Three hours’ drive from Shanghai city centre, at the mouth of the Yangtze River, a new generation of rural entrepreneurs are hoping to turn Chongming island into a hub for sustainable farming, providing a glimpse of what the future of agriculture in China could look like. From saffron, to hairy crabs and tourism, the farms operate using green methods, while making fairly decent amounts of money, telling a different tale from the Chinese rural economy story that is often associated with relative poverty, inefficiency and excessive use of pesticides and fertilisers. The local and national governments are trying to make the modern farms in Chongming an example for others to follow, but at the same time, the jury is still out over whether China can truly change its rural economy into something like the Riverside Happy Farm, which has 20 hectares (49 acres) of organic rice fields, and raises sheep and chickens. The farm also offers a popular weekend retreat for tourists from China’s biggest metropolitan area. Next door to Riverside Happy Farm, the Jiang Fan cooperative is promoting an ancient agriculture method that combines raising rice and fish in the same paddy fields, creating a mutually beneficial relationship. A few kilometres from Jiang Fan, Chongming local Tang Di, whose main job is big data consultant, is running a cooperative that grows saffron crocus bulbs to be used as a herbal remedy. We decided on saffron because it was non-perishable and it has high value-added content. And it’s also a traditional Chinese medicine that meets national [quality] standards Tang Di “We decided on saffron because it was non-perishable and it has high value-added content,” said Tang. “And it’s also a traditional Chinese medicine that meets national [quality] standards.” Blessed with its proximity to a vast consumer base in Shanghai that is willing to spend a bit more on locally grown organic products, Chongming highlights the potential model for a sustainable rural economy, with similar developments springing up in other rural areas surrounding other Chinese cities. Instead of simply growing traditional crops to feed local mouths, the new type of agriculture caters to the demand from China’s affluent urban consumers for high-quality products and services, from hairy crabs and organic vegetables to sightseeing experiences and comfortable accommodation in a rural setting. Agriculture has long been the bedrock of China’s political and economic stability as it stands at the heart of the national security strategy for a nation where around 60 per cent of population live in urban areas. Yet, the rural economy has always lagged behind even as China’s overall economic growth has expanded rapidly over the past 40 years of opening up with the per capita disposal income of urban residents more than 2.5 times that of the rural income last year. Infrastructure and public services in rural China have improved significantly as President Xi Jinping and his predecessor Hu Jintao tried to build up a new socialist countryside, but the general conditions are often not comparable to the cities as wealth and talent continues to flow into the major metropolitan area. According to Ma Wenfeng, an analyst from Beijing Orient Agribusiness Consultant, which provides analyses for the Ministry of Agriculture and Rural Affairs, per capita disposable rural income, which excludes what migrant workers bring home, is only US$302, compared with US$5,604 in the cities. Throughout most of the past two decades, China’s first and most important annual policy has been focused on the sector, and it has introduced a slew of polices to deepen reforms in the countryside, while simultaneously pushing for sustainable and technologically advanced farming. In China’s agricultural heartlands of the likes of central Henan, northeastern Shandong and Heilongjiang provinces, rural disposable income accounted for less than half that of urban incomes in the past five years, according to Chinese government data. Life for people in these areas could be particularly hard amid current conditions as they are often vulnerable to the slowdown of the economy and out-of-control food inflation, with analysts saying that most Chinese farmers barely had enough to survive, limiting the possibility for upgrading technology and sustainable farming. “Raising rural income is so hard,” said Ma. “The outlook will not be ideal in 2020.” Ma’s analysis of government data showed that rural income, excluding the substantial contribution from migrant workers’ income, has slid since 2014, with the pace of the decline reaching 20 per cent in 2019. Raising rural income is so hard. The outlook will not be ideal in 2020 Ma Wenfeng Boosting the rural income share of the country’s gross domestic product was tied to two interrelated areas of reform – land ownership and China’s household registration system, the hukou, said Rory Green, TS Lombard’s China and North Asia economist. A hukou is a household registration document all Chinese citizens must have that controls access to public services based on the birthplace of the holder. Migrant workers will hold hukou from their hometowns, meaning that they will have very limited rights to public services in any other city that they move to for work Farmers who do not own the land they till can still monetise some of their rural land assets without directly selling them, including leasing the lots, but this can take time. “Slow steady progress will occur over the next few years. However, local governments, fearful of losing revenue, are blocking the path to deregulation. If rural land becomes available for commercial and residential use, then the value of local government land banks, their most important source of income, could decline,” said Green. Slow steady progress will occur over the next few years. However, local governments, fearful of losing revenue, are blocking the path to deregulation Rory Green Green said the hukou system was being hindered by smaller cities and provincial governments, concerned that an influx of rural migrants would put too great a strain on local services and infrastructure. “Slow progress is being made here, and Beijing will continue to push for reform, but we do not expect a major breakthrough in the near future,” he added. “Improved labour mobility, access to better public services and increasing income from rural land are key to expanding rural consumption.” Still, Green expects the growth in rural consumption of goods to continue to outpace that in urban areas this year. On the ground in Chongming, Tang said his cooperative are on track as planned, but profitability would not be immediate. And at Jiang Fan, after the initial two years of experiment, the farm’s rice-fish system of farming produced 400kg of rice and 300 fish for sale in 2019 after increasing the field size to about 533,328 square metres (5.7 million sq ft). “But establishing the distribution channels [to sell] aren’t easy, and there’s a question of trusting our brand,” said Jiang Fan’s manager, who only gave her name as Mrs Han. Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.