Agricultural Supply-side Reform on the Loess Plateau

By ZHANG ZHENGBIN & DUAN ZIYUAN

THE Loess Plateau of Shaanxi Province has traditionally been a poverty-stricken area. Local farmers would grow grains like winter wheat and spring corn, and every July, August, and September plow the fields and collect rain water. The plateau featured desolate scenery with dry, powdery, wind-blown soil, with barely a trace of green.

However, years of hard work by local people spent on developing the fruit industry while balancing economic development and ecological protection have achieved sustainable development. This is manifest in a stable grain yield, a continuous increase in rural incomes and an improved ecological environment.

Supply-side Reform Imperative

In recent years, China’s agricultural sector has faced three problems. First is the imbalance between the overall grain supply and demand. The grain price has decreased, while imports and domestic stock both hit record highs. Speeding up adjustment to the production structure, therefore, is imperative. Second is the lack of a proper system to guarantee a steady increase in rural incomes. Efforts need to be made to expand employment space and channels for farmers. Third is the overdevelopment of agricultural resources and extensive farming. These need to be changed to curb deterioration of the ecological environment. Efforts should also be made to develop new industries and promote integration of the agricultural industrial chain and upgrading of the agricultural value chain.

On March 8 this year, Chinese President Xi Jinping stressed that, both now and in the near future, efforts should focus on pushing forward supply-side structural reforms, improving comprehensive benefits of the agricultural industry, and making the sector more competitive.

Shaanxi Province is composed of three natural areas: the Loess Plateau, Guanzhong Plain, and Qinba mountainous area (Qinba refers both to the Qinling Mountains and Daba Ranges). The province features a complicated terrain and a diverse geological structure. The hilly and ridged Loess Plateau, with an annual precipitation of only 400 to 600 millimeters, has been plagued with serious soil erosion.

Among the 80 counties of Shaanxi, 50 suffer poverty. The whole province features relatively low-quality arable land, poor infrastructure, insufficient capacity for scientific research or technological innovation, and a low level of industrialization. Two thirds of Shaanxi’s total arable land is arid, and 80 percent of arable land is in regions plagued by soil erosion and a vulnerable ecological environment. A high percentage of arable land is on slopes or made up of middle-to low-yield crop fields. The water available, per capita, in Shaanxi is only 54 percent of the national average, and water resources available per mu of arable land is only 69 percent of the national average (15 mu is equal to one hectare). The water shortage has resulted in escalating water conflicts between agriculture and industry.

Developing the Fruit Industry

Shaanxi’s fruit industry has vigorously developed since the 1980s, achieving great results and blazing a trail in the supply-side structural reforms.

Shaanxi was deemed one of the best places in the world to grow apples by the United Nation’s Food and Agriculture Organization. As early as 2002, experts like Shu Huairui, an academician at the Chinese Academy of Engineering, agreed that the Loess Plateau was the best place in China in this regard because the local climate meets the seven meteorological indices essential for growing high-quality apples.

Shaanxi was deemed to be one of the best places in the world to grow apples by the United Nation’s Food and Agriculture Organization.

In addition, the northern slopes of the Qinling Mountains and the southern area down to the Weihe River have been recognized as the best place to grow kiwi fruit. Consequently kiwis have become Shaanxi’s second most competitive fruit produce.

Shaanxi’s apple production currently represents a quarter of China’s national output, and forms one seventh of the world total. Apple juice and kiwi fruit output from the province each makes up one third of the world total. Shaanxi is also one of the country’s foremost producers of cherries, grapes, pears and red dates. Statistics show that Shaanxi is now the number one fruit-production province in China, and its fruit industry is still expanding. In 2015, the fruit-growing area of the province increased by 800,000 mu, bringing Shaanxi’s total to 19.16 million mu and the total fruit output to 16 million tons: a year-on-year growth of 5-8 percent. In 2015, Shaanxi’s apple output exceeded 10 million tons, with a production value taking up nearly one third of the provincial total in planting industry. Farmers in counties that have been identified as an apple-growing base have seen their average annual income, per person, exceed RMB 10,000.

Over the past few years, the local government has rolled out a series of strategies for industrial transformation and upgrading, sustainable development, brand building, industrial chain building, and globalization.

Through optimizing the layout, a large number of fruit-growing bases have been established. The apple-growing industrial belt is on the Loess Plateau on the north side of the Weihe River. There are production bases for pears, Red Globe grapes and cherries on the land between the Wuding River and the Weihe River. Red date production bases lie along the Yellow River and kiwi production bases are situated on the northern slopes of the Qinling Mountains and in the Hanjiang River Valley. There are orange production bases in the Hanzhong Basin and Qinba Mountainous Area, and seasonal fruit-growing bases situated in suburban areas. So far 43 counties have been identified as apple-growing bases, 10 counties as pear-growing bases, six counties as kiwi-growing bases, and two counties have been identified as major sites for growing oranges. Several industrial zones have been formed, including a 10 million mu-plus apple zone on the Loess Plateau north of the Weihe River and a 1 million mu kiwi zone on the slopes of the Qinling Mountains. Shaanxi has also developed environmentally-friendly fruit products and promoted organic apple-growing, as well as establishing 19 research centers for the development of new greener technologies.

Local fruit enterprises and professional cooperatives have proliferated, continuously improving the fruit industrial chain. Twenty fruit juice enterprises with 51 processing plants constitute a demand of over three million tons of fresh fruit every year. To tap into the domestic market, local enterprises helped to set up 130 Shaanxi fruit stores nationwide. They also wholesale fruit (more than 1,000 tons) to 21 countries and regions around the world. Many of the fruit brands have been named as top national brands in China’s fruit industry, demonstrating that Shaanxi is a national leader in terms of fruit industry development.

The fruit industry has become a pillar of the agricultural sector in Shaanxi. Farmers in counties which are designated fruit-growing bases and major fruit production sites receive over 80 percent of their income from the fruit business. Over 10 million people are employed by the fruit sector in Shaanxi.  

As the environmental conditions in Shaanxi are so harsh, however, it is impossible to organize such large-scale fruit industry without the support of modern technology. As a result, agricultural production technology has experienced unprecedented reform here. Local farmers actively promote high-density apple orchards using dwarfing rootstock, a globally advanced technology that significantly increases efficiency. The local government also encourages the formation of an ecological circle: farmers grow grass in orchards to feed livestock, the feces of which are used to generate biogas; the biogas residues are then used as fertilizers to grow fruit trees. This process connects people’s daily lives with industrial production. The local government has also set up an environment monitoring system in a bid to strike a balance between industrial development and ecological protection for more sustainable development.

In the knowledge that China is currently promoting the “Internet plus” plan, Shaanxi local government has strengthened efforts to explore the e-market for its fruit products. Standards have been established for building and managing orchards and funds have been allocated to guarantee cold-chain logistics and construct refrigeration houses at fruit stores.

In 2013, during his visit to Kazakhstan, President Xi Jinping introduced the Silk Road Economic Belt concept in a speech delivered at Nazarbayev University. The concept inspired Shaanxi to develop its fruit industry and provided new opportunities for growth. Shaanxi and Kazahstan plan to co-establish 10 Sino-Kazakhstan Friendship Apple Orchards in order to enhance exchange and cooperation within the fruit industry. These apple orchards will also serve as bases for Shaanxi to further explore the international market.

Years of practice show that the fruit industry has been most competitive in the agricultural sector of Shaanxi, with low risks and high economic returns.

In 2008, Xi Jinping (then a member of the Standing Committee of the Political Bureau and member of the Secretariat of the CPC Central Committee) praised Shaanxi’s efforts in developing the fruit industry and improving its ecological environment, during the first session of the 11th National People’s Congress. He said that Shaanxi had made considerable headway in the energy and chemical industries, high and new technologies and in the equipment manufacturing industry. Locally produced apples and tourism resources had won the province both fame and profits. Shaanxi’s sustainable development model had also helped to improve the local environment. The local pillar industries had great potential and a bright future.

In 2010, Wen Jiabao (then Premier of the State Council) pointed out during his inspection of local economic development in Shaanxi, that the apple industry can reflect the economic operation of China.

In February 2015, Xi Jinping said during his inspection tour of Liangjiahe Village, Yanchuan County, that the local fruit industry (especially apple and kiwi products) had become an advantageous leading industry in the local agricultural sector. Farmers earn more by growing fruit and the local environment has been immensely improved. Xi also emphasized that more efforts are still needed to improve industrial standards, develop new technology and extend the industrial chain, in a bid to take the fruit industry in Shaanxi to a higher level. The local government set a target for increasing the total orchard area to 20 million mu (or one third of the total arable land in the province) and increasing total fruit output to 23.35 million tons by 2020.

Cooperating with Scientific Research Institutions

The Loess Plateau, with its dry climate and scant water resources, used to be trapped in poverty, and deemed unsuitable for agricultural development. However, after years of experimentation with fruit growing, people living on the plateau now enjoy a relatively comfortable life, and the local ecological environment steadily improves.  

The idea of developing an agroforestry system with an efficient use of water that we proposed in 2000 has been proved right during the development of the fruit industry in Shaanxi.

While ensuring the security of the grain supply, Shaanxi has successfully developed the fruit industry, yielding great results. There has been an increase in the income of local farmers, improvements in the ecological environment and a reduction in soil erosion, thus setting a good example for agricultural supply-side reform in China. It would be beneficial if this practice could be promoted nationwide. Scientific research institutions such as the Chinese Academy of Sciences (CAS) should be invited to help further promote the innovation and advancement of the local fruit industry. By conducting assessments and doing scientific research on carbon sequestration, climate change, soil and water conservation, ecological environment and economic benefits, the CAS can provide suggestions for further improving the local industrial development model. This successful method can be promoted in other arid and semiarid regions in China, and even the world, helping China’s agricultural sector to go global under the Belt and Road Initiative.    

ZHANG ZHENGBIN is a research fellow with the Center for Agro-Resources Research of the Institute of Genetics and Development Biology at CAS.

DUAN ZIYUAN is a research fellow with the Bureau of Science and Technology for Development at CAS.