Lena Kuhn: From large agricultural country to agricultural powerhouse - a comment from the digitalization perspective

2023-04-26

The main objectives of establishing an “agricultural powerhouse” are self-sufficiency in terms of major food products and boosting food security, which are seen as vital protection against climate change and increasing geopolitical tensions. Lena Kuhn, a research associate from the Leibniz Institute of Agricultural Development in Transition Economies, shared some thoughts from an international viewpoint.

 

China Daily: How important is a functioning global food trade system for ensuring food security in China, especially in times of extreme weather shocks?

 

Kuhn: Certainly, stressing self-sufficiency is understandable considering current geopolitical turbulence and increasingly volatile food markets. Yet, we should not underestimate the importance of a functioning global food trade system for ensuring food security for China.

 

For once, climate change is a global phenomenon, but resulting weather extremes are typically regional. The potential impact of weather shocks, as harvest losses in one region, can be made up by imports from other regions. A lack of functioning trade connections and high reliance on domestic production might make it difficult to source food from the world markets in times of extreme weather conditions.

 

Furthermore, we should consider that food security not only means food availability by either production or trade, but also food accessibility. The latter means that the consumer has access to affordable food. Regional relative advantages in terms of production inputs, labor costs and natural resource, which China not necessarily holds, help to decrease prices for agricultural products to a level that make products also affordable for people close to the poverty line.

 

Finally, one should not forget that trade is also the oldest way of establishing and fostering diplomatic relationships and cultural exchange, thus helping to relax potential geopolitical tensions

 

But, more importantly, how to become an “agricultural powerhouse” in the first place? In the past, only countries with relative abundance of natural resources turned into large agricultural exporters. While China is one of the largest countries worldwide in terms of land area, its stock of arable land per capita is by far the lowest among large agricultural producers. Water being equally scarce, production gains will clearly have to stem from increased productivity, as is also emphasized by Chinese agricultural policy.

 

But how to further increase productivity? Chinese agriculture is already characterized by the highest levels of fertilizer inputs in the world, which is leading to serious degradation of soils and pollution of water resources. Input efficiency, sustainability issues and green agriculture are more long-term aspects of food security, which should not be overshadowed by short-termed productivity considerations. Unsustainable productivity growth could seriously hamper the future development of the Chinese agriculture, whose largest and most persistent challenge remains the limitations and depletion of natural resources.

 

China Daily: What is the current state of digitalization in Chinese agriculture, and what are the remaining challenges?

 

Kuhn: In the past years, digitalization has been promoted as one potential solution worldwide, for instance through its capacity to optimize resource inputs. Below we share preliminary findings of a 2022 survey^[1] on the state of digitalization of Chinese agriculture: Despite many impressive technical advancements and initiatives in China, actual digitalization levels of its farms were found to be low. Only 4.4 percent of the 2,214 sampled crop farms owned any machinery with a digital component at all. The most frequently owned machinery were agricultural vehicles, planters, rotary cultivators and UAVs, which were used by 0.5-1 percent of the farms each. For most of the appliances, not even an analog (nondigital) version was being owned.

 

For the livestock and aquatic industry, digitalization was higher. Here, the highest level of digital machinery was found in the poultry and pig industry. Among these farms, 16-19 percent had at least one appliance with digital functions. Overall, 17 percent of farms engaging in the livestock industry had at least one type of digital equipment.

 

Equipment for using agricultural software and applications was more readily available. In 86 percent of the sample farms, at least some household members were using the internet. While 48 percent of farms had at least one smartphone in the household, desktop computers or laptops/tablets, which could be used for more sophisticated software, were only available in 27 percent and 25 percent of the farms. The lowest availability was agricultural sensing equipment with internet connection, which was only owned by 2 percent of the farms.

 

Actual usage of digital applications meanwhile was lower. Some 43 percent of the respondents used agricultural mobile phone software to inquire about agricultural production information at least once a month. About 43.4 percent of the respondents shopped online, but only 4 percent shopped for agricultural inputs like fertilizer or pesticides. Only 6 percent of the farmers interviewed understood how to sell products online and only 4.3 percent had already sold products online. Equally low was the use of e-finance: For instance, 21 percent of the farmers used the internet to make online transfers, but only 1.9 percent bought financial products online. About 3.1 percent used mobile banking and other online credit products.

 

China Daily: What are the main factors behind the low levels of digitalization in Chinese agriculture, and what actions can the government take to improve the situation?

 

Kuhn: One explanation for low digitalization levels is the small average size of Chinese farms. First, small farms have difficulty accumulating the required capital for investment. Second, high initial investments into digital technology might simply not pay off for small farmers. However, large-scale agriculture is not a panacea, as we can see from international experience: After decades of land consolidation in Germany, various negative consequences of large-scale agriculture have been acknowledged, for instance monocultures, loss of biodiversity and soil erosion.

 

Government subsidies can help to boost digitalization also in small-scale agriculture, but only if clearly targeted in terms of usage and recipients. For instance, German national and regional governments support the investment into digital technology, but usually so with a specific focus on technologies enhancing the protection of climate and environmental protection. In addition to general European Union subsidies – which are allocated based on agricultural area and thus mostly benefit large farms – national governments also introduce programs targeted at small farms specifically.

 

A second, maybe even more important factor is low digital literacy among farmers: In 28 percent of the cases, interviewed Chinese farmers were not personally using the internet. Even among internet users, 27 percent couldn’t search for information in a browser, 40 percent could not download, install or update a mobile app, and more than 50 percent did not know how to make online purchases.

 

In Germany, as well as in China, the need for sustainable agricultural production at high productivity levels requires a new type of agricultural labor force. However, hoping for individual initiatives might not be enough, especially as the average age of farm managers is as high as in Germany (53 years). Training tomorrow’s farm managers will be the task of the education system.

 

In Germany, about two-thirds of farm heads received vocational degrees, either by vocational training, technical schools, or some other type of higher agricultural schools. Vocational training takes three years, during which student spend half of their time in school, half in training farms, to learn about production techniques, marketing and bookkeeping. About 14 percent of German farmers even hold a university degree, which means additional courses on financial management, plant biology or soil sciences. However, most vocational and university level programs are still in the process of establishing curricula on digitalization of agriculture and food industry.

 

One major difference between China and Germany is obvious. In Germany, one driving force of digitalization has been the rising labor wages, which left farmers in labor- intensive sectors no choice but to substitute costly labor with digital applications. While China certainly is yet at a different stage of demographic transition, digitalization might at some point in the future not just be an option but a necessity. 

[1] The data stems from a survey conducted in five Chinese provinces (Sichuan, Heilongjiang, Hubei, Hebei and Hunan) in 2022, the project DITAC collected data on 2400 randomly selected farms, which also represented China’s growing number of large commercial farms.