The Pinduoduo (PDD) model to alleviate poverty in remote areas of China through ‘cloud agriculture’ is boosting rural farming by expanding the reach of agricultural products to consumers, according to a research report released by Tsinghua University in Beijing.
PDD’s focus on improving information, intelligence and scale — referred to as the “three transformations” in farming by the researchers — will transform the short shelf life of agricultural products and increase geographical limits for rural businesses, according to the June 11 report.
Poverty alleviation is one of China’s main objectives for 2020, and agriculture, rural areas, and farmers are among the country’s top targets for relief work. The Chinese government has introduced several policies this year to stimulate rural agriculture growth, including a policy to develop rural markets by expanding e-commerce into regional areas.
E-commerce platforms have stepped in and are serving as the driving force for growth in the rural e-commerce industry, said Yin Chengjie, a former deputy minister of agriculture and the main adviser to the research team that compiled the report.
Yin said mainstream e-commerce platforms have implemented a “demand integrated supply chain model” that has helped stabilize demand and supply for agricultural products, and reduced the need for rural farmers to rely on professional marketing services.
The research was conducted by experts and scholars from industry-related institutions, including Tsinghua University, Renmin University of China, Beijing Agricultural College, and Farmer’s Daily.
To be sure, China’s agriculture industry faces multiple challenges, many of which became evident as the lockdown to curb the spread of the coronavirus outbreak put pressure on food supply chains across the country. The agricultural sector in China has historically been operated by small farms with a long supply chain that includes middlemen and multiple distribution layers, which add to the delivery time and costs for the consumer.
PDD is an example of a company that is creating opportunities and streamlining the industry chain with innovative agri-tech tools to raise efficiency and reduce wastage and costs, according to the report.
PDD, which has 628 million active users, saw its agricultural product turnover reach 136.4 billion yuan in 2019, a 109% increase year-on-year. The platform had 240 million buyers of agricultural products and byproducts in 2019, an increase of 174% over 2018, and a repeat customer rate of 70%. Among the 240 million buyers, 160 million were buying primary agricultural products, an increase of 165% compared to the previous year.
‘Help the Farmers’ — a PDD commitment
In 2019, Pinduoduo and the government of Yunnan province launched Duo Duo Farms, which employs innovative technology to better match the supply and demand for agricultural products. This project has encouraged increased integration within farms, processing plants and sales platforms to improve overall efficiency. It has been launched successfully in Nujiang, Baoshan, Wenshan, Lincang and other regions in Yunnan to give statewide market access to distinctive local produce, such as yacon tubers, coffee and tea.
By the end of 2019, merchants on PDD from poverty-stricken counties had reached a combined annual order revenue of 37.26 billion yuan, an increase of 130% compared to 2018.
During the coronavirus outbreak in mid-February, PDD joined worked with the authorities and other partners to provide rural businesses with production and logistics information and tools such as livestreaming help them promote their products online. Such efforts helped more than 350,000 rural farmers in China.
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So far, more than 100 livestreams across more than 20 provinces and autonomous regions, and community leaders from more than 180 cities and counties have joined these livestreams to promote local produce. More than 100 regional crops were shown to PDD’s large and active user base of more than 600 million consumers.
China’s rural e-commerce market is projected to grow to 1.686 trillion yuan in 2020, and the average compound growth rate in the agricultural products market is projected to be around 38.9% per year over the next five years, according to the Ministry of Commerce’s Research Institute.