They provide suggestive evidence that the advice given by dealers is motivated at least partly by their concerns about how it will affect their reputation and future business opportunities. This offers one explanation as to why dealers advise farmers about a new seed variety even when prices do not give them a direct incentive to do so. While helping to understand the incentives at play, this additional small experiment has some clear limitations. First, it does not mimic an everyday conversation between dealers and customers as closely as our secret shoppers did the previous year. Framing the conversation around an on-farm demonstration gave a simple way of randomizing some dealers to have their business interests and reputation linked to the demonstration. But it has the downside of not being the same type of conversation that would happen between a farmer and dealer. Second, the sample size is small, as it was limited to the active dealers from our original list. As such, some of the estimates are imprecisely estimated. This article provides evidence on how private sector business practices can be more effective than public agricultural extension services in promoting the adoption of new agricultural technologies. Relying on private input suppliers, i.e. agrodealers, would be a substantial deviation from the standard methods currently used. Indeed, government workers most often try to spread knowledge via direct contacts with selected farmers, expecting those to in turn diffuse information in their social networks. Much of current research on information constraints tries to identify ways of optimizing this approach. Our paper instead provides an empirical test of using an entirely different approach where information is transmitted to private input suppliers. We find that informing private agrodealers about a new and profitable seed variety, and giving them small amounts of demonstration seeds to test, causes farm-level adoption to increase by over 50 percent, vertical farming racks compared to the business-as-usual approach where government workers focus on outreach with selected farmers.

Using the private-sector approach increases adoption most among farmers with higher expected benefits from the technology. This improvement in targeting suggests that there is an alignment of incentives between dealers and farmers: dealers benefit in some way from inducing farmers to adopt the right technology. We also found that our treatment triggers a supply response. It causes dealers to be more likely to keep the seed in stock and it increases local production of the seed. Further evidence shows that these effects can be at least partly explained by dealers actively advising farmers. Dealers in treated locations are more likely to mention the new seed variety when asked what to grow by a “secret shopper”. Unpacking the incentives of agrodealers is difficult and not something we can do perfectly with our experiments. But we find some evidence in our second experiment that agrodealers may consider their reputation and business prospects when giving advice. Reputational and business concerns can discipline agrodealers to put effort in recommending the right technologies to farmers. Our findings thus show potential for a different approach to agricultural extension in developing countries: delivering information on the supply rather than the demand side of technology. Of course, there might be drawbacks to this type of approach in other contexts. Particularly, if agrodealer incentives are not well aligned with those of farmers, then using them as information agents may not increase adoption of the optimal technologies for farmers. But it appears that when incentives are aligned, as in the case of our experiment, making input suppliers better informed can improve the practice of agricultural extension. China’s economic liberalization and structural change have proceeded for several decades. Since the economic reforms were initiated in the late 1978, China’s economy has grown substantially. For example, the annual growth rate of GDP was 8.5% in 1979-84 and 9.7% in 1985-95 . Moreover, despite the Asian financial crisis, China’s economy continued to grow at 8.2% annually between 1996 and 2000. Foreign trade has been expanding even more rapidly. China’s trade to GDP ratio increased from 13% in 1980 to 44% in 2000 . Although reform has penetrated throughout the whole economy since the early 1980s, most of the successive transformations began and in some way depended on growth in agricultural sector . After 1978, decollectivization, price increases, and the relaxation of local trade restrictions on most agricultural products accompanied the take off of China’s agricultural economy in 1978-84.

Grain production increased by 4.7% per year. Even higher growth was enjoyed in horticulture, livestock and aquatic products . Although agricultural growth decelerated after 1985 after the one-off efficiency gains from the decollectivization, the country still enjoyed agricultural growth rates that have outpaced the rise in population . Despite the healthy expansion of agriculture, the even faster growth of the industrial and service sector during the reform era has begun to transform the rural economy, from agriculture to industry and from rural to urban. During this process, the share of agriculture in national economy has declined significantly. Whereas agriculture contributed more than 30% of GDP before 1980, it fell to 16% in 2000 . During this same time, agriculture’s share of employment fell from 81% in 1970 to only 50% in 2000. The rapid economic growth, urbanization and food market development have boosted demand for meats, fruits and other non-staple foods, changes that have stimulated sharp shifts in the structure of agriculture . For example, the share of livestock output value more than doubled from 14% to 30% in 1970 to 2000 . Aquatic products rose at an even more rapid rate. One of the most significant signs of structural changes in the agricultural sector is that the share of cropping in total agricultural output fell from 82% to 56%. Moreover, the most significant declines in crop-specific growth rates have been experienced in the grain sector.Whereas the share of primary products in total exports was over 50% in 1980, it fell to only 10% in 2000 . Over the same period, the share of food exports in total exports fell from 17% to 5%. The share of food imports fell from 15% to 2%. Disaggregated, crop-specific trade trends show equally sharp shifts and suggest that exports and imports increasingly are moving in a direction that trend toward products in which China has a comparative advantage . The net exports of land-intensive bulk commodities, such as grains, oilseeds and sugar crops, have fallen; exports of higher valued, more labor-intensive products, such as horticultural and animal products, have risen. The proportion of grain exports, which was only around 20% of total agricultural exports in the 1990s, is less than half of what it was in the early 1980s. By the late 1990s horticultural products and animal and aquatic products accounted for about 80% of agricultural exports . These trends are even more evident when reorganizing the trade data grouping them on the basis of factor intensity . Taken as a whole, we believe the trends of China’s economic structure and agricultural trade over the past two decades reveals that the changes that are expected to be experienced as a result of WTO are not new. Changes in the structure of economy and agricultural production and trade suggest that China was already moving towards a point that was more consistent with its domestic resource endowments. To the extent that the new trade agreements reduce barriers to allow more land-intensive products into the domestic market and the fall in restrictions overseas stimulates the export of labor-intensive crops, WTO main impact will be to push forward trends that were already happening on their own. The commitments that China provided in its WTO Protocol of Accession are largely consistent with the nation’s long-term reform plan.

Despite the continuity with the past, few can dispute that the terms of China’s WTO accession agreement pose new challenges to the agricultural sector. In some cases, there will likely be large impacts on rural households, and will undoubtedly elicit a sharp behavioral response . However, the nature and severity of the impacts will not only depend on how households respond. Perhaps of even greater importance will be how China’s agricultural policy makers will manage their sector as the new trade regime takes effect. To examine this set of issues more carefully,vertical rack system in this section we first review agricultural policy during the reform era. In the next section we will then see how WTO measures will change the environment in rural China. Fiscal and Financial Policies. While government expenditures in most areas of agriculture have increased gradually during the reform period, the ratio of agricultural investment to agricultural gross domestic product has monotonically declined since the late 1970s. In 1978, officials invested 7.6 percent of AGDP . By 1995, the proportion of AGDP committed to investment fell to 3.6 percent. Exceptions were only recent years in the late 1990s when this ratio rose. Moreover, a significant capital outflow from agriculture to industry and rural to urban has occurred during the last two decades through the financial system and government agricultural procurement . Foreign Exchange and Trade Policies. China’s policies governing the external economy have played a highly influential role in shaping the growth and structure of agriculture for many decades. During the entire Socialist Period , the overvaluation of China’s domestic currency destroyed incentives to export effectively isolating China from international exporting opportunities . After the reforms were initiated, however, officials allowed the real exchange rate to depreciate by 400% between 1978 and 1994. Except for during the past few years when the exchange rate has experienced a slightly re-appreciation, adjustments in the exchange rates throughout most of the reform period have increased export competitiveness and contributed to China’s export growth record. These, in turn, have helped the overall expansion of the national economy. Perhaps more than anything, China’s open door policy, including its exchange rate policy, has contributed to the rapid growth in the importance of the external economy. Rural Development and Labor Market Policies. The shift of labor from the rural sector to the urban sector lies at the heart of a country’s modernization effort and China has been experiencing this primarily two ways: by the absorption of labor into rural firms and by movement of massive amounts of labor into the off farm sector in cities. Rural industrialization has played a vital role in generating employment for rural labor, raising agricultural labor productivity, and farmer’s income. The share of rural enterprises in GDP rose significantly from less than 4% in the 1970s to more than 30% by 1999. REs have dominated the export sector throughout the 1990s . And, perhaps most importantly, REs employ 35% of the rural labor that works off the farm. In addition to formal wage earning jobs in rural areas, a large and rising part of the rural labor force also works in the self-employed sector. At the same time, although China’s factor markets still contain a number of structural imperfections, such as employment priority for local workers, housing shortages, and the urban household registration system, labor has poured into the cities during the last 20 years and labor markets emergence are transforming the economy . According to a nearly national representative survey of 1200 households across China, it is found that more than 100 million rural workers found employment in the urban sector in the late 1990s . In fact, to an extent never found before, China’s labor markets have allowed migration to become the dominant form of off-farm activity; been increasingly dominated by young and better educated workers; expanded fastest in economies or areas that are relatively well-off; and recently begun to draw workers from portions of the population, such as women, that earlier had been excluded from participation. According to the work on some researchers, if China continues to change at the pace it has in the past 20 years, and other provinces experience the same changes that have already occurred in the richest provinces, China’s economy will continue to follow a healthy development path and be on the road to modernization. Technology Development Policies. China has a strong agriculture research system that has generated technologies adopted by millions of farmers to meet the increasing demand of food and agricultural products in the most populous country in the world .