Industrialization to Increase Farmers’ Income

1. Case Study of Ewes Project Performed by Chongqing Three Gorges Animal Husbandry Corporation Industrialization to Increase Farmers’ Income Wang Changqu Poverty Alleviation and Development Office in Chongqing Province 12 June 2006

2. Preface Chongqing Three Gorges Animal Husbandry Corporation, located in Wanzhou Prefecture under the national key poor county in the Three Gorges Reservoir Area of Chongqing Municipality, launched the Project of Ewe, an industrialization project aimed to reduce local poverty. With support from prefecture government, the project started in 2000 by involving a number of live goats breeding households. Five years of efforts have brought about social and economic benefits, enormous poverty reduction and a replicable model of industrialization. Today we are sharing our experience for your reference. Project area Map of Chongqing

3. 1. Rational of the Project 1.1 Causes The inception of the project was a result of various demands integrated. It was initiated by the Corporation which wants materials supply bases. Rural households need business and techniques. Government aspires for social effects that can drive poverty reduction. The three factors joint to give birth to the Ewe Project. The Chongqing Three Gorges Animal Husbandry Corporation is a sizable enterprise focused on study and production of veterinary drug, production of the materials for Chinese herbal medicines and processing of livestock products. It has been playing a leading role in local agenda of poverty reduction.

4. 1.Rational of the Project 1.2 Circulation (1) The Corporation offers free of charge an ewe of quality breed along with hybridization semen and breeding techniques to a household. (2) After the ewe is grown up and gives birth to lambs, the household returns two ewes to the Corporation. (3) The Corporation offers the two ewes to another two households. (4) After the two ewes are grown up and give birth to lambs, the two households return two lambs to the Corporation respectively. As the cycle is fulfilled, the households secure the first ewe and the other lambs, while the Corporation secures four lambs for sale.

5. Circulation of ewe goats and Technical Service 2 Cross ewes in 1 household 2 lambs Corporation Breeding Field of Quality goats Corporation Processing 1 ewe in 1 household Market 2 Cross ewes in 1 household 2 lambs lambs

6. 1.Rational of the Project 1.3 Basic Conditions for the Project 1.3.1 goats raising is the mainstay of local economy with sound conditions for development As goats raising is the leading industry in Wanzhou Prefecture, producing 1101.3 thousand goats annually, it becomes the main source of local farmers’ income. In spite that breeding techniques widely spread among local farmers and the necessary facilities are installed, the problems range from poor breeds to small size and slow growth of the goats. It requires high quality breeds and updated techniques of breeding and disease control. These are most desired in local households.

7. 1.Rational of the Project 1.3 Basic Conditions for the Project 1.3.2 The Corporation is well equipped with capital, Technology and market The Three Gorges Animal Husbandry Corporation is financially powerful evidenced by 250 million RMB of fixed assets. Its business covers animal husbandry, processing of agro products and technical service delivery. It abounds in: technology, staff (2600), expertise (948, among which 36 are senior technicians for animal breeding and medicare) and stable partnership with research institutions, slaughterhouses, meat processing factories, feedstuff factories and veterinary drug factories. The Corporation is both the major buyer of goats market and the major seller of veterinary drugs and feedstuff. These favorable conditions relieve the households of any shortage of fund, technology and market access.

8. 1.Rational of the Project 1.3 Basic Conditions for the Project 1.3.2 Government support to industrialization • The Chongqing Municipal Government enforced a range of incentive policies to support leading enterprises engaged in industrialization. The policies include: low price of breeding field rental and purchase, reduction or exemption of goats slaughter fee, award to exports and support to investment in fixed assets. • The local government regarded the upgrade of goats breed as a crucial measure to improve farm techniques. It rolled out quality breeds prefecture wide, and imposed the tasks on local government officials.

9. 2.Enforcement of ewe Project Seven measures in bond 1. Mass participation 2. Provision of high quality goats breeds and matching service 3. Technical support to households 4. Marketing of goats 5. Collaboration with research institutions to address technical problems 6. Planting of medical herbs 7. Government implementation of policies.

10. 2.1 Mass participation and Joint Benefit The local government and the Corporation jointly convened the mobilization meeting, printed and issued promotional booklets, encouraged households to the project and signed contracts with the Corporation. Government enforced favorable policies to the corporation and households, supervised the contracted performance of both corporation and households and safeguarded the benefits of all actors. 2.Enforcement of ewe Project Promotional activities for the project

11. 2.Enforcement of ewe Project 2.2 The corporation provides high quality goats, feedstuff prescription and veterinary drugs After the contract is signed, the corporation breeding field provides high quality ewes and feedstuff prescriptions to the contracted households. At the same time, the households may purchase on credit the feedstuff and drug from the corporation and pay back after sales of lambs. The circulation of goats has helped deal with the shortage of capital for households.

12. 2.Enforcement of ewe Project 2.3 Technical support to households • Deliver technical training on breeding, disease control and shed upgrade: Rely on service stations, based on township schools, sited in exemplary households. • Clarify accountability split: Each station has one technician for husbandry and one for veterinary medicare whose job is to survey the households for information on the breeding and collect the information into records signed by the households. The records shall be taken as the evidence of performance evaluation for the technicians. ●Build up service system: technical service stations in 12 townships, service teams in villages, 100 exemplary villages and 10 thousand exemplary households. Head of tech service station visits household to teach feeding tech

13. 2002 Gao Hongbin, Deputy Director of LGOP inspected the records of project households Procedure of technical service Breeding and Disease control Technical section of the corporation Technical service stations in townships Households Produced ewes within 18 months Can be sold to the corporation or directly to the market Market Provision of feedstuff and drugs Slaughter and Processing by corporation Quality Breed Field lambs goats Frozen Semen

14. 2.Enforcement of ewe Project 2.4 Guarantee the purchase of lambs To guard the sales of lambs against price fluctuation, the corporation purchases a proportion of the lambs on time so that the households have no difficulty in selling the lambs. If the ewes fail to produce lambs for any reason, the household can pay 50 RMB back to the corporation and secure the ewe, so that the benefit of farmers is guaranteed.

15. 2.Enforcement of ewe Project 2.5 Partnership with research institutions to innovate reproduction technology To ensure the reproduction rate and quality of the project, the corporation partnered with Southwest Agricultural University, Nanjing Agricultural University and Chongqing Municipal Station of Animal Breed Upgrade. Professors of the Southwest Agricultural University were invited to give guidance and training. By these efforts, the breeding rate climbed from 71.4% in 2000 to 85.7% in 2005. Technical Training Courses

16. 2.Enforcement of Ewe Project 2.6 Install more collaboration projects based on the partnerships established for the Ewe Projects The project has strengthened the relation between the corporation, government and households. The corporation started to plant herbs in the five towns in project areas to provide quality materials for veterinary drug production in 2002 and the planting area has expanded to 1000 hectares by 2005 . Herb Planting Base of the Corporation

17. 2.Enforcement of ewe Project 2.7 Government support Government finance for the project amounted to 1 million RMB in 2001 and 0.5 million cash-for work fund in 2002, altogether 1.5 million, which was spent on the purchase of quality breeds of goats. Government took the lead in promotional and coordination activities. On-site inspection by the senior government officials Government played an important role in the approval of land for goat folds, promotion of upgraded feedstuff and solution of disputes.

18. 3. Effects By 2005, 8035 ewes have been offered, 12078 cross ewes have been returned and reoffered and 26000 double-cross lambs have been returned. The project involved 12 townships, 35 thousand households among which 9600 are poor households. The project released positive social effect. It helped expand the corporation business, stabilize industrial chains, increase farmers’ income and local government revenues and optimize the rural industrial structure.

19. 3. Effects 3.1 Increase farmers’ income The aggregate income of farmers increased by 165 million RMB over the past five year. Net income increased by 49.5 million RMB, average 1412.3 RMB by household and 404 RMB per capita. Farmers’ income increased by 24 RMB with each 1 RMB invested by the government to poverty reduction. President of the corporation pays the household for lambs

20. In the case of a specific household in the project area, 4 family members gained per capita 600 RMB in 2000. Involved in the project since December 25 in the same year, the household per capita income reached 3600 RMB in 2005. Income increase derived from the project in the specific household

21. 3. Effects 3.2 Increase the profits of the corporation The Three Gorges Husbandry Corporation, with its sales of goats and expanded business on veterinary drugs and feedstuff, has seen its profits increased year by year, in which those from goats sales rose from 12 million in 2000 to 20 million in 2005, those from drug sales climbed from 120 million RMB in 2000 to 326 million RMB in 2005. 3.3 Economic Restructure The project has also brought about advances in local economic structure. The portion of grain planting in the total agricultural outputs decreased from 35.1% in 2000 to 25.2% in 2005, while the portion of husbandry outputs rose from 38.5% in 2000 to 44.2% in 2005. Revenues from ewe business have been greatly expanded by percentage in the total of family income.

22. 3. Effects 3.4 Increase government tax revenue With the constant expansion of the corporation, the government received increasing taxes from the corporation, from less than 1 million in 2000 to 5.6 million RMB, to 6.3 million in 2004 and 10.3 million in 2005. 3.5 Update the mentality of farmers The project raised the awareness of tech and commerce in locality. Rates of Slaughtered goats(%) have risen due to the guidance of technicians, farmer master of breeding tech, feedstuff and disease control tech. The project has also further commercialized local production of goats, changed the local tradition of self-consumption of goats, so as to bring the commodity rate of goats to over 90%.

23. 4.Lessons from the project 4.1 Business opportunities for the poor households are the core of poverty reduction Poverty reduction relies on income increase and the latter relies on optimal business projects. Constrained by capital shortage, low tech level and limited market access, the households can only increase income with business projects that require minimum capital investment, lowest cost of tech innovation and maximum guarantee of sales. In the ewe project, the corporation provide goats, feedstuff prescription and tech service all free of charge, and offers to purchase the goats, so this is the right project needed.

24. 4.Lessons from the project 4.2 Collaboration between different stakeholders is the driving element Connection of social goals with economic goals should be the focus of industrialization-based strategy of poverty reduction. More specifically, the demand of rural households, the demand of enterprises for profits and the administrative purposes of the government should all be integrated to foster a favorable collaboration between the three stakeholders. By doing so, the households can be mobilized to participate, the enterprise can provide materials, tech service and marketing for the purpose of profit and the government can give financial and infrastructure support. The success of the project is attributable to the stable collaboration and logical duty split between the three stakeholders.

25. 4.Lessons from the project 4.3 Tech innovation to improve household breeding techniques is the basis for poverty reduction Without tech innovation, market can not be expanded, while without cost-efficient introduction of tech, the households may have little access to the business of high quality. In the ewe project, innovation of tech including goats, feedstuff, veterinary drugs and breeding tech was all managed by the corporation charging nothing or on credit to the households. This benefited the household by quality tech service at low cost and upgrade of household business at low cost.

26. 4.Lessons from the project 4.4 Government support is the indispensable condition of poverty reduction From the perspective of coordinated social development, poverty reduction is a public product produced by the government as its prime mandate. In the ewe project, government was doing a good job in promotion, tech spreading, safeguard of the interests of households and the corporation. Apart from the above, the government rendered the corporation and households with production subsidies which smoothed the proceeding of the project and brought about huge benefits.

27. 4.Lessons from the project 4.5 Leading enterprises are the major actors of poverty reduction Industrialization, to achieve a success, requires the initiation and glue functions that the leading enterprises can give. The corporation advocated that it would perform with households on the principle of voluntary cooperation, mutual benefits, observance to contract and common development. The corporation invested 57% of the capital needed for the project to bond itself up with the benefit of the households, finally attaining a win-win result.

28. Thank you! 长江——瞿 塘 峡