Industrialization to Increase Farmers Income

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Industrialization to Increase Farmers Income
Case Study of Ewes Project Performed by
Chongqing Three Gorges Animal Husbandry
Corporation

• Wang Changqu
• Poverty Alleviation and Development Office in
  Chongqing Province
• 12 June 2006

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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
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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.

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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.
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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
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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.

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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.

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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.

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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.

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2.Enforcement of ewe Project

• 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.

Promotional activities for the project
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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.

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2.3 Technical support to households
2.Enforcement of ewe Project
?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

• 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.

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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 Technica
l 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

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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.

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2.5 Partnership with research institutions to
innovate reproduction technology
2.Enforcement of ewe Project
Technical Training Courses

• 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.

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2.6 Install more collaboration projects based on
the partnerships established for the Ewe Projects
2.Enforcement of Ewe Project

• 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
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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.

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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.

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3.1 Increase farmers income
3. Effects

• 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
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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
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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.

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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.

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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.

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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-bas
  ed 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.

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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.

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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.

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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.

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Thank you!
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