation, including a range of capacity building and training activities at all levels including improved policy support, the provision of vehicles and equipment, as well as detailed M&E activities. In addition, the project would pilot several insurance schemes for farmer owned assets (e.g. livestock).

The State Office for Comprehensive Agricultural Development (SOCAD) is the implementing agency for this project.

The loan for the Agricultural Technology Transfer Project has a maturity of 20 years, including a five year grace period.

(China.org.cn April 29, 2005)